Upfront NPV payments exempted

The Union environment ministry has exempted firms from upfront payment of net present value (NPV) of the forests diverted for mining until March 31 next year, or up to two months after the Covid-19 pandemic ends, whichever is earlier, officials aware of the matter said on Tuesday.

NPV payments are made to compensate for the losses of forests and their ecosystem services because of infrastructure projects. They are in addition to those for compensatory afforestation. NPV payments are used for conservation efforts like mitigating wildlife loss and biodiversity projects, through the Compensatory Afforestation Fund. They are calculated depending on canopy density and quality of forests diverted.

Sanjay Kumar, the director-general of forests, said the mines ministry had requested for annualisation of NPV payments, which basically means they would be paid in annual instalments. “We have said that we cannot do it. If they delay, they will have to pay a hefty sum as interest and if they do not, they will not have forest clearances. We understand that this is a critical time when everything was closed during the lockdown. But we cannot defer payment of NPV indefinitely. A call will be taken on the cut off time depending on circumstances.”

The mines ministry has requested the environment ministry to annualize the upfront NPV payments because of the economic slowdown associated with the pandemic.

Anil Kumar Jain, secretary, mines, declined to comment on why mining corporations are seeking the exemption.

In a letter dated August 9 to the principal secretaries of states and Union territories, the environment ministry said it will give mining companies time till March 31, 2021, or up to two months after the Covid-19 pandemic ends, whichever is earlier to make the lump sum payments. The environment ministry has clarified the exemption will be made on condition that an interest of 12% per annum will be levied for delayed payments till then and thereafter.

“The matter has been examined in the ministry and it is informed that annualization of NPV may not be feasible as it involves techno-economic analysis of various parameters used for NPV calculation,” said the letter, a copy of which HT has seen.

Kanchi Kohli, a legal researcher at New Delhi’s Centre for Policy Research, said from the time NPV was introduced into the forest clearance process in 2005, specific projects and sectors have been seeking exemptions. “But the larger question here is whether conditions like compensatory afforestation or NPV justify large scale forest diversions for mines, hydropower, highways, railways or ports.”

Community Forest Rights-Learning and Advocacy member Tushar Dash said Covid-19 is being used as an excuse to extract all kinds of exemptions from the environment ministry, which it is happily doing. “I saw another guideline by the environment ministry, which has allowed states to continue to keep and utilise unspent compensatory afforestation funds till March 31. The money should be utilised for the welfare of forest dwellers and forests now,” said Dash.