Govt approves allocation of coal mines to Central, state PSUs for sale of coal

Taking into consideration high demands of coal in the country than the current level of production and supply, the Cabinet Committee on Economic Affairs (CCEA) on Wednesday gave its approval for allotting coal mines to Central and State Public Sector Units (PSUs) for sale of coal, especially to medium, small and cottage industries, under the provisions of the Coal Mines (Special Provisions) Act, 2015.

The allocation is expected to enhance domestic production of coal to meet the demand of national economy and reducing import.

The coal bearing states will get additional revenue from such coal mines equal to the amount of royalty on the quantity of coal produced on a monthly basis during the lease period/life of the mine as well as one time upfront payment, which is 10 percent of the intrinsic value of coal in the mine in three instalments in the first year of allotment.

It is expected that the incremental coal produced from such coal mines will cater to the unmet demand of the coal in the country, especially of medium, small and micro industries and bridge the gap between demand and supply considerably.

During the year 2014-15, as against a total consumption of 825.6 million tonnes (provisional), the domestic production of coal was 612.4 million tonnes (Provisional).

The gap between consumption and domestic supply is met through imports. Due to sustained efforts for increase in domestic production, import of coal that was showing positive growth since 2011-12, registered a negative growth of 12.2 percent during April-November 2015. However, the gap between the demand and the supply continues to be, large.