The discussion was intense, sometimes emotional, as the National Council discussed on allocation of mines to state owned enterprises (SoE) while deliberating the Mines and Minerals Bill 2020 yesterday.
The legislative committee recommended that the economic affairs ministry should lease out mines to SOEs.
While many supported the committee’s recommendation, some questioned if it would limit private sectors participation in mining and raised the need to keep it open for the private sector. Few also pointed out bureaucratic hassles if mines are allotted to SOEs.
Eminent member Phuntsho Rapten, who is a member of the legislative committee, asked the members to understand why mining should be leased out to SOEs.
“It’s as per Constitution and also because a national law review taskforce found out inconsistent and contradictory provisions of the laws.” The member was referring to the National Law Review Taskforce of 2018. The taskforce in 2018 recommended amending the MMMA 1995 in accordance with the provisions of the Constitution.
“The Constitution vests the ownership of mineral resources in the State,” it recommended. “The MMMA 1995 was enacted prior to the adoption of the Constitution. It must be harmonized and amended based on the provisions of the Constitution.”
Phuntsho Rapten also said the committee members made the recommendation based on reports and findings of the Royal Audit Authority, Anti-Corruption Commission and an independent research group.
Phuntsho Rapten said that some members are deliberating as if all avenues for the private sector would be closed just because mining has to be leased to a SOE.
“If we visit the Bill carefully, there are surface collections and quarries, which are not at all limited to SOEs.”
Classifying the private sector, he said there are more than 88,000 business license holders in the country, of which about 1,000 are in wholesale and retail business, 23,000 in cottage and small scale industries, 2,500 in construction industry, of which 2,000 are petty contractors.
“There are only 26 private individuals in mining and 40 in quarries,” Phuntsho Rapten said.
He said that in the present scenario, about two to three people own 70 percent of mines and minerals before it was awarded to State Mining Corporation (SMCL) as interim measures. “Only about 30 percent share is floated to the public.”
He reminded the House that there were reports pointing out underpricing, undervaluation, and tax evasion when mining was leased to private individuals. “There are many avenues where our private sector could participate in mining.”
Eminent member, Dasho Tashi Wangyal, said people watching the live broadcast of the session should not misunderstand that the NC is against supporting the private sector.
He said that there are many in the private sector, including people selling essentials to rural people and petty contractors involved in farm road maintenance. “They will not be affected by the mining Act.”
Dasho Tashi Wangyal explained that there are also more than 300,000 people in the informal sector without holding any licenses, like farmers and vendors who are in the private sector. “Private sector is not limited only to people who have money and participate in auctions.”
He explained how the price of sand soared to almost Nu 5,700 for a truckload in 2007 when it was operated by private entities and how it became affordable, Nu 615 once it was operated by a SOE. The Natural Resource Development Corporation today manages Sand, a DHI owned company. “The policy affected a few private individuals who are in sand business, but all people in the private sector benefited from it.”
Eminent member Tashi Wangmo also supported the committee’s recommendation. Punakha’s representative, Lhaki Dolma, said that while she supports leasing mines to SOEs in line with the Constitution, she was not against private sector development.
Meanwhile, 16 sections of the Bill were reassigned to the NC’s legislative committee for further review.