CCEA approves methodology for auction of commercial coal mines to private sector

The Cabinet Committee on Economic Affairs (CCEA) has approved methodology for auction of coal mines/blocks for sale of coal to private sector under Coal Mines (Special Provisions) Act, 2015 and Mines and Minerals (Development and Regulation) Act, 1957.

This decision opens coal sector to commercial mining by private eblntiti, ending 41 year old monopoly ot state owned Coal India Ltd (CIL). It will allow power cement and steel producers to source fuel more efficiently.

Background

Supreme Court in its September 2014 order had cancelled 204 coal mines and blocks allocated to various Government and Private Companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.  The pursuance of this order, Parliament had enacted Coal Mines (Special Provisions) Act, 2015 to bring transparency and accountability for allocation of coal mines by way of auction and allotment for the sale of coal.

Under this methodology

The auction will be ascending forward auction whereby bid parameter will be price offer in Rs./tonne which will be paid to State Government on actual production of coal. There shall be no restriction on the sale and utilization of coal from coal mine.

Moreover, the entire revenue from auction of coal mines will accrue to coal bearing States. It will incentivise these states to utilize this increased revenue for growth and development of backward areas and their inhabitants including tribals.

Significance

The methodology gives highest priority to transparency, ease of doing business and ensuring that natural resources are used for national development. It opens commercial coal mining for private sector and will help in boosting the economy. It is most ambitious coal sector reform since the nationalisation of this sector in 1973.

It will bring efficiency by moving coal mining from era of monopoly to competition and enable use of best possible technology. It will also attract higher investments and create more jobs in mining sector. It will also lead to the availability of low cost power as 70% of India’s electricity is generated from thermal power plants. States in Eastern part of the country will be especially benefited from this new methodology.

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Categories: India Current Affairs 2018

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Comments

  • P K SINGH RATHOR says:

    IF WE OPEN COAL MINES FOR OPEN SALES GO CONSUMERS, THE SALE PRICE OF COL WILL REDUCE DUE TO FIERCE COMPETITION AMONG PRODUCERS AND PEOPLE WILL BE BENEFITED AS THEY WILL GET POWER AT CHEAPER RATE.
    GOOD DECISION BY THE GOVT FOR AUGMENTING INDIGENOUS COAL PRODUCTION AND REDUCING IMPORT.BUT INDIAN PRIVATE PARTIES WILL HESITATE IN INVESTING HUGE CAPITAL FOR OPENING MINES.

  • Nishikant Mategaonkar says:

    A welcome move by GOVT. to come to rescue the coal starving consumers be it bulk or small. The pricing game is purely based on logistics. Need to allow commercial mining in the region where starvation is killing industries / utilities.
    Any Bar Chart drawn for entire exercise – Identification of Commercial Blocks, Auction Schedule, Award, preparation/ setting up mining activities after all permissions / lease, etc; identification of utilities starving for coal, logistics arrangements such as Road -Rail hub, commencement of delivery to consumers, gradation of coal of the block, legalities …….
    Also need to specify in the guidelines whether subletting actual mining activity & middleman concept for sale is entertained .

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