Coal Mine Auctions

Why in news?

The Central government has launched the auction of 41 coal blocks for commercial mining.

What is the decision?

• The decision was part of the announcements made by the Centre under the Atmanirbhar Bharat Abhiyan.
• The private players will be allowed to mine coal for commercial mining purposes, without any end-use restrictions.
• Successful bidders will obtain leasing rights from State governments to mine a coal block for a certain period.
• A revenue-sharing basis is opted for payment as against the current method of paying fixed rupee per tonne.
• In the revenue-sharing basis, a percentage of revenue share (final bid) has to be paid to the government on the sale of coal.
• The operational efficiency parameters have been liberalised.

Why mining was nationalised previously?

• India has a long history of commercial mining, starting from 1774.
• In second half of 20th century, the private players could not make adequate capital investments to meet the energy needs of India.
• Some private miners were found to be using unscientific coal mining practices and providing poor working conditions for labour.
• This led to the Central Government to nationalise private coalmines.
• The nationalisation was done in two phases, from 1971-1973.
• The Coal Mines (Nationalisation) Act, 1973 was enacted for this purpose.
• This Act restricted coal mining operations mainly to government entities.

Does India import coal?

• India imports around 240 million tonnes (mt) of coal a year valued at about ₹1.7 lakh crore.
• The 41 mines opened for auction now can hit a peak production of 225 mt in 2025-26, saving foreign exchange.
• A High Powered Expert Committee (2017) recommended a shift from the allocation of coal blocks for own consumption to commercial mining.
• Commercial mining would help tap the locally available reserves.
• It would also increase the availability of coal in the Indian market at a cheaper price making India less dependent on imports.

What is the significance of the decision?

• The private sector involvement would help realise ₹33,000 crore of capital investment in the next five years.
• It can give a leg up to the economic activity within the country.
• It would play an important role in job and income creation.
• Higher production and surplus availability of coal may lead to fall in its prices.
• This, in turn, may reduce the cost of electricity consumed by the households and industries.
• Currently, coal-fired plants generate about 70% of India’s electricity.
• However, there needs to be a fine balance between short-term cost savings and long-term environmental impact.

Source: Business Line