Govt opens up coal sector beyond Coal India monopoly

Allots 16 mines to states for sale to fuel-starved small industries

Bringing cheer to fuel starved small industries, the Ministry of Coal earmarked 16 coal mines to be allocated to states for sale to MSMEs. This is also the first step towards government’s effort to open up the coal sector beyond monopoly of state owned Coal India Limited.

The government released a list of 16 mines which will be allocated to states through transparent auction process. The list is divided into 2 parts -- host state and non-host states.

The states will then mine and sell coal to their own Industries - mostly MSME’s. The effort is also to curb black marketing of coal which small industries succumb to as there is supply shortfall from Coal India.

The Coal Ministry is in process of designing a guiding mechanism for transparent mining and sale of coal by the states. The mechanism would have broad parameters which the states can customise as per demand and need.

Senior Coal Ministry officials said ministry is in last lap of designing a model tender process for states to sell mined coal. 

“Central government would just allot mines and after that would be in guiding role. We are hopeful of starting process by April,” said the official. 

The earlier coal blocks allotted to the states during this year under the new auction mechanism had stipulated end-use and no sale of coal were allowed.

Commercial mining will have strict guidelines. The states would be allowed to engage MDOs through a transparent process but only as a contractor. The centre would make sure that no joint ventures with MDO or change of ownership happens,” said a senior Coal Ministry official.

The states in fray are the six mineral rich ones - Jharkhand, Chhattisgarh, Odisha, Madhya Pradesh, Goa, and West Bengal among others.