Coal news and updates

Modi government to seek Cabinet nod to allow commercial mining of coal by state utilities

The government is poised to undertake the next big-ticket reform in the coal sector by allowing state utilities to commercially mine the fuel, after which it will finalise protocols for opening the door to private companies.

The coal ministry has approached the Cabinet seeking approval for allotment of mines to state government utilities for non-captive use, said two officials aware of the development. The move will lead to resumption of commercial mining by state corporations that was barred by the Supreme Court in October 2014.

"Restart of commercial mining by state utilities will be the first step towards opening the coal sector. This will help in testing the waters before allowing private companies to mine commercially," one of the officials said.

The government is holding a second round of consultations with private companies on Wednesday to arrive at a methodology for allowing them to mine and sell coal. After consulting industry, the government will draft the rules and publish them online for consultations. The first round of talks was held on June 23.

The coal ministry will try to resolve two key questions during the discussions— the basis on which auctions are to be held and eligibility criteria for companies. The official said the coal ministry is considering two auction models—revenue sharing and lump sum payment. In the first, companies that pledge the highest share of revenue with the government will win. The second will be determined by the highest amount bid.

source: http://economictimes.indiatimes.com