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Commercial coal mining opened to private sector

New Delhi: In a landmark move, opening up commercial coal mining for Indian and foreign companies in the private sector, the Cabinet Committee on Economic Affairs on Tuesday approved the methodology for the auction of coal mines/blocks for sale of the commodity.
The government described the move as the most ambitious reform of the sector since its nationalisation in 1973. Coal accounts for around 70% of the country's power generation, and the move for energy security through assured coal supply is expected to garner attention from majors including Rio Tinto, BHP, Vedanta, Anglo American, Glencore and Adani Group.
The auction — on an online transparent platform — will be an ascending forward auction whereby the bid parameter will be the price offer in rupees per tonne, which will be paid to the State government on the actual production of coal. There shall be no restriction on the sale and/or utilisation of coal from the mine, an official statement said on the decision taken by CCEA.
"This reform is expected to bring efficiency into the coal sector by moving from an era of monopoly to competition. It will increase competitiveness and allow the use of best possible technology into the sector," it added. Public sector undertaking Coal India was so far the lone commercial miner in the country for over four decades. The company accounts for 84% of India's coal output.
The methodology on Tuesday accords the highest priority to transparency, ease of doing business and ensures that natural resources are utilised for national development, the statement said.
As the entire revenue from the auction of coal mines for sale of coal would accrue to the coal-bearing States, this methodology shall incentivise them with increased revenues which can be utilised for the growth and development of backward areas and their inhabitants including tribals, it said. States in Eastern part of the country will be especially benefited.
Coal Minister Piyush Goyal said the move would bring efficiency and competition in coal production, attract investments and best-in-class technology including for 'safe and efficient mining', and help create more jobs in the sector. He said the government was in the process of identifying some mid- and large-sized coal blocks for auctions for non-captive purposes, adding that the timelines for the same are yet to be fixed.
When asked how the move would impact Coal India, Goyal said competition would help the state-owned miner.
The Supreme Court had in September 2014 cancelled 204 coal mines allocated to the different government and private companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.
To bring transparency and accountability, the Coal Mines (Special Provisions) Bill 2015 was passed by Parliament which was notified as an Act in March 2015. Enabling provisions have been made in the Coal Mines (Special Provisions) Act, 2015 for allocation of coal mines by way of auction and allotment for the sale of coal.
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