You are here: Home » PTI Stories » National » News
Business Standard

Commercial coal mining may cut import bill by Rs 30,000 cr

Topics
Disaster Accident

Press Trust of India  |  Mumbai 

The decision to allow commercial coal mining will not just boost production but also help save Rs 30,000 crore of imports, through the substitution of imported non-coking coal with domestic production, says Crisil.

The Cabinet Committee on Economic Affairs (CCEA) recently approved the methodology for auction of mines for sale of coal, under which the highest bidder will be given mining rights and there are no restrictions on end use.

"The move to allow the private sector to commercially mine coal will boost both production and mining efficiency. Moreover, the substitution of imported non-coking coal with domestic production could save roughly Rs 30,000 crore of coal imports," the rating agency said in a statement here.

Currently, about 94 per cent of the mining is being done by government-owned entities Coal India and Singareni Collieries Company.

Despite the recent increase in domestic coal production, India still meets a fifth of its annual requirement through imports, costing about Rs 1 lakh crore.

"Participation of private miners, if allowed, would increase much-needed competition, enhance productivity by facilitating the use of latest equipment, technology and services through higher investments," it said.

Considering that almost half of the domestic coal reserves of 300 billion tonne, mostly non-coking coal, are yet unallocated, commercial mining can have far-reaching impact.

"Coal imports, especially of the non-coking variety, should reduce once the proposed regulatory changes to admit private sector companies in coal mining materialise. It will also help the country come closer to its vision of producing 1.5 billion tonne of coal annually by 2022," Crisil Ratings senior director Sachin Gupta said.

He further said that sectors like power, cement and steel will gain the most being the largest consumers of non-coking coal.

In fiscal 2017, India imported 150 million tonne (MT) of it costing Rs 59,000 crore. As much as 90 per cent of this was by imported-coal-based power plants, independent private thermal power plants and captive power plants.

For imported-coal-based power plants, coal imports will, however, continue due to their specific requirements.

"Nonetheless, imports by independent thermal power plants and captive power plants can be substituted, once commercial mining picks up. These accounted for nearly 50 per cent of the non-coking coal imports which can potentially result in an import bill saving by Rs 30,000 crore," Gupta reiterated.

As for coking coal, the benefits are moderate because India has limited reserves of this fuel, and imported about 40 MT for Rs 41,000 crore last fiscal.

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

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: Tue, March 06 2018. 17:15 IST
RECOMMENDED FOR YOU