The Ministry of Mines has recently urged the Forest Advisory Committee (FAC) of the Ministry of Environment, Forest and Climate Change to exempt exploratory boreholes from what is known as the Net Present Value (NPV). It is noteworthy that the Ministry of Coal, the Ministry of Mines, and the Ministry of Petroleum and Natural Gas have previously sought exemptions from forest clearances for these boreholes back in 2018.
What are Exploratory Boreholes?
Exploratory boreholes refer to drilling activities undertaken to identify the characteristics, location, quantity, and quality of resources. These resources can be coal, metal, or petroleum. The process forms an integral part of prospecting a site for future mining and extraction activities.
Understanding Net Present Value
The NPV is a one-time mandatory payment that users must make when they divert forestland for non-forest use, as per the Forest (Conservation) Act, 1980. The calculation of this value hinges on the services and ecological worth of the forests. Factors that determine it include the location and nature of the forest, along with the type of industrial enterprise that may potentially replace a parcel of forest.
These payments flow into the Compensatory Afforestation Fund (CAF) and are utilized for afforestation and reforestation. The Compensatory Afforestation Management and Planning Authority (CAMPA) manages the CAF.
The Role of the Forest Advisory Committee
The FAC, a statutory body established by the Forest (Conservation) Act 1980, determines whether forests can be diverted for projects and the corresponding NPV to be levied. The committee comprises members appointed by the Ministry of Environment, Forest and Climate Change (MoEF&CC).
Exemptions from NPV Payments
Certain projects, such as construction of schools, hospitals, village tanks, and laying down of optical fiber, have been granted exemptions from paying NPV. Other endeavors such as underground mining and wind energy plants receive a 50% NPV exemption.
Historical Background: NPV
In a landmark case in 2008, N. Godavarman Thirumulpad v. Union of India, the Supreme Court mandated the payment of NPV. Post this case, the concept of NPV was developed by the Kanchan Gupta Committee.
Ministry of Mines’ Argument
The Ministry of Mines asserts that not all exploration areas evolve into mining sites. In fact, only about 1% of cases transition to mining. Thus, making an NPV payment at the current rate of 2% or 5% of the total forest area in the lease area poses significant challenges, often resulting in delays in exploration activities.
Response from the Forest Advisory Committee
While the Forest Advisory Committee acknowledged the difficulty in eliminating the NPV, it suggested that the MoEF&CC consider charging NPV on a per borehole basis instead of the existing practice of charging 2% or 5%.
About the Forest Conservation Act, 1980
The Forest Conservation Act, 1980 asserts that central permission is necessary for sustainable agro-forestry practices in forest areas. It penalizes violations or lack of permit as criminal offences. The act restricts the utilization of forest land for non-forest purposes, with the objective of reducing deforestation, conserving biodiversity, and protecting wildlife.
