Coal Mining By Private Firms Allowed

The Centre has decided to allow local private companies to enter into coal and lignite mining.

Minister of state for coal Kanti Singh told reporters in New Delhi yesterday after a cabinet meeting, where the decision was taken, that only domestic companies would be allowed to bid for the coal mining blocks that are thrown open to the private sector.

However, they will be permitted to have foreign equity partners subject to clearance from the Foreign Investment Promotion Board.

She said a bill would be moved in parliament to amend the Coal Mines (Nationalisation) Act, 1973 to allow any Indian company to mine coal and lignite not only for captive consumption but also for sale.

 

The cabinet also cleared a proposal to deregulate the prices of D grade of non-coking coal. Singh said Coal India Ltd and Singareni Collieries Company Ltd had been allowed to fix the prices of `E, `F and ~`G grades of non-coking coal till January 1, 2000.

The minister also said an independent body would be set up to step up exploration of coal and lignite resources and allocate blocks on the basis of a competitive bidding process.

Coal mining blocks have already been allotted to 17 power and steel projects for captive use but not even one has started operations.

A regulatory body is also expected to be set up to arbitrate in price disputes. The ministry of surface transport will be asked to augment coal handling facilities at ports.

The minister said that though the deregulation of prices could lead to higher prices, the government was working towards bridging the demand-supply gap of coal by bringing in foreign technology in mining and exploration activities.

Singh said the Chari committee report on an integrated coal policy has already been accepted by the Planning Commission and placed before parliament.

She also announced that the government was negotiating a $1 billion World bank loan to restructure Coal India Ltd, the public sector behemoth. She, however, refused to divulge the details and merely said that discussions in this regard were being held.

There were muted protests from the Left which have consistently opposed any move to privatise the coal sector, which is a traditional vote base for these parties.

S Ramachandran Pillai, member of the politburo of the Communist Party of India (Marxists), said the decision went against the spirit of United Front common minimum programme. The CPM supports the patchwork coalition led by Prime Minister H D Deve Gowda, but has opted to stay out of the government.

The Communist Party of India, which however is a part of the Gowda government, said it would react to the decision only when all the issues were examined. CPI secretary D Raja said the issues were not clear now.

K L Mahendra, president of the Indian Mine Workers Federation, said the new policy would have an adverse effect on the coal industry as well as the economy. If the government can crackdown on the coal mafia that operates at the mines and check corruption in the managements, it will have enough resources to raise coal production, he said.

In Calcutta, the Coal India headquarters seemed unaware of the cabinet decisions. CIL sources said the deregulation of the D grade of non-coking coal would address a long-standing demand of the public sector giant.

Last year, the government deregulated prices of the superior coal grades A, B and C. CIL responded by raising prices for these grades twice on March 31 and on October 20, which enabled it to crank up income by nearly Rs 1,300 crore.However, it found consumers soon opting for D grade of coal which was being sold.