Indian Government is considering a flexible approach for private players in commercial mining to boost the coal sector.
Sources familiar with the matter have indicated that the government aims to affix minimum qualification criteria for companies to participate in the auction for commercial mining. It was informed that the government has identified 15 large coal blocks for pilot round of bidding, for which related policies would be finalized soon.
As per the official, net worth and experience were marked as the minimal qualification for the private bidders. Besides, the companies would be asked to submit upfront payment and bank guarantees similar to captive coal mines auction to settle down various tedious norms of participation.
The official stated that many private cement and steel companies didn’t participate in latest auction because they want to hold their cash for the upcoming auction for commercial coal mining.
The identified coal mines in the pilot round are envisaged of producing 4 MnT coal per annum.
It is pertaining to note that the latest coal auction of captive coal mines for steel, cement and power got a lukewarm response, wherein only six out of 27 blocks have received adequate bids.
Earlier, it was mandatory that only companies which are registered in India can participate in the coal block auction process as per the Coal Mines Nationalization Act 1973. However, the coal Mines special provision act 2015 tweaks the earlier law by opening up commercial coal mining for private and public entities as well.
The guidelines for commercial coal mining were laid last year, which specifies that government will not regulate the production, marketing and sale of coal and the prices pertaining to the mining process.
The introduction of FDI is also seen a long-term prospect of government to boost the coal demand, but had witnessed severe protect from trade unions.
The government aims to negotiate with trade unions opposing 100% FDI and help them to understand the impact of imported coal to the economy and employment, before starting the auctions.
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