Govt renews effort to open up commercial coal mining in India

May 19,2020

The Government declared on Saturday that it would implement competition, transparency, and private sector investment in the coal sector via a revenue-sharing system. It would be done instead of the set rupee/tonne scheme, Union Finance Minister Nirmala Sitharaman said when declaring the fourth tranche of the economic stimulus.

Previously, only captive consumers with end-use ownership could bid. Now, every group will bid for a coal block and sell it in the open market, the finance minister stated.

The commercialization of coal would mean that the monopoly of Coal India will be over. Almost 50 coal blocks would be offered immediately, the finance minister said. This will be achieved through a revenue-sharing mechanism instead of a set ton rupee policy. Any party could bid for coal blocks and sell in the open market, the finance minister said. This is contrary to the previous rule, where only captive consumers with end-use possession could bid.

There would be no eligibility of condition and there will only be upfront payment with a ceiling.

Finance Minister further said, "Entry norms will also be liberalized. Nearly 50 blocks will be offered immediately. There will be no eligibility conditions and only upfront payment will be done with a ceiling."

This is done to reduce the import of substitutable coal and improve self-reliance in the manufacture of coal. The government would also spend Rs 50,000 crore to construct evacuation facilities. Coal gasification and liquefaction would be promoted by a refund of revenue sharing; she said the introduction of coal bed methane (CBM) production would also be promoted.

The government has attempted to kick-start commercial coal mining in India – beginning with the introduction of the Coal Nationalization Act in 2015 – many times without much success.

Previously this week, Prime Minister Narendra Modi announced a cumulative package of Rs 20 lakh crore, approximately 10 percent of GDP, to provide relief to various segments of the economy battered by a nationwide lockdown following the coronavirus pandemic.

While this included a March 27 declaration of Rs 1.7 lakh crore free food grain package and cash to poor for three months and RBI’s Rs 5.6 lakh crore monetary policy since March, the government has announced a combined Rs 10.73 lakh crore package in three tranches over the last three days.

Latest News