You are here: Home » Economy & Policy » News
Business Standard

Cabinet allows states to mine & sell coal, ends monopoly of Centre

Decision ends monopoly of Centre

BS Reporter  |  New Delhi 

Coal is stockpiled at the Blair Athol mine at the remote Bowen Basin coalfield near Moranbah
Coal is stockpiled at the Blair Athol mine at the remote Bowen Basin coalfield near Moranbah

Ending the 41-year-old monopoly of the central government over mining and sale of coal, the Cabinet Committee of Economic Affairs (CCEA) approved the allotment of coal mines to states for mining and commercial sale to medium and small industries in their state.

The statement of the government said CCEA gave its approval for allotting coal mines to central and state public sector undertakings for sale of coal, especially to medium, small and cottage industries, under the provisions of the Coal Mines (Special Provisions) Act, 2015.

Business Standard had earlier reported that the ministry of coal would allot non-operational mines to state governments for commercial mining and sale of coal to respective utilities for end-use in power, iron, steel, cement and allied sectors.

This move is likely to benefit the mineral-rich states to earn surplus revenue, which were until now earning royalty from private companies mining coal for captive use. This is pursuant to the enabling act on commercial mining and sale of coal in the new Coal Ordinance (Special Provisions), 2014.

Currently, states are allotted coal blocks but with specified end-use such as power production, steel and iron production etc.

“Consequent to this Cabinet decision, such coal blocks will not be having any specified use. So, the coal blocks which the states would mine, in turn, would be able to allot that coal to any industry. This will ultimately benefit the medium and small scale industries, including small power plants, which can’t source coal from Coal India,” Anil Swarup, secretary, ministry of coal, told Business Standard.

OTHER APPROVALS
  • Pact with Met offices of UK, South Korea and Australia to jointly develop a model for better climate and weather prediction
  • Pact with Spain to strengthen ties in the ports sector
  • Pact on energy saving and energy efficiency among BRICS countries
  • Sale of 0.99 acres of Air India at Coimbatore for Rs 19.81 cr
  • Amendments in the Constitution (Scheduled Castes) Order Act, 1950, to modify the list of Scheduled Castes from Chhattisgarh, Haryana, Kerala, Odisha and West Bengal and in the Central List of Other Backward Classes of Chhattisgarh, Haryana and Kerala
  • Ex-post facto approval to amendments in the Commercial Courts, Commercial Division and Commercial Appellate Division of High Courts Bill, 2015

The government’s statement said this shall also enhance domestic production of coal to meet the demand of national economy, thereby reducing import. The coal-bearing states shall be getting additional revenue from such coal mines.

“The revenue would be 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 installments in the first year of allotment,” said the statement.

It is expected that the incremental coal produce 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 considerably between demand and supply.

Gasification in coal

In another key decision, the CCEA approved a policy framework for development of underground coal gasification in coal and lignite bearing areas in the country. A policy based on revenue sharing will be adopted for offering the blocks through competitive bidding. Over the next two years, some explored blocks will be identified for offer.

UCG is a method of extraction of energy from coal/lignite resources which are otherwise regarded as uneconomical to work through conventional mining methods. In the perspective of

CCEA allowed ministry of coal to engage a consultant for development of the contract document. For development of bid documents, work programme, conducting the bidding process etc., Central Mine Planning and Design Institute Limited (CMPDIL) will be the nodal agency, said CCEA.

Dear Reader,


Business Standard has always strived hard to provide up-to-date information and commentary on developments that are of interest to you and have wider political and economic implications for the country and the world. Your encouragement and constant feedback on how to improve our offering have only made our resolve and commitment to these ideals stronger. Even during these difficult times arising out of Covid-19, we continue to remain committed to keeping you informed and updated with credible news, authoritative views and incisive commentary on topical issues of relevance.
We, however, have a request.

As we battle the economic impact of the pandemic, we need your support even more, so that we can continue to offer you more quality content. Our subscription model has seen an encouraging response from many of you, who have subscribed to our online content. More subscription to our online content can only help us achieve the goals of offering you even better and more relevant content. We believe in free, fair and credible journalism. Your support through more subscriptions can help us practise the journalism to which we are committed.

Support quality journalism and subscribe to Business Standard.

Digital Editor

First Published: Thu, December 17 2015. 00:26 IST
RECOMMENDED FOR YOU
.