Coal mine auctioning may be restricted to commercial use to boost output

Govt also looking to privatise and split Bharat Coking Coal

With miners, which took coal blocks for own use, performing poorly, the government is planning not to auction mines to captive users. Instead, it will allot or auction rights only for commercial use of coal.

The allocation would be decided based on the production plan and revenue share to the government.

The Union ministry of coal is also looking at a proposal to privatise and split Bharat Coking Coal (BCCL) that holds lease to the Jharia coalfields. 

The lease areas of the Coal India subsidiary could be divided into five to six parts, each held by a different company. Each of these companies could be privatised. The privatisation could take place through a profit-sharing model.

The proposal is to ask existing captive mining lease holders, which have not yet started production, to surrender their blocks and pay a penalty of 10 per cent of the bid security. 

These blocks were given out through e-auction by the earlier NDA government after the Supreme Court judgment cancelled 204 coal mine allocations in 2014. Of the 85 firms awarded through four tranches of auction, 29 were already producing coal when their licences were cancelled.

There are only three mines that have met their annual peak-rated capacity in 2018-19 and only one is sticking to its mining plan. More than a dozen had seen zero production in the last financial year. The companies owning these mines — from state agencies of Rajasthan, Telangana, and Chhattisgarh to NTPC, and private companies Balco as well as Hindalco – have listed challenges faced by their mines at a recent meeting with the coal ministry.

Only a three-month window could be given to the lease holders, including state government-owned companies, for starting production. These (returned coal mines and blocks) could then be auctioned again for commercial mining, within six months of being returned.

A high-level committee, constituted by the government to lay out the road map for the sector, has found that there is discrimination between public and private companies on various issues, including land acquisition and grant of lease. It was, therefore, felt that the Coal Bearing Areas Act, 1957, should be amended to give private companies a level-playing field in land acquisition. Besides, provisions in the Minerals & Mines Development Regulation Act and Coal Mining Special Provisions Act that give preference to government companies should be removed.

Prior to the enactment of Coal Mining (Special Provisions) Act in 2015, coal mines were never given out through bidding. The previous governments had amended the Coal Mining Nationalisation Act to specify specific sectors that were given mines attached to their units. 

Companies in sectors like steel, cement, power, coal-to-gas and coal-to-liquid used to apply for coal blocks and rights were given to them after scrutiny by an inter-ministerial committee.

The committee is in favour of only a one-stage competitive bidding with a maximum mining lease duration of 50 years.