In the next year, there is likelihood for a change in the mode of coal block allocation in the lines of the production/revenue sharing model practiced in the oil and gas industry.
The Coal Ministry of the Government of India has formed an expert committee, comprising of representatives of the NITI Aayog, Department of Industrial Policy and Promotion and the Coal Ministry; to study the relative merits and demerits of the current system of bidding and the production/revenue sharing model. It is expected that the proposed system will gain more enthusiasm in the industry.
At the same time, the panel will also discuss and suggest possible changes in the bidding process in vogue, and a timeframe of one month will be given for the submission of the complete report. The Ministry has taken the initiative of forming the committee due to the tepid response elicited from the industry during the auctions. The fourth and fifth rounds of coal mine auctions for non-power firms were annulled due to the poor response.
During FY17, coal production from the operational auctioned/allotted mines was 15.3 MnT as compared with 15.8 MnT in FY15. Also, production from the captive coal mines was lower due to some mines yet to resume production.
Action has been already initiated against the 5 non-operational coal auctioned mines, and show-cause notices were issued for 15 allotted coal mines for deviation from the scheduled production timelines. Out of these 15 blocks, 6 blocks were not operational due to legal hurdles involved; however, the remaining 9 blocks are expected to be start production in FY19.
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