New Delhi : The government on Tuesday ended the 45-year-old stranglehold of the State-owned Coal India Limited on coal mining since the industry’s nationalisation in 1973.
With that, it has opened up coal mining to private companies once again. So far, the private sector was allowed to mine coal only for captive use, while the CIL accounted for over 80% of coal production.
Hailing the decision by the Cabinet Committee on Economic Affairs as the most ambitious coal sector reform, Coal and Railway Minister Piyush Goyal told reporters that small, medium and big mines would be offered to private companies for selling coal to anybody without government control.
He said the auction of coal mines and blocs will be in the hands of the state governments.
He said: “This will increase competitiveness and allow the use of best possible technology into the sector. The higher investment will create direct and indirect employment in coal bearing areas, especially in mining sector, and will have an impact on economic development of these regions.” Asked how the move would impact CIL, Goyal said competition would help the state-owned miner.
The CCEA has also approved the methodology for auction of coal mines/ blocks. The methodology gives highest priority to transparency, ease of doing business and ensures that natural resources are used for national development, the statement said.
The move will lead to energy security as 70 per cent of country’s electricity is generated from thermal power plants, the statement said, adding that this reform will ensure assured coal supply and affordable coal leading to affordable power prices for consumers.
Goyal said the move would help ramp up domestic production and reduce dependence on imports, which in turn will save the country precious foreign exchange. The move will also help in bringing down power tariffs, he said.
The Supreme Court had in September 2014 cancelled 204 coal mines allocated to the different government and private companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.