Coal India issues 7 LoAs to raise output through MDO mode

Coal India (CIL) said that it has issued letters of acceptance (LoA) for seven coal projects to be pursued through engagement of mine developer and operators (MDO).

Cumulatively, these projects have production capacity of close to 100 million tonne per year (MT/Y).

The domestic coal miner said that the intent of engaging MDOs through open global tenders is to increase domestic coal output and reduce import dependency to extent possible.

Of these seven projects, three belong to Central Coalfields (CCL) and two to Mahanadi Coalfields (MCL). South Eastern Coalfields (SECL) and Eastern Coalfield (ECL) account for a solitary project each.

The state-owned coal miner is tracking a total of fifteen Greenfield coal projects to mine coal through MDOs. CIL's investment component would be to the tune of Rs. 20,600 Crores largely spread on land acquisition, rehabilitation and resettlement issues. In some cases on railway sidings as well.

The role of MDOs would be to excavate, extract and deliver coal to CIL's coal companies in accordance to the approved mining plan. Ownership of the mines and coal rests with CIL.

Sale of coal would be done by CIL. MDOs would bring to the table technology infusion, bulk of the capex investment, economic viability and efficiency in operations for increased production.

The contract period of engagement is for 25 years or life of mine whichever is less.

Since contracts offered to them are on long-term basis, allied infrastructure at mine projects also would be developed by these private players. They shall facilitate R&R issues, land acquisitions, green clearances and coordination with State and Central Pollution Boards for fast tracking the required approvals.

CIL is a coal mining company engaged in the production and sale of coal. As of 30 September 2022, the Government of India held 66.13% stake in the company.

The company's consolidated net profit zoomed to Rs 6,043.99 crore in Q2 FY23 from Rs 2,932.73 crore in Q2 FY22. Net sales during the quarter increased by 29% YoY to Rs 27,538.59 crore.

The scrip rose 0.04% to currently trade at Rs 231.65 on the BSE.

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