The government is preparing to take the next big leap in the coal sector and hopes to auction blocks for commercial mining in the current fiscal year after consulting sector experts, foreign companies and industry bodies, Coal Secretary Anil Swarup said.
The coal ministry has already identified coal blocks that will be auctioned to private miners and started the process of preparing tender documents for the auction that will allow companies to bid for blocks and sell coal in the open market. Currently, the private companies own mines only for use in their own plants.
The government wants to encourage commercial mining as it plans to significantly increase coal supply to help fuel-starved projects. State-run Coal India has an ambitious target to significantly increase its output to 1 billion tonnes, but the country’s fuel requirement is poised to grow even faster.
“We are conscious of the fact that if the coal production has to go up in this country to the levels we are talking about we will have to go in for commercial coal mining. We are organising a seminar next month in Ficci to work out the nuances and details. I am saying nuances as we don’t really know what are the implications of what are we going to do,”
Indian and foreign mining companies are expected to participate in the workshop on June 23 which is being organised by Ficci in association with the coal ministry, an executive in the chamber said.
Swarup said the first step towards allowing private commercial mining of coal would be to prepare a draft tender document for auction of blocks for non-captive use and discuss the draft with stakeholders.
He said the ministry has not set any timeline for starting commercial coal mining but hopes to auction the blocks to private miners this fiscal. The coal ministry is also looking at the possibility of allocating blocks to state governments to mine commercially, he said.
“That will give another dimension or understanding. It (Commercial mining by states and private companies) could happen together or it could be sequenced. We have not decided what would be first and what would be later,” he said. On March 20, Parliament passed the Coal Mines Special Provisions Bill that provides for opening up commercial coal mining to Indian and foreign private firms. So far, Indian companies with enduse plants were permitted to mine coal for captive purposes. The Act ends the monopoly of state-run Coal India Ltdand in commercial mining and allows private companies registered in India to mine and sell coal. Swarup said Coal India’s production increased by a record 8.3% in the last financial year.
Coal India’s output had been almost stagnant in recent years, while private investment in the power has galloped. As a result, many new power plants are starved of fuel.
Last year, the Supreme Court cancelled the allocation of captive coal blocks to private firms after allegations that the government had handed over minerals to private parties in an opaque and arbitrary manner. The coal ministry subsequently started auctioning coal blocks for captive use by companies. Swarup said the auctioned blocks would help increase India’s coal production.
The ministry expects the output to rise by 130 million tonnes from auctioned captive coal blocks in the next 18 months.