Pvt miners can sell coal to Coal India

Ministry forms committee to set price for such sale

Private coal block owners will now be able to sell coal mined from captive blocks to Coal India Ltd (CIL), and the ministry of coal has recently formed a committee that would set the price for such sale.

This will allow private parties to initiate mining activities on captive coal block even if projects for which these blocks were allotted did not come onstream.

Sources at the ministry said that it has recently formed a committee comprising of representatives from the industry as well as Coal India that would set the price of coal mined from captive blocks in conjunction with all concerned parties.

"The decision to buy coal was mooted by Coal India and allowed by the ministry recently. With the country facing shortage of coal, CIL had proposed to the government that private block owners be allowed to sell coal to Coal India which the company in turn would sell at an administered price in the market," explained officials from CIL.

"The Committee's primary task would be to determine the administered price of coal produced from captive mines on a case to case basis. Factors like grade of the coal mined as well as its price in the international market would be considered," said CIL sources.

This was worked out as a stop gap arrangement to meet demand for coal which has witnessed consumption far outpace domestic production in the last couple of years due to increased demand from the power sector, cement and steel.

"Mines allotted to private parties were on the basis of projects they has lined up but there are numerous instances where the main project has not come up or has been delayed. The new provision will now allow these companies to mine coal and receive a price for the same," explained officials.

"The price for coal would be fixed by the government through a predetermined mechanism which would be a temporary arrangement to bring in the demand supply equilibrium," he added.

"Although the Committee is yet to receive any such proposal, this enabling provision and the formation of the Committee would enable private blocks to initiate producing," said officials.

The ministry has till date allotted 55 coal blocks with a total reserve of 7 billion tonnes. Only a few of these has come on stream mainly due to factors like delay in main project and inability to sell it in the open market.

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The calculus

• The ministry has formed a committee comprising representatives from the industry and Coal India that would set the price of coal mined from captive blocks in conjunction with all concerned parties
• The price would be fixed taking into consideration factors like grade of the coal and its price in the international market