To reduce the dependency on imports, meet the growing coal demand, support self-reliant India initiative and boost the economy, the government is planning to introduce a policy on coal mining financing. It believes that it is prudent to involve private players like Vedanta Ltd, Hindalco Industries Ltd and Adani Group for managing coal mines across Chhattisgarh, Jharkhand, Odisha and other coal-bearing states
Even as the global push towards cleaner energy transition gains momentum, coal remains to be one of the major indigenous energy resources in India and also the dominant fuel for power generation. In the FY20, coal production was recorded at 729.10 million tonnes (MT) and marked 304.88 MT in FY21 (as of October 2020). Subsequently, the government allowed commercial mining by private entities to raise India’s coal output and last year it approved the promulgation of the Mineral Laws (Amendment) Ordinance, 2020, to attract investment in coal mining.
The Centre is unlocking more opportunities for private players like Vedanta, Hindalco Industries, Sarda Energy & Minerals Ltd, Adani Group Chhattisgarh in coal mining to attain self-reliance in the sector. However, for sustainable utilization of coal at mines in Chhattisgarh, Odisha, Jharkhand and more, there is a need to look into the reforms from a multidimensional viewpoint.Recently, the government announced auction of 67 coal mines. This is seen as a major step towards strengthening the 'Aatmanirbhar Bharat' initiative. Since the commencement of the auction regime in 2014, this would be the highest number of mines offered in a particular tranche.
During the pre-bid virtual meeting for the second tranche of coal mining auction, the government stated that it would be introducing a policy on project financing in coal mining. The policy is expected to boost private commercial mining in India. Amid the outbreak of COVID-19 pandemic, the government conducted a virtual meeting with the prospective bidders reinstating its vision to accelerate the second tranche of commercial coal mining auction. However, the ministry of coal will be analyzing the complete situation before making any further move.
The government is of a view that with commercial coal mining, more new investments would be introduced to boost the socio-economic development in the coal-bearing states and generate huge employment opportunities. Private players like Vedanta, Hindalco and Adani Group mining Chhattisgarh have won different contracts across the coal mines in Odisha, Jharkhand and other states. A few months back, Vedanta Limited bagged the contract of one of the largest mines at Radhikapur in Odisha, whereas, Hindalco Industries remained the biggest bidder for the Chakla mine in Jharkhand. The Adani Group had also planned supercritical units of 1,600 MW in the Godda district of Jharkhand and got approvals.
The coal blocks offered for mining have small and large reserves, and fully and partially explored blocks in Chhattisgarh, Jharkhand, Odisha, Madhya Pradesh, Maharashtra and Andhra Pradesh. In these states, regions including Raigarh, Kathautia, Sahapur, Godda and more are already being analyzed by large corporate houses like Adani Group Chhattisgarh, Vedanta, Hindalco Industries, Sarda Energy & Minerals Ltd.As per the Union Coal Minister, Mr Pralhad Joshi, “19 mines were successfully auctioned in November 2020 during the first tranche of commercial coal mining. It is expected to generate a total revenue of whopping Rs. 6,656 crore per annum from mines spread over the following five states – Madhya Pradesh, Chhattisgarh, Odisha, Jharkhand and Maharashtra.”
Union Finance Minister Nirmala Sitharaman had earlier planned to end the monopoly of the state-owned Coal India Limited in coal mining and welcome private companies for better transparency and enhancing the productivity.With huge investments from private players like Hindalco Industries and Adani Group, across coal mines in Chhattisgarh, Jharkhand, Odisha, Andhra Pradesh and more, these regions are developing and increasing the domestic production.
The new policies are expected to address the key problem of supply shortages. They will let the private entities access the commercial coal mines to boost production and mining efficiency. Despite owning the fourth-largest coal-reserve in the world and being the second-largest producer, India is the second-biggest importer of coal. Therefore, to utilize the full potential of Indian mines, a slew of policies to promote commercial mining of coal in the country is under process. To meet the surge in coal demand across India, it becomes important to contemplate the commercial sales of coal by private developers through a suitable framework for fair pricing, balanced profits, etc.
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