In the most significant move involving the Indian coal sector since its nationalisation in 1973, the Union Cabinet on Tuesday made a decision to end the monopoly status of state-miner Coal India Ltd (CIL) by opening commercial mining for the private sector. This will also help to bring latest technology in coal mining as well as to boost the domestic production of fossil fuel, the minister added.
The official statement said the methodology approved by cabinet on Tuesday gives highest priority to transparency, ease of doing business and ensures that natural resources are used for national development.
Coal India Chairman Gopal Singh, in recent media interviews said that his organisation welcomes competition in the sector but competition depends on when the government decides to go for the auctions. About 68 per cent of India's electricity generation is coal-based.
The trade union leaders apprehend that the move will gradually kill Coal India as private players will not do mining ethically.
Coal secretary Susheel Kumar had first announced the government's decision to open coal sector to private companies on February 2, 2017, and on March 27, released a discussion paper on "Auction of Coal Mines for Commercial Mining". "This methodology shall incentivise them with increased revenues which can be utilised for the growth and development of backward areas and their inhabitants including tribals. Further, as merchant power prices fall, power utilities and manufacturing industry, too, will benefit from lower energy costs".
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The move comes as India seeks to cut down its reliance on imported coal amid power shortages caused by the lack of availability of the fuel.
Besides, it will bring in higher investment and help create direct and indirect employment.
West Bengal, Odisha, Jharkhand, Chhattisgarh, and Madhya Pradesh are the major coal bearing sates. Though the state-run miner's production has increased by more than 100 million tonnes in the past five years, it has consistently missed government targets.
According to him, image of Coal India will improve post government's move.
In September 2014, the Supreme Court had cancelled 204 coal mining leases allocated to the public sector and private companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.