NEW DELHI: In a disruptive move that heralds the end of state-run Coal India’s monopoly, the government on Tuesday allowed commercial mining by private firms. With this, domestic and international players like Adani Enterprises, JSW Group and multinational miners such as Rio Tinto, BHP Billiton and Peabody Energy can mine and sell coal in India.
“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,” coal minister Piyush Goyal told reporters after the Cabinet meeting here on Tuesday.
“As per the new methodology, the auction would be held as forward bidding on an online transparent platform,” Goyal added.
“Opening up of commercial coal mining for the private sector is the most ambitious coal sector reform since the nationalisation of this sector in 1973,” a cabinet note said.
The government’s decision will allow both domestic and foreign companies to sell coal in the open market at market-determined prices. When asked about the impact on state-run Coal India, which has enjoyed near-monopoly for over 40 years, Goyal said commercial mining would also help the state miner because competition would help improve efficiency of all stakeholders. “The quality of coal would improve and imports would come down,” Goyal said, adding that the revenue generated from coal mining would go to the mine-bearing states, while the Centre would not have any share in this income.
The government had already enabled some commercial mining earlier through the Coal Ordinance (Special Provisions), 2014. The Centre had then auctioned 29 mines to private companies and states for captive use in power, steel and aluminium industries.
Coal India’s production during the April 2017-January 2018 period grew just 1.6 per cent, leading to huge imports.
While the industry welcomed the decision, coal trade unions were fuming. Vedanta Group chairman Anil Agarwal called it a path breaking and bold reform. However, several unions opposed it.
CITU affiliated All India Coal Workers Federation general secretary D D Ramanandan said, “This is a precursor to hand over coal mines to the foreigners. We are in touch with other trade unions to chart out next course of action.”
1. Unshackled after 45 years
Government has allowed commercial mining by private players in coal sector
It was nationalised in 1973 and Coal India became the only commercial miner with 80% market share
Till now, private firms were only allowed to mine it for use in their own cement, steel, power plants
2. Door wide open for private players
Now, private firms and foreign mining companies can take part in auction and those who offer highest per-tonne price will get contract
No restriction on the sale and/or utilisation of coal from the coal mine
3. Big deal for coal-rich states
Bonanza for coal-rich states like Odisha, Jhakhand, Madhya Pradesh, West Bengal and Chhattisgarh as entire revenue from auction of coal mines would go to the respective states