Govt to now offer coal mines to private companies only for commercial work

Captive production allowed, companies can sell coal in open market

India will now offer coal mines to private companies only for commercial mining and sale purpose, thereby moving away from the earlier regime of offering mines for captive (own) use.

The coal ministry has identified 60 mines to be offered in two tranches for commercial mining. Officials said the ministry was awaiting a high-level committee report of the NITI Aayog on coal, which should come by December. 

After four years of enabling commercial mining and sale of coal in the new Coal Ordinance (Special Provisions), 2014, the Union Cabinet in February last year approved the methodology for auctioning coal mines to private companies for commercial purposes. 

Under the new law, private mining companies would be able to mine and sell coal in India alongside state-owned Coal India. Since then, there have been no bidding regulations issued by the Centre. “We will put the bidding regulations in two months, and hopefully by the next financial year, we will commence commercial mining process,” said an official.

He said the plan was to offer mines for commercial purpose only. “Most of the private companies, which were offered captive coal mines, have surplus coal and wish to sell in the open market. So, the ministry might as well give them mines for commercial purpose, which they can use for oneself and sell surplus in the open market,” said the official.

The Centre will also offer coal block for coal bed methane, surface, and underground gasification as well. State-owned Neyveli Lignite Corporation has issued a tender for underground gasification of lignite blocks in Gujarat, this week.  

In the first e-auction of coal blocks in 2014, 34 coal blocks in three tranches went to private companies, including Hindalco, Balco, Jindal, JSW, Adani, GMR, Essar, among others. This year, three tranches of coal auctions were held after two years and nine blocks were awarded. 

Sources said Coal India’s labour unions are not on board on the issues. “Even after the Cabinet’s approval, the unions protested twice in April and October last year against any such move,” he said. The ministry is, however, hopeful all differences will be ironed out soon.