New Delhi: Trade unions are blocking the Central government’s landmark decision to auction commercial mining of coal in order to ramp up production in the country. The decision to this effect was taken last year, but nothing has moved so far even as India continues to depend on imported coal to meet its requirements. The country had to import 235.2 million tonnes (MT) of coal in 2018-19 valued at Rs 1.7 lakh crore, an increase of about 24% in the last three years.
As per the latest figures of the Ministry of Coal, during 2017-18, the country imported 208.2 MT of the dry fuel valued at Rs 1.3 lakh crore, while in 2016-17, India imported 190.9 MT of coal valued at Rs 1 lakh crore.
In a major reform in the coal sector since its nationalisation in 1973, the government last year allowed private companies to mine coal for commercial use, ending the monopoly of Coal India Limited (CIL). The Cabinet Committee on Economic Affairs (CCEA), chaired by Prime Minister Narendra Modi, had in February 2018 approved the methodology for the auction of coal mines/blocks for sale of coal under the Coal Mines (Special Provisions) Act 2015, under the Mines and Minerals (Development and Regulation) Act 1957.
Under these provisions and rules, the government, according to a senior official, has allocated 25 coal mines (24 to private companies and one to a government company) through electronic auction. The methodology for the auction of coal mines/sale has been approved by the government and an order has been issued in this regard, he added.
However, after the announcement, the Indian National Mine Workers’ Federation (INMF), affiliated to the Indian National Trade Union Congress (INTUC), threatened to strike work in CIL to protest against the government’s decision. Sources said that the government decided to keep the issue on the backburner until the general elections. No progress has been made in this area ever since and the delay in implementing coal reforms is taking a toll on the Indian economy.
The country has abundant coal reserves—around 319.02 billion tonnes as per estimates. Every year, around 3-5 billion tonnes of proved resources are being added through fresh exploration of the coal inventory in India. If the present rate of extraction prevails in the country, coal would last for several decades.
However, despite all this, the country is not self-sufficient in terms of coal and has to buy it from outside. According to a senior official of a CIL subsidiary, this is because there is limited availability of coking coal, an essential input for steel making, in the country. Moreover, power plants designed on low ash imported coal also continue to import coal for their requirements, he added.
As per the current import policy, coal is kept under Open General Licence (OGL) and consumers are free to import coal from the source of their choice as per their contractual prices on payment of applicable duty.
Reforms in the coal sector started in 2015, when the Ministry of Coal started the process to auction some of the 214 coal mines that were de-allocated following the Supreme Court order. The apex court said that 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 auction for nearly 45 coal-producing blocks were conducted in 2015, but these were auctioned for captive usage by companies only. The sale of coal on commercial basis was not allowed. In February 2017, the Ministry announced opening up of the coal sector for commercial mining. In March 2017, the Ministry released a discussion paper on the topic of “auction of coal mines for commercial mining”. Thereafter, the government decided to allow auction of commercial mining of coal by private companies.
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MAKE CHART
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Year Imported Coal (MT)
2016-17 190.953
2017-18 208.272
2018-19 235.240