Commercial coal block auction by March 2018

Commercial coal block auction by March 2018

By NAVTAN KUMAR | NEW DELHI | 26 November, 2017
It will break the 41-year-old monopoly of the state-owned Coal India Limited.

Decks have been cleared for the long-awaited commercial auction of coal blocks, with the Cabinet Committee on Economic Affairs (CCEA) likely to finalise the methodology for allocation of coal mines for commercial mining soon.

According to a source, to begin with, the Ministry of Coal plans to put 5-10 coal blocks for commercial mining. A discussion paper on the modalities for allocation of coal mines through auction route was earlier placed in public domain for comments. Enabling provisions have been made in the Coal Mines (Special Provisions) Act, 2015, for allocation of coal mines through auction.

While captive mines are allocated to companies to run their own plants only, commercial mines are allocated without specifying the end use. Thus the owner of commercial mines can sell the coal to buyers across any sector such as power, steel and cement.

The source said the CCEA is likely to finalise the modalities next month and commercial auction may be carried out by March 2018. The CCEA is also likely to decide on which coal mines could be put for commercial auction.

This will be for the first time in four decades that the country will throw open commercial coal mining to private companies, a step which is expected to make the country self-sufficient in energy.  This will break the 41-year old monopoly of the state-owned Coal India Limited (CIL).

In 2015, the Coal Ministry had started the process to auction some of the 214 coal mines which were de-allocated following the Supreme Court order. The Apex court said that the companies would have to return the coal blocks by March 2015. Subsequently, the Coal Mines (Special Provision) Act was passed in 2015 allowing the government to auction mines to private entities for mining and commercial sale.

The three phases of the coal auction for nearly 45 coal-producing blocks were conducted in 2015, but these were auctioned for captive usage by the company only. Sale of coal on commercial basis was not allowed.

In February this year, the Ministry announced opening of coal sector for commercial mining. On 27 March, the ministry released a discussion paper on the topic of “auction of coal mines for commercial mining”.

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