Cabinet approved Public Procurement Bill & Ad-valorem Regime for Calculating Royalty for Coal

The Union Cabinet on 12 April 2012 approved Public Procurement Bill, 2012 which aims at regulating public procurement of above Rs 50 lakh and provides fair treatment to bidders. The move is aimed at bringing transparency in State purchases.

Public Procurement Bill, 2012 aims at regulating public procurement by all ministries and departments of the Union government, Central public sector enterprises (CPSEs), autonomous and statutory bodies controlled by the Centre and other procuring entities. The Bill also proposes absence of price negotiations, except in circumstances that are prescribed, and for which reasons are to be recorded.

Ad-valorem Royalty on Coal

The Cabinet Committee on Economic Affairs (CCEA) on 12 April 2012 also approved an ad-valorem regime for calculating royalty for coal and lignite. Following the approval the coffers of coal-bearing states will get richer by over Rs 1000 crore. Currently the hybrid formula is in place for charging royalty on coal and lignite at the rate of 14 per cent and 6 per cent respectively.

Royalty rates on coal and lignite have not been revised since 2007. The ad-valorem regime will enable major coal producing states to earn revenue of about Rs 6980 crore in place of Rs 5950 crore being earned at present at existing rates. The new regime is to increase the combined earning by more than Rs 1050 crore.

The CCEA also approved the proposed joint venture between state-run Neyveli Lignite Corporation (NLC) and Uttar Pradesh Rajya Vidyut Utpadan Nigam Ltd for setting up a 1980 MW thermal power plant at Ghatampur in Kanpur district in Uttar Pradesh. The proposed power project, which could entail investments of over Rs 10000 crore, by the JV company is to cater to the demand of Uttar Pradesh and northern region.