The government will allocate 16 coal mines to state-run utilities for commercial mining by September, Coal Secretary Anil Swarup said on Tuesday.
He told reporters here that the government expects to discover market-determined prices for coal through these mines production where is expected to start in another year or two after their allotment.
“There will no restriction on pricing from our end. We hope this will lead to discovery of market determined pricing of coal for the first time in the country,” Srivastava said.
“Right now Coal India is determining the price. With another entity coming in, some sort of a market will be created and price discovery will happen,” he added.
Of the 16 mines identified for commercial coal mining by state government-run utilities, eight will be given to the host state and eight will be available for public sector companies of other states.
The host States for which eight mines have been reserved are Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Telangana and West Bengal.
“There are in all 16 blocks that are being put for allocation. Each of these blocks will be allocated to host states, that is where the mine is and the other set of 8 blocks will be allocated to states which are no host states,” the secretary said.
The 16 mines have geological reserves of 2.137 billion tonnes and are expected to annually add an additional 40 million tonnes of coal production in the country.
The Coal Mines Special Provision Act of 2015 provides for opening up commercial coal mining to Indian and foreign private firms.
“The ownership of the entity applying for the allocation must be with the state government or state government-owned company. They can form a joint venture where they own 74 per cent of the venture before applying for the allocation. However, post allocation transfer of mines will not be allowed,” Srivastava said.
“Right now, coal supply is growing at 9-10 per cent while demand is growing at around 5 per cent. The government is not opposed to commercial coal mining by private companies but right now there is no need to go ahead with it,” he added.