Govt to allot mines to PSUs for supplying coal to MSMEs

Putting an end to the Centre's monopoly over mining and sale of coal, the government today approved allotment of coal blocks to PSUs for sale of the fossil fuel mainly to medium, small and cottage industries.
The move seen as a big-ticket reform in the coal sector is also being viewed as allowing state utilities to commercially mine coal and permitting the PSUs to sell the fuel to private companies.
Besides, the Cabinet also approved a policy for developing underground coal gasification in coal and lignite areas.
The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi, has given its approval for allotting coal mines to central and state PSUs for sale of coal, especially to medium, small and cottage industries, under the provisions of the Coal Mines (Special Provisions) Act, 2015, an official statement said.

Coal Secretary Anil Swarup told PTI, "Keeping in mind the interest of small and medium enterprises the government took the decision to allocate coal blocks to state government and state entities.
"This is without end-use stipulation so that they can in turn mine coal and allocate or sell coal to such entities, thereby removing the end use stipulation which was mandated for coal blocks allocation earlier."

The Secretary said that today's decision will not impact Coal India.
Coal India is the largest domestic provider of the dry fuel and accounts for 80 per cent of domestic production.
The decision "will also enhance domestic production of coal to meet growing demand of the economy, potentially cutting down imports", the statement said.

The statement said 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 per cent 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 would 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, it added.

UCG is a method of extraction of energy from coal/lignite resources which are otherwise regarded as uneconomical to work through conventional mining methods.
A policy on the lines of the existing policy for Coal Bed Methane (CBM) development on a revenue sharing basis will be adopted to offer the blocks through competitive bidding.
An inter-ministerial panel under the Coal Ministry with members from the ministries concerned will be responsible for identification of the areas, marking blocks to be put up for bidding or awarding them to PSUs on a nomination basis.
The Ministry of Coal may engage a consultant for development of the contract document.

"For development of bid documents, work programme, conducting the bidding process, evaluation of bids, monitoring and process protocols etc, the Central Mine Planning and Design Institute Limited (CMPDIL) will be the nodal agency," the statement said.
In the next two years, some explored blocks will be identified for the purpose.
Union Coal and Power Minister Piyush Goyal today said the Cabinet has approved allotment of coal blocks to PSUs and a policy framework on Underground Coal Gasification policy.
"Policy framework for development of Underground Coal Gasification in coal- and lignite-bearing areas in India," he tweeted.