Cement, Energy and Environment

district mineral foundation (DMF) is to be set up in all areas "affected by mining related operations". Holders of mining leases will pay to the foundation of the district in which mining is done a sum, "which will not exceed one-third of the royalty" in the case of new leases and "equivalent to the royalty" in case of old leases. The amendment lets state governments set the rules for the foundation, including its composition. But it does say that the object of this foundation will be to work for the "interests and benefits of persons and areas affected by mining related operations." My colleagues have calculated that DMFs in big mining districts will get substantial inflows of funds. At current royalty rates districts like Keonjhar would get some Rs 600 crore annually. It is possible to use this money for the direct benefit of the affected people as well as to invest in their future assets. Now the question is who will make the rules to ensure that the money reaches where it belongs? By now the original proposal is long gone. However, in this case, CSE as the proponent of the idea remains. The first draft of dmf rules, from Rajasthan, focuses on the use of money. It has no idea that this provision was meant to give people a stake in the rent on natural resources . It was meant to profit them so that it leads to inclusive growth. In the great Indian policy bazaar the challenge is to ensure that even this not-so-great policy is used as per its original intention and to find ways to implement it so that it can do what is was meant to do: bring change in the lives of the poor. I will keep you posted on the updates on this issue. Courtesy: CSE's Fortnightly News Bulletin (July 17, 2015) Renewable Energy Solar CAN INDIAN DISCOMS SUPPORT INDIAN THE SOLAR GROWTH STORY Indian distribution companies continue to be a major drag on its annual balance sheet. The power sector will continue to be a source of asset quality risk for public and private sector banks in India if the financial condition of State electricity board distribution companies (discoms) do not improve. The poor state of discoms' financial health can pose significant risk to the Indian solar growth story. A Brief History with the combined debt of all distribution companies rising above Rs 2 lakh crore, the previous UPA government had introduced a restructuring plan in 2013. However, there were not many takers among states. After failure of the scheme, the NDA government decided to rework the plan to make it more attractive than giving financial assistance to states. As per the previous government's scheme, 50 per cent of the accumulated debt of the discoms till March 2012 could be converted into bonds. These bonds will be issued to the participating lenders, backed by state government guarantees. The remaining 50 per cent loan will be restructured by providing moratorium on principal and best possible terms for repayments. Power Minister Piyush Goyal recently said the government aims to attract $50 billion investment in transmission and distribution sector in the next 20 years and is preparing short, medium and long term plan for strengthening the discoms. With the 40 per cent of electricity going unpaid for in some states, the discoms have no money to purchase power from market to supply to consumers despite availability of sufficient power in the grid. A Risky Assetlmpaired loans to discoms comprise more than 10 per cent of the total impaired loans at all public sector banks except State Bank of India; it is as high as 46 per cent for Oriental Bank of Commerce and 48 per cent for Central Bank of India. In contrast, private sector banks have almost no direct exposure to discoms. The poor financial health of discoms in India is one of the key factors weighing on the asset quality of Indian banks, Moody's report, 'Indian Banks: Exposures to State Electricity Board Distribution Companies.'The fundamental problem with discoms' finances has been the uneconomical pricing of power sold. Discoms, on an average, lose money on every kilowatt-hour of power they provide to users, even after the government subsidies they receive are included, says Moody's. 14