CoalMin targets projects worth Rs 41K-crore for asset monetisation

These projects include coal washeries, coal gasification, first-mile connectivity for building coal silos/mechanised loading, offering mines to private firms under mine developer and operator model

The Union coal ministry, along with Coal India (CIL) and Neyveli Lignite Corporation (NLCIL), will offer 60 projects worth Rs 41,042 crore for private investment, increasing the government’s national asset monetisation target to Rs 2.9 trillion.

These projects include coal washeries, coal gasification, first-mile connectivity for building coal silos/mechanised loading, and offering mines to private companies under the mine developer and operator (MDO) model. All these projects will be awarded in the current fiscal year, except 15 MDO projects that will be tendered between 2022 and ’24.

The coal ministry was not given an asset monetisation target when the Centre had set an ambitious Rs 2.5 trillion target for other ministries as the NITI Aayog was not optimistic that coal projects could garner large investments. There is a global push towards being carbon-free and moving towards environmental, social, corporate governance (ESG) goals set by companies and investors. There were deliberations on altering monetisation models as the shift towards renewables is likely to dampen investors’ interest in the conventional energy source.

ESG targets entail reduced investment in fossil fuels. Several global financiers and companies have committed to step away from fossil fuel and allied sectors. Coal ministry officials, however, pointed out that the Indian coal sector was not facing this pressure and coal demand would drive investment.

 “We are offering projects that will improve the supply and quality of coal. CIL is already outsourcing many mines under the MDO route. This is a revenue friendly idea for them. Leading companies and investors have shown their confidence in the sector in the last commercial coal auction. There is definitely an appetite for this sector,” said a senior coal ministry official.

Through the MDO route, the coal ministry is planning to  ALSO offer unutilised and abandoned mines for production. Currently, CIL offers its mines to private MDOs on a contract basis, where they are paid according to the amount of coal mined.

Responding to NITI Aayog’s call for providing coal/lignite mines for asset monetisation, the coal ministry said, existing mines of CIL and NLCIL cannot be offered as they are operated under the Coal Bearing Areas (CBA) (Acquisition and Development) Act, 1957. Lands of CIL and NLCIL coal mines acquired under CBA and cannot be sold to a private company.

The coal ministry’s asset monetisation plan is exclusive of the commercial coal auction. In 2020, the Centre allowed private companies to commercially mine and sell coal — 47 years after coal mining was nationalised. In the two-part auction that followed, 19 mines were awarded out of the 38 on offer.

NLCIL had already awarded it's two mines through the MDO route. The capacity of the project is 20 million tonnes per annum, and the value of the project is Rs 33,477 crore over its project life. 

Union ministries were given a target of Rs 2.5 trillion for monetising their assets over the next three years starting 2021-22, said an official. This did not include targets for coal, mines and food processing ministries.