The government may in near future scrap the present system of allocating coal mines for captive use and instead only auction mines for commercial use to private as well as foreign companies with a view to boost domestic product and cut imports. The move, which would not just help attract foreign investment but also bring in efficiency and promote competition, follows government’s decision of opening up the coal sector to commercial mining by private entities.
The cabinet had last week approved auctioning of coal mines to any firm bidding the highest per tonne price. At present, private sector firms are only allowed to mine coal for use in cement, steel, power and aluminium plants. Coal India Ltd (CIL) is the sole commercial miner with 80% market share. This will be another experience of commercial mining auctions. So we will see and compare whatever is better for the country in the longer term,” coal secretary Susheel Kumar told PTI in an interview.
Stating that the country was slowly moving towards free market in the coal sector, the secretary said CIL ought to improve its efficiency else it “will not be in the market. On deadline for commercial mining auctions, the secretary said : “Our expectation is that we will complete the process of auction by March 2019. The government had in 2014 auctioned 29 mines to private players and states for capital use in power, steel, aluminium and cement plants. In the following year, it permitted the allotment of coal mines to states for mining and commercial sale to medium, small and cottage industries. Close to 16 mines were allotted to several states.