Government likely to consider nod to private firms to sell coal from blocks to be auctioned

NEW DELHI: The government is likely to consider allowing private companies to sell coal from blocks that will be auctioned from December, a big reform in India’s starved energy sector that could be taken up at the meeting of the Union Cabinet on October 20 evening.

The Cabinet is expected to bring an ordinance to allow private commercial mining and enable state-run miner Coal India to temporarily take over 204 captive coal mines, whose allocation was declared illegal by Supreme Court last month, and operate them till the time they are auctioned.

The ordinance, if approved, will override a bill seeking amendments in the Coal Mines Nationalisation Act to allow private firms to mine and sell coal. The bill has been pending in the Rajya Sabha since 2000 due to stiff opposition from Coal India’s trade unions.
Several experts consider commercial coal mining an answer to the increasing demand-supply gap of coal. The amendment in the Coal Mines Nationalisation Act is expected to increase competition, infuse new technology and subsequently lead to a market-based price discovery.

Monopoly miner Coal India is unable to meet the demand for coal in the country. The firm blames delayed environment and forest clearances for the slow growth in production.

The government proposes to auction all 204 coal mines – operating as well as non-operating. Coal India, however, may be given an option to retain some blocks.

The Cabinet is also likely to deny companies the market value for land that they acquired for coal blocks. The companies are likely to be compensated for the land, at the price at which they bought it, and machinery after depreciation. Coal India is likely be given the right to retain or fire employees at the mines.

The Cabinet note was prepared late on Sunday by the officials of the law and coal ministries and was approved by the coal minister Piyush Goyal on Monday morning. The note was circulated on Monday afternoon among the Department of Industrial Policy and Promotion and the ministries of law, power, steel, finance and environment.