Karnataka set to form company to restore mining-ravaged areas

It will take up work under the Comprehensive Environment Plan for Mining Impact Zone

June 01, 2014 02:15 am | Updated October 18, 2016 02:38 pm IST - BANGALORE:

The Central Empowered Committee had recommended the setting up of an SPV to rejuvenate mining-affected areas in three districts. Photo: Bhagya Prakash K.

The Central Empowered Committee had recommended the setting up of an SPV to rejuvenate mining-affected areas in three districts. Photo: Bhagya Prakash K.

The State government is all set to form Karnataka Mining Environment Restoration Company Ltd. (KMERCL) to restore mining-ravaged areas in three districts — Bellary, Tumkur and Chitradurga.

Following a Supreme Court directive to set up a company under Section 25 of the Companies Act, 1956, with an initial corpus of Rs. 3,500 crore, the government has commenced the process of setting up the KMERCL to take up work under the Comprehensive Environment Plan for Mining Impact Zone (CEPMIZ).

Special Purpose Vehicle

According to Tushar Giri Nath, Secretary, Department of Mines, on getting approval from the government, the KMERCL will be formed and this Special Purpose Vehicle (SPV) will implement projects under the CEPMIZ. An SPV is a legal entity created to fulfil a temporary objective.

Describing the effort as one of the first and biggest programmes to mitigate the impact of mining, Mr. Nath said the proposed company would repair the damage caused by mining companies in the three districts. It will take up afforestation programmes and address issues in the fields of education, health, nutrition, water supply, employment and minor irrigation.

The KMERCL will be headed by Additional Chief Secretary and Development Commissioner, and its members will be the secretaries of the departments of Forest, Mining and Revenue. “A nominee from the Federation of Indian Mineral Industries will also be on the company board,” he said.

The court-appointed Central Empowered Committee (CEC), in its 2012 report, recommended the setting up of an SPV to rejuvenate mining-affected areas in the three districts.

Plea rejected

Initially, the government proposed to set up an SPV under the Karnataka Societies Registration Act. However, the court rejected the plea and directed the government to set up a company under the Companies Act to implement the CEPMIZ. The court also directed the government to maintain funds collected from the lessees in a separate account of the company and not to transfer the funds to the State treasury.

The KMERCL will receive funds already collected by the Monitoring Committee from A, B and C category mines in the form of compensation from sale proceeds of existing stock in accordance with the guidelines fixed by the CEC. The company, which will get Rs. 3,500 crore after its formation, will spend a minimum of Rs. 10,000 crore on rejuvenating mining areas in the next 30 years, Mr. Nath said.

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