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Strong case for opening up coal sector to full competition: Montek

January 24: The Deputy Chairman of Planning Commission, Dr Montek Singh Ahluwalia, is strongly in favor of opening up the Indian coal sector to full competition.

In an exclusive interview to Coal Insights, a sister publication of India Coal Market Watch (ICMW), just before leaving for Davos to attend the World Economic Forum, Ahluwalia said, "There is a strong case for opening up the coal sector to full competition by allowing entry of private mining. If we have done it for petroleum and natural gas, which are more valuable minerals, there is no reason not to do so for coal."

He, however, said that opening up the sector will not be possible immediately as this requires amendment of the Coal Mines (Nationalisation) Act, 1973.

Asked about his views on whether the government should allow large overseas miners to do the initial exploration for coal in India, Ahluwalia said, "This also requires amendment to the Coal Mines (Nationalisation) Act, 1973. At present, private sector participation has to be through the captive mining mechanism and big companies are welcome to participate."

The deputy chairman also said flexibility shown by the government in allowing private investment in setting up captive coal mines appears to be not yielding desired results so far.

"We have introduced flexibility by allowing private investment in setting up captive coal mines. Production from the captive mines was initially expected to be over 100 million tons (mt) by the end of the 11th Plan but, in fact, it is only about 45 mt," he said.

Ahluwalia pointed out that captive mining ran into controversies because of allegations of impropriety in the allocation of coal blocks.

"The government has since then decided that all allocations for private captive mining will be by auction, which will eliminate controversy. The issue of impropriety in the earlier allocations is being investigated. The government has cancelled some allocations. The law will take its course on these past decisions but the position for the future is clear," Ahluwalia added.