Govt liberalises coal, mineral sectors

Finance Minister Nirmala Sitharaman announced commercial mining of coal by the private sector, ending government monopoly in the sector.

In her fourth tranche of the economic package, she said commercial mining will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne. The move will bring competition, transparency and private sector participation in the coal sector.

“Commercial mining of coal on a revenue-sharing basis would help more coal availability at market prices. So this will be far more efficient. Liberalised entry to allow people to participate in a range of coal blocks and those who produce well before the deadlines incentive would also be given,” the finance minister said.

Earlier, only captive consumers with end-use ownership could have participated in the bidding. But now any party can bid for a coal block and sell it in the open market.

Stating that entry norms would be liberalised, the minister said that nearly 50 blocks will be offered immediately for the bidding, she said. This is being done to reduce import of substitutable coal and increase self-reliance in coal production.

“India which has the third-largest valued coal availability in its existing and untapped mines and we still import coal. Sometimes the energy sector suffers because of non-availability of raw material so the regulations are required. Regulations are required when there is shortage. This country has abundant coal and we are regulating it,” she said.

Rs 50,000 cr for building evacuation infrastructure

Against the earlier provision of the auction of fully explored coal blocks, now even partially explored mines will be auctioned, a move that will allow the private sector participation in exploration.

Also, the government will invest Rs 50,000 crore for building evacuation infrastructure. The move will help in evacuation of coal by Coal India which is targeting one billion tonnes of production by 2023-24 as well as fuel production from private blocks.

The sum of Rs 50,000 crore also includes Rs 18,000 crore worth of investment in mechanised transfer of coal (conveyor belts) from mines to railway sidings. This measure will also help reduce environmental impact.

Coal gasification and liquefaction will be incentivised through rebate in revenue sharing, the minister said adding coal bed methane (CBM) production  would also be encouraged.

“In order to convert coal into gas we are providing incentives. Incentives so that the coal also be used and environmental commitment is honoured and we benefit from gasification of coal,” the finance minister said.

Coal bed methane (CBM) extraction rights will be auctioned from Coal India Ltd mines. “Coal bed methane will also be auctioned. These coal beds with Coal India but untapped can benefit the country. Coal bed methane will happen through auctioning,” the minister said. 

Policy reforms in mineral sector

The Centre said it will rationalise stamp duty in the mining sector, eliminate the difference between captive and non-captive mines, introduce seamless composite exploration-cum-mining-cum-production regime and auction 500 mining blocks.

The introduction of a seamless composite exploration-cum-mining -cum-production regime will bring many more mineral blocks into auction.

The blocks having potential for mineral production will be auctioned for composite licence wherein the successful bidder will complete the exploration and start production seamlessly.

The move, the government said, will allow transfer of mining leases and sale of surplus unused minerals, leading to better efficiency in mining and production.

Amendments will be made in the Mines and Minerals (Development and Regulation) Act to remove the distinction between captive and non-captive mines.

Captive mines will be allowed to sell surplus unused minerals, leading to better efficiency in mining and production and better conservation of the minerals.

The ministry of mines, the finance minister said, is in the process of developing mineral index for different minerals.

The government said that the introduction of joint auction of bauxite and coal mineral blocks will enhance aluminum industry’s competitiveness. “Bauxite and cheap power sources are the basic requirements for the aluminium industry. In order to ensure ready availability of these two resources, joint auction of bauxite and coal will be enabled,” the government said.

It said that 500 mining blocks would be offered through an open and transparent auction process by amendments to MMDR Act.

Transfer of mining leases will be allowed to ensure ease of doing business.

The structural reforms are announced by the central government for the mineral sector to boost mineral production, employment generation and bring in state-of-the-art technology, especially in exploration of minerals.

Manorama Yearbook app is now available on Google Play Store and iOS App Store