Cabinet allows commercial mining of coal mines

In a bid to bring efficiency and to aid the ailing power infrastructure in the country, the Union Cabinet has approved the methodology for the auction of coal mines for commercial mining by private companies.

India has world's third biggest coal reserve, it is the third biggest coal producer, despite this India is also the third biggest importer of coal. The country is also third biggest coal consumer accounting for roughly 8 per cent of the world’s coal consumption. About 68 per cent of India’s electricity generation is coal-based.

With this bold reform private companies, including foreign firms would be allowed to mine coal without any price restrictions or end-use of coal clause.

The government aims to bring efficiency, transparency, introduce competition and bring in new investment in terms of technology into the coal mining industry. The move will also create direct and indirect employment. This will also end the monopoly of Coal India in the mining sector.

The Cabinet Committee on Economic Affairs (CCEA) approved new guidelines for sale of coal under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957.

Speaking about the new methodology, Railway Minister, Piyush Goyal said auctions will be forward auction through e-bidding platform. While Coal Secretary Sushil Kumar said government aims to maximise efficiency and increasing revenue is not the objective of allowing the entry of private miners. He opined that the size of coal blocks put on auction would have to exceed 40-50Mt to make commercial mining feasible for companies.