National Mineral Policy 2006 - Department of Mines

was of the opinion that while the mining majors could be expected to take the responsibilityfor infrastructure in their areas the SME miners depended on the government for it.4.28 Even if we leave aside the larger NH, railway, and port projects to be taken up on PPPbasis under the current programmes of the GOI, the remaining infrastructure tasks—in termsof improvement of link roads from the mines to the NH, SH, or railhead, railway projects toopen up new areas to mining, and projects for provision of water and power would also bevery substantial. For undertaking the task of building the infrastructure in mining areas theCommittee would recommend the creation of a Mineral Development Fund (MDF) in eachstate with major mining activity by setting apart 15 per cent of the royalties collected everyyear on minerals mined in the states. In Chapter 6, we recommend measures for augmentationof revenue, particularly by converting specific rates of royalties into ad valorem rates. Sincethe augmentation is likely to be substantial there may not be much problem in earmarking asmall proportion of the royalties collected for the creation of this Fund. The Committee alsorecommends matching contribution from the GOI of an equal amount from the Plan funds,every year for the duration of the Eleventh Five-Year Plan. The capital cost of water andpower projects (to access the main grid) for the SME sector may have to be borne by the stategovernment through outright grants from the MDF. If the Rural Water Supply Scheme of theCentral government could be extended to the mining areas to meet the water supplyrequirement of the small- and medium-sized mines it would alleviate the strain on theresources of the MDFs. Similarly, if a conscious decision is taken by the state government tomake electricity available to the mine sites also, especially for small- and medium-sizedmines, the need for financing electricity projects from MDF would diminish.4.29 Where the infrastructure projects can be taken up in the PPP mode, recourse to thefollowing two schemes established by the GOI in January 2006 can increase the availabilityof funds:(a) Viability Gap Funding Scheme of the GOI notified by the Ministry of Finance,Department of Economic Affairs vide O.M. No 1/5/2005-ppp dated 12January 2006. This scheme envisages a capital grant of up to Rs 200 crore foreach project, subject to a maximum of 20 per cent of the project cost (with thepossibility of a capital grant of another 20 per cent from the state governmentconcerned). Proposals can be made under this scheme for making a PPPproject commercially viable;108