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Deregulate coal sector to allow commercial mining: Govt Panel
As coal shortage remains a persistent issue for industry, a Working Group headed by then Steel Secretary PK Misra says that Government should deregulate coal sector and allow commercial mining to bring in competition and thereby improve efficiency.
The Group, which has other 46 members from ministries including Coal and Planning Commission, says, “As a first step, captive block owners, who have surplus coal after meeting the full normative requirements of their end-use plants should be allowed to sell the excess coal to registered end-users at a fair price to be determined by a regulator. A market platform where all the captive block owners (as sellers) and end-users (as customers) may trade, needs to be created. Over a period of time, sale of coal should be allowed freely at market determined prices.”
The Group, set up by the Plan Panel, will form basis of policy formulation for steel sector in the 12th plan (2012-17).
It further says that with initialisation of deregulation a Coal Regulator needs to be appointed with key responsibilities of mine plan, fixing prices for sale of coal and checking illegal mining.
At present, Coal India Limited (CIL) enjoys monopoly in production and development of coal assets except in case of coal for captive use. The panel says that stagnation in coal production is largely due to restrictions on investment by private sector. So, there is a need to take policy measures for faster development of captive blocks. For this, it is recommended to set up a single window system for granting clearances, permit coal mining and associated activities through contract mining, allow companies to sell surplus coal left after captive use and provide flexibilities to adjacent block allottees to develop blocks as a single entity.
It is also recommended to unlock underexploited coking coal reserves through calibrated deregulation. The Indian coal mining industry is dominated by CIL which produces more than 80 per cent of the total coal production of the country. Of the total raw coal production of 531 million tonnes per annum, less than 17-18 million tonnes are of washable grade raw coking coal, despite the fact that the country has 33 billion tonnes of reserves of coking coal and CIL has a share of 90 per cent in the reserves. As the focus of CIL is on power grade coal, coking coal production in the country has stagnated for last several years.
For this, the Group suggests that Bharat Coking Coal Limited, a subsidiary of CIL, which controls the coking coal mines of the Maharatna company, should be de-merged from CIL and be made a separate company since it has not performed under CIL. This new entity can continue to be under the Government to begin with. Any non-coking coal that is mined in the process can be offered to CIL at a reasonable price to be fixed by the regulator.
“The Government may also consider additionally or in substitute of the above, offering coking coal assets to steel producers for development on tender basis to go to the highest bidders. The steel companies getting such mines should also be allowed to sell the surplus coal mines in the open market. There are several virgin coking coal assets currently lying undeveloped with CIL and for which CIL does not have plan for development in the 12th Plan. These assets may be put on auction and the highest bidder may be allocated these blocks,” it adds.
Over the last few years, India has become over-dependent on imported coking coal. Dependence on import of non-coking coal is also likely to go up to sustain the growth of power sector and other sectors.
As coal shortage remains a persistent issue for industry, a Working Group headed by then Steel Secretary PK Misra says that Government should deregulate coal sector and allow commercial mining to bring in competition and thereby improve efficiency.
The Group, which has other 46 members from ministries including Coal and Planning Commission, says, “As a first step, captive block owners, who have surplus coal after meeting the full normative requirements of their end-use plants should be allowed to sell the excess coal to registered end-users at a fair price to be determined by a regulator. A market platform where all the captive block owners (as sellers) and end-users (as customers) may trade, needs to be created. Over a period of time, sale of coal should be allowed freely at market determined prices.”
The Group, set up by the Plan Panel, will form basis of policy formulation for steel sector in the 12th plan (2012-17).
It further says that with initialisation of deregulation a Coal Regulator needs to be appointed with key responsibilities of mine plan, fixing prices for sale of coal and checking illegal mining.
At present, Coal India Limited (CIL) enjoys monopoly in production and development of coal assets except in case of coal for captive use. The panel says that stagnation in coal production is largely due to restrictions on investment by private sector. So, there is a need to take policy measures for faster development of captive blocks. For this, it is recommended to set up a single window system for granting clearances, permit coal mining and associated activities through contract mining, allow companies to sell surplus coal left after captive use and provide flexibilities to adjacent block allottees to develop blocks as a single entity.
It is also recommended to unlock underexploited coking coal reserves through calibrated deregulation. The Indian coal mining industry is dominated by CIL which produces more than 80 per cent of the total coal production of the country. Of the total raw coal production of 531 million tonnes per annum, less than 17-18 million tonnes are of washable grade raw coking coal, despite the fact that the country has 33 billion tonnes of reserves of coking coal and CIL has a share of 90 per cent in the reserves. As the focus of CIL is on power grade coal, coking coal production in the country has stagnated for last several years.
For this, the Group suggests that Bharat Coking Coal Limited, a subsidiary of CIL, which controls the coking coal mines of the Maharatna company, should be de-merged from CIL and be made a separate company since it has not performed under CIL. This new entity can continue to be under the Government to begin with. Any non-coking coal that is mined in the process can be offered to CIL at a reasonable price to be fixed by the regulator.
“The Government may also consider additionally or in substitute of the above, offering coking coal assets to steel producers for development on tender basis to go to the highest bidders. The steel companies getting such mines should also be allowed to sell the surplus coal mines in the open market. There are several virgin coking coal assets currently lying undeveloped with CIL and for which CIL does not have plan for development in the 12th Plan. These assets may be put on auction and the highest bidder may be allocated these blocks,” it adds.
Over the last few years, India has become over-dependent on imported coking coal. Dependence on import of non-coking coal is also likely to go up to sustain the growth of power sector and other sectors.
