Millennium Post

‘Commercial mining of coal to be allowed after auction’

The Union Government will allow commercial mining of coal by private companies after allocating mines to public sector companies and auction to specific end users, Finance Minister Arun Jaitley said on Sunday.

‘First you give it to the state and central PSUs.Thereafter you make a pool of all actual users and have an auction. Then the extra resource, while preserving the character of Coal India, without disturbing it, you then start exploring the possibility of commercial mining,’ he said at an interaction with PTI journalists at the agency's headquarters here.

The government had last month promulgated an ordinance for auctioning the 204 coal blocks whose allocation was cancelled by the Supreme Court in September. In that ordinance, a provision was added for allowing commercial mining of coal by private companies. The first lot of 74 mines will be auctioned to specific end-users and allocated to state-owned entities by March. Allowing private companies into commercial mining will help raise coal output as state monopoly Coal India Ltd (CIL), which produces about 80 per cent of the nation's coal, has missed all its output targets in last four years.

Jaitley, however, did not give a timeline for allowing commercial mining by private firms.

‘I am not binding myself by time. But the Ordinance is logical,’ he said, adding, because of the coal scam the nation has lost seven precious years and a lot of credibility that soured investment climate.

‘The net gain has been that in a surgical manner we have found out a solution for our future. That this is how a natural resource has to be allotted,’ he said. The auction and allocation of coal blocks through a transparent methodology would ensure that coal exploration will begin and the actual users will get the fuel rather than importing and putting a burden on current account.

‘It is a very systematic ordinance,’ he said, adding, a Bill to convert the Ordinance into an Act will be brought in the Winter session of the Parliament which begins on Monday. Meanwhile, Jaitley once again pitched for an interest rate cut, expressing confidence that the RBI will move in the direction of making the cost of capital reasonable to help perk up economy.

‘The cost of the capital must be reasonable ... If you are unable to infuse liquidity or unable to provide capital which is cheaper then even if you have opened out (economy) that itself won’t be enough. So it is a chain of events which has to take place,’ he said.

RBI which has kept policy rates unchanged for almost 10 months citing high inflation despite persistent demand from industry and government for a cut to boost economic activity, is slated to review monetary policy on 2 December. ‘...its their (RBI) job to balance rates with inflation.

I am sure they will do it competently. But fact is, this is the direction we have to take...we are slowly but surely moving in that direction,’ he said.

‘I am sure the RBI is run, headed by eminent and competent people. They also see merit,’ he said.

Inflation based on the Wholesale Price Index cooled to a 5-year low of 1.77 per cent in October driven by softening prices of fuel and food items. At the same time, retail inflation, based on Consumer Price Index, also eased to 5.52 per cent at the end of October. With moderation
in inflation, there is a widespread expectation that RBI will cut interest rate in its upcoming bi-monthly monetary policy.
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