R-Power, Essar could be hit as state mulls benefit-sharing levy for ecology loss.

In yet another case of a state government asserting its right on natural resources, Madhya Pradesh is set to issue notices imposing a new environmental benefit-sharing levy on mining companies operating in the state. This could spell more trouble for captive coal mine operators, already grappling with issues of green clearances.

The state’s insistence on the levy, over and above the existing royalty paid as compensation for local people, opens up a new front of reverses for at least a dozen companies, including Reliance Power, Ruias-controlled Essar Power, Jindal Steel & Power (JSPL), Monnet Ispat and Aditya Birla Group’s Hindalco.

The Madhya Pradesh State Biodiversity Board had earlier asked three Coal India subsidiaries and one private captive miner, BLA Industries Ltd, to explain why they were engaging in commercial mining of a “bioresource” without its permission. In addition, it asked these four companies to share two per cent of their turnover with biodiversity committees (local panchayat-level bodies) under the provisions of the Biodiversity Act, 2002.

Captive coal miners are so far immune to this new roadblock, but they, too, could soon get similar notices. “Notices will be issued to other captive coal miners once they start commercial mining,” Ram Gopal Soni, member secretary of the board, told Business Standard.

MP is India’s fifth-largest coal-bearing state, with reserves of 24 billion tonnes (bt). Since 1993, the government has allocated 26 coal blocks with reserves exceeding 2.8 bt to 18 companies in the state. These include Mahan coal block, held jointly by Essar Power and Hindalco; three blocks linked to Reliance Power’s Sasan UMPP; two blocks allocated to NMDC and Urtan North block allocated to JSPL and Monnet Ispat.

The spectre is also looming on the coal-bed methane blocks in the state allotted to Essar Oil and Reliance Industries Ltd.

Though some of the companies have announced production from the blocks but, according to Soni, have yet to start commercial mining.

The three CIL subsidiaries, after failing to convince Soni at a meeting, recently appealed against the board’s decision at the National Green Tribunal. With both sides putting their foot down, an early resolution of the issue does not seem likely.

Experts say there is merit in the board’s contention. “Coal is definitely a biological resource. The board is well within its right to impose a levy for protecting the local environment and community life, which might may have been damaged due to mining of the resource,” said Dinabandhu Sahoo, professor at the Delhi University who has over 25 years of experience in biodiversity research.

Soni said there was lack of willingness to accept coal as a bioresource. “Coal is a plant material. There is evidence suggesting entrapment of leaves, bark and plant seeds found in coal samples. So, by not sharing benefits with biodiversity communities, the companies are hijacking their rights.” Asked whether the biodiversity benefit-sharing would amount to double taxation, as mining companies paid hefty royalties to states under the mining Act, Soni said: “The biodiversity levy is over and above all prevailing Acts.”

A top CIL executive rejected the board’s claim, calling it “outright trash” and said coal could not be a biological resource, as it was a mineral. He said: “We will go to the Supreme Court to fight this matter out, if required. I do not rule out the possibility of other states coming up with similar claims.”

Coal secretary S K Srivastava is also understood to have taken up the matter with his environment counterpart.