Coal Bill To Allow Easy Mining Of Coal, Lignite

The Coal Mines (Nationalisation) Amendment Bill, 2000, which is expected to be introduced in forthcoming monsoon session of Parliament, would allow the Indian companies to mine coal and lignite without the existing restriction of captive mining.

"The objective of the amendment is to augment country's coal production and bridge the rising gap between demand and production," official sources said.

In the report of the working group set up by the Planning Commission for coal and lignite sector for the 9th plant (1997-2002), the demand-production gap at the end of the XI plan (2011/12) was estimated to be 400 million tonne.

However because of varying perception about the growth of the coal-based thermal power generation capacity, coal ministry has pegged the production gap at 41.94 million tonne for the current fiscal and 260.30 million tonne in 2011-12.

"It is not possible for the nationalised coal companies and captive coal mining companies to bridge this huge gap and import of coal is not sustainable," sources said.

The major growth in coal demand is envisaged in power sector. While the actual off-take in power sector in 1999-2000 has been 193.84 million tonne, it is expected to rise to 261.23 million tonne at the end of 10th plan and 347.22 million tonne at the end of 11th plan.

Dispelling doubts that the proposed amendment would result in privatisation of Coal India Ltd (CIL), officials said that the existing coal and lignite mining operations of state-owned companies such as CIL and its subsidiaries and Neyveli Lignite Corporation, will continue to grow as per plan.

The nationalisation of the coal mines took place during 1971-1973. As per the provisions of section 3 of the coal mines (nationalisation) act, which was amended from time to time, state-owned coal companies can do non-captive coal mining.

It also stipulates that companies engaged in iron and steel production, power generation and other end-user of coal can mine it only for captive consumption.

In 1996, government allowed the cement producing companies also to mine coal for captive consumption.

"Besides increasing coal production, the bill seeks to attract smooth flow of private investment for formation of joint venture companies with CIL," sources said.

According to industry sources, India has coal reserves of estimated 82 billion tonne which can supply coal for about 250 years at the current level of production while reserves of oil and natural gas may last about 17 and 26 years, respectively.

They said that the proven coal reserves will last more than 125 years if the existing rate of production is doubled.

However an investment to the tune of $20 billion for increasing the coal production to around 435 million tonne by the year 2020-21 was needed, said officials.