India opens up commercial coal mining for private miners

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The most ambitious coal sector reform since its nationalisation in 1973 – the opening up of commercial coal mining for the private sector – received a green signal with the Cabinet Committee on Economic Affairs Tuesday approving the methodology for auction of mines.

The move is expected to challenge the monopoly of Coal India, which currently meets over 80% of the coal requirement of the country, in the sector.  However, the government expects that it will make the sector more competitive.

The government in a statement said that the methodology will give highest priority to transparency, ease of doing business and will ensure that natural resources are used for national development. The auction will be an ascending forward auction.

The government has made it clear that there will be no restriction on the sale or utilization of coal from the mine. 

While commercial coal mining will increase competitiveness and allow the use of best possible technology into the sector, it will also create direct and indirect employment in coal bearing areas, the government expects.

The move will lead to energy security as 70% of India’s electricity is generated from thermal power plants. This reform will ensure assured supply, accountable allocation and affordability of coal leading to affordable power prices for consumers.

States in the eastern part of the country are expected to be benefited immensely from the move. 

The Supreme Court had in 2014 cancelled 204 coal mines allocated to the various government and private Companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.

To bring transparency and accountability, the Coal Mines (Special Provisions) Bill 2015 was passed by the Parliament which was notified as an Act in March 2015. Enabling provisions have been made in the Coal Mines (Special Provisions) Act, 2015 for allocation of coal mines by way of auction and allotment for the sale of coal.