Cabinet approves revision of royalty rates on coal and lignite

New Delhi, June 21 (UNI) The Cabinet Committee on Economic Affairs (CCEA) today approved revision of royalty rates on coal and lignite, effecting amendment to second schedule of the Mines and Minerals (Development and Regulation) Act 1957.

The weighed average royalty payable after revision excluding West Bengal as a percentage of weighted coal price based on 2004-05 production level works out to about 14 per cent.

This will give coal producing states a reasonable share of income earned by production and selling of a non-renewable mineral resource like coal, said Finance Minister P Chidambaram.

The earnings of coal producing states will increase as a result of revision in coal and lignite royalty rates.

Royalty rates on coal were not revised since 2002 and on lignite since 2001. The states were insisting that value of rupee has depreciated substantially since the last revision.

They also contended that while coal companies have been revising prices frequently and since royalty rates are fixed on tonnage basis, the benefit of higher prices has not been shared with states.

Consequently, the share of royalty as a percentage of coal prices has declined significantly.

UNI