The opening up of commercial coal mining for the private sector is the most ambitious coal sector reform since the nationalization of the sector in 1973, claims the Indian government. There will be no restrictions on the sale or utilization of coal from mines.
New Delhi (Sputnik) — The Indian government has allowed private sector firms, including those of foreign origin, to mine and sell coal blocks at a market-determined price — a major decision that ends the state’s monopoly over coal resources.
The approved methodology for auctioning coal mines to private companies will allow the energy-starved country to cut imports and boost local coal production. State-owned Coal India has been the sole commercial miner for 41 years with a market share of 80 percent.
“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,” Piyush Goyal, India’s minister of railways and coal said after the decision.
With the latest initiative, the government expects higher investment that will generate direct and indirect employment in coal bearing areas especially in the mining sector and will have an impact on economic development of these regions.
“The quality of coal would improve and imports would come down. We want India to be self-sufficient in coal. The move aims to improve ease of doing business in India,” Goyal added.
At present, India is heavily dependent on thermal power (70% of total generation) for electrification of the vast country.
“This reform will ensure assured coal supply, accountable allocation of coal and affordable coal leading to affordable power prices for consumers,” the coal ministry statement said.
An earlier attempt to liberalize coal mining was unsuccessful after the country’s apex audit body CAG unearthed massive fault lines in the allocation of coal blocks to various public sector undertakings and private companies in the period between 2004 and 2009. The 2014 CAG report garnered immense media attention and public outrage, with some alleging corruption terming it as “the Coalgate scandal.” The Supreme Court of India canceled the allocation of 204 coal blocks made between 1993 and 2014, rendering the liberalization process futile. Later, the new government led by Narendra Modi amended the four decades old law and enacted the Coal Mines (Special Provisions) Bill in 2015.
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