The state steel and mines department will file its response within four weeks to the recently issued draft guidelines of the Union ministry of mines on Memoranda of Understanding (MoU) signed by the state governments and joint ventures forged by the state PSUs with private firms.
"We will file our response to the draft guidelines of the Union Ministry of mines on MoUs and JV s within four weeks”, a top official of the state steel and mines department said.
According to the draft guidelines, The MOUs signed by the State Govt. must be inconformity with the State Mineral Policy and must be entered into in a transparent manner and suitably notified in the state website.
In order to be able to use the provisions of Section 11(5) of the Mines and Minerals (Development and Regulation)-MMDR Act of 1957, there must be a clear policy on the kind of situations in which MoUs will be entered into- for instance large investment, latest or special technology, value addition or long-term ore linkage and the MoU must clearly specify the basis.
Obviously, the signing of a large number of MoUs indiscriminately, and without considering what the other party is bringing to the table is not compatible with the use of the MoU as ‘special reasons’ for the purpose of Section 11(5) of the MMDR Act.
An MoU for exploitation of a mineral resource at a specific location (i.e. specific lease area) in anticipation of a concession or a reservation will be deemed to be incompatible with principles of fair play and equity because it will give that MOU applicant an unfairadvantage in relation to other MOU applicants who apply for the same area.
Needless to say it would contradict the policy of ‘first in time’ for non-notified areas or ‘most meritorious’ for notified areas, as the case may be, the Ministry of Mines had stated categorically in its guidelines.
In case MOU/JV is treated as special reasons, it is necessary to make its provisions enforceable, and as such State Government must send all details of the MOU/JV along with a proposal to make it relating to the MOUs/JVs in the context of their application in both reservation and concession cases, the following additional guidelines are issued in this regard.
It may be noted that while the above guidelines elaborate the process and procedures, they do not specify the policy and content of the MoUs since they have to be State specific. In order to enable this to be done, it will be necessary for the States to issue a comprehensive circular and notify it, specifying the policy and content, and including therein the details of these guidelines in so far as procedures and consequences are concerned, subject to any variation that the State Government may consider desirable.
The state governments will also need to enter into supplementary MOUs with existing MOU companies to enable the conditionalities to be fulfilled, and while doing so may ensure that the process of entering into supplementary MoUs filters out routine MOUs that may have been entered into earlier.
The list of all qualifying MOUs (including supplementary MOUs) may then be put up by the state government on its website.
