The National Assembly (NA) yesterday criticised and rejected the National Council’s (NC) recommendation to allocate mines to the State Mining Corporation Ltd. (SMCL) until a new Mines and Minerals Act is enacted.
The House of review had come up with the recommendation during the deliberation on the annual budget 2020-21.
Only two members of the House—the home minister and MP Ugyen Wangdi—supported the NC’s recommendation. While the home minister reasoned that mines belonged to the state, Ugyen Wangdi compared mines with hydropower resources, which is managed by the government.
MP Passang Dorji (PhD) said that allocating all the mines to the state-owned corporation would contradict with the policy of private sector development. The government’s role, he said, was to formulate rules, monitor and collect taxes in an efficient manner.
“The development of the private sector would naturally help the growth of our economy,” he said.
MP Kinley Wangchuk countered the NC’s argument that only a handful of people had benefited from mines, saying that the private operators were paying various forms of levies and taxes to the government.
MP Duptho said that it would not make sense for the government to allocate the mines to SMCL temporarily as recommended by the NC.
“Although the new mines and minerals Act is yet to be amended, we have agreed in principle that non-strategic mines should be left open for the private sector,” he said.
The NC had commended the government for handing over the Chunakhola dolomite mine in Samtse to the SMCL after cancelling a scheduled auction where private companies were supposed to participate. However, some members questioned the rationale behind the government’s decision on the mine.
MP Jurmi Wangchuk said economic development was impossible without private sector development. The private sector, he said, had given overwhelming support to the government in tackling the Covid-19 pandemic.
The SMCL performed well in 2019 making a profit after tax of Nu 336.35 million (M). However, MPs said that it was equally important for the government to see the revenues private mines are contributing to the state.
MP Dorji Wangdi cited the example of Jigme Mining Corporation, which had paid Nu 194M and Nu 235M in 2018 and 2019 respectively in taxes alone. Mining companies are pay royalties and rents.
He added that the Eastern Coal Company, similarly, had paid Nu 205M in 2017 and 180M in 2019. Issues, he said, were found both in the private mines and government-operated mines.
MP Ganesh Ghimiray said that the government should operate only strategic mines and that the rest should be left open for the private sector.
Economic Affairs Minister Loknath Sharma said that mining works should not be halted, as mining was one of the major sectors that could help the government revive the economy affected by the Covid-19 pandemic.
He said that disruptions in mining activities could further worsen the employment problem.
The economic affairs minister said that until the new mines and minerals Act is enacted, the government would continue to allow private participation as per the Mines and Mineral Management Act 1995.
The House endorsed the budget 2020-21. The closing ceremony of the session will be held today.