Cabinet Decision Current Affairs

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.

Tags:

Recent Updates of BIMSTEC grid interconnection

The Union Cabinet has approved the proposal of the Ministry of Power for signing a Memorandum of Understanding (MoU) with member states of BIMSTEC for establishing BIMSTEC grid interconnections. The MoU will be signed at the 3rd BIMSTEC Energy Ministers’ Meeting that will be held in Nepal shortly.

The Bay of Bengal Initiative for Multi-Sectoral Technical and Economic Cooperation (BIMSTEC) is a sub-regional group of seven countries in South Asia and South East Asia lying in the littoral and adjacent areas of the Bay of Bengal viz. Bangladesh, India, Myanmar, Sri Lanka, Thailand, Bhutan and Nepal. It was established on 6th June 1997 through the Bangkok Declaration. It is headquartered at Dhaka, Bangladesh.

Timeline

In 2005, during the first BIMSTEC Energy Ministers’ Conference held in New Delhi, a Plan of Action for Energy Cooperation in BIMSTEC was formulated. As a part of the plan, under the BIMSTEC Trans-Power Exchange and Development Project, a task force under the leadership of Thailand was formed comprising the representatives of member countries to come up with a report on draft MoU for grid interconnections.

After a total of five meetings, the draft MoU for the establishment of the BIMSTEC grid interconnection was finalised on March 16, 2015.

The leaders reached a consensus to expedite the signing of the MoU on BIMSTEC grid interconnection during the BIMSTEC Leaders’ Retreat, 2016 held in Goa.

In the fourth meeting of BIMSTEC held in January 2017, the MoU was discussed and finalised.

Salient features

The MoU provides a broad framework of cooperation for the implementation of grid interconnections for the purpose of carrying out trade in electricity. Its objective is to promote rational and optimal power transmission in the BIMSTEC region.

The MoU for the establishment of the BIMSTEC grid interconnection facilitates:

  • Optimization of energy resources in the BIMSTEC region for mutual benefits on non-discriminatory basis subject to laws, rules and regulations of the respective Parties;
  • Promotion of efficient, economic, and secure operation of power system by developing regional electricity networks;
  • Necessity of optimization of capital investment for additional capacity generation across the region; and
  • Power exchange through cross-border interconnections.

 

Tags:

12