Government allows commercial coal mining with revenue sharing mechanism, liberalises mineral sector

Finance Minister Nirmala Sitharaman on Saturday said that India will further open up commercial coal mining, with revenue sharing arrangement instead of the regime of a fixed rupee per tonne. Coal mining will be opened to boost the fuel's production in the country and end the state's monopoly on the fuel and make it available at market prices. Any party can bid for a coal block and sell in the open market.

The announcement was made while detailing the fourth tranche of Rs 20 lakh crore stimulus package that was announced by Prime Minister Narendra Modi on Tuesday to mitigate the economic fallout of the coronavirus pandemic. The package is equivalent to 10% of India's GDP and includes both fiscal and liquidity measures to make India self-reliant under the 'Aatmanirbhar Abhiyan'.

She said coal bed methane will be auctioned. The government will spend Rs 50,000 crore on evacuation infrastructure. Nearly 50 coal blocks will be available for auction in the near future. Upfront payment ceiling will be applicable. For gasification from coal, new allotments will be done for new diversified investments.

She said India has the third-largest valued coal availability in its untapped mines. Yet we still import coal due to which emerging sectors have to suffer as the raw material is not available. Regulations are required when there is a shortage. But this country has abundant coal. India imports around 230 million tonnes (mt) of coal.

In an attempt to attract investments in coal mining, the government had earlier approved the promulgation of Mineral Laws (Amendment) Ordinance 2020. It allowed coal mining by any company present in sectors other than steel and power and did away with the captive end-use criteria.

While briefing the press, FM Sitharaman said there will be further reforms in the mineral sector, with no distinction between the captive and non-captive mines that will allow the transfer of mining leases.

The government has introduced a joint auction mechanism for the mineral sector to facilitate a seamless composite mining-cum-exploration-cum-production facility for the mineral sector. It said, 500 mining blocks will be allocated for this and joint auction will take place. The aforesaid reforms will allow the sale the unused and surplus mineral by new mining lease facility.

Bauxite and coal mineral blocks will be jointly auctioned to save electricity, boost employment, and develop state of the art technology.

Finance Minister Nirmala Sitharaman today announced structural reforms in coal, minerals, defence production, airports and civil aviation, power distribution, space and atomic energy. The last of the five-part economic package will be released tomorrow.