New Delhi, Feb 20: After four years of enabling commercial mining and sale of coal in the new Coal Ordinance (Special Provisions), 2014, the Cabinet on Tuesday approved the methodology for auctioning coal mines to private companies. State-owned Coal India has been the sole commercial miner in India for 41 years now with a market share of 80 per cent.
The move aims to open up coal mining for private players, both Indian and foreign. In 2015, the government had permitted the allotment of coal mines to states for mining and commercial sale to medium, small and cottage industries. Close to 16 mines were allotted to several states.
This was after the auction of about 29 mines to private players and states for captive use in power, steel, aluminium industry in 2014.
The Cabinet’s decision today permits commercial mining and sale of coal in the open market as a commodity, at prices determined by market conditions.
“The government has taken several measures in the coal sector, which will enhance competition in the system, bring efficiency in coal production, reduce coal import, save foreign exchange, and generate job opportunities for the people,” said Piyush Goyal, union minister for coal and railways.
Elaborating on the methodology, Goyal said the auction would held as forward bidding on an online transparent platform. “There will no end use and price restriction. It would be up to the players to bring down the prices in open market,” he said. The minister said the revenue generated from the mining would go to the mine bearing states, Centre will not get any share from coal mining.
Regarding threat to Coal India, Goyal said commercial mining would help the state owned miner as well because competition would beget efficiency for all players includiokang Coal India.
“The quality of coal would improve and imports would come down. We want India to be self-sufficient in coal. The move aims to improve ease of doing business in India,” he said. The mines are yet to be identified.
This move is likely to benefit mineral rich states, which have only been getting royalty amount from private companies mining coal for captive use, to earn surplus revenue.