The government intends to keep the eligibility criteria for participating in the commercial coal block auctions to a minimum and move from a per unit levy/charge model to a more dynamic market-driven revenue share model. The government is expecting a good response to its proposal to auction 41 coal blocks in the first tranche, and it has indicated that it will further enhance on ease of doing business.

Commercial coal block auctions are intended to be conducted in a two-stage bidding process, which will involve technical screening and submission of competitive initial price offer in the first stage, and a second and final stage where better price offers are intended to be received. This will ensure greater competition, and will assist various coal bearing states to earn higher revenues and invest in the much-needed development and growth, emerging from the Covid-19 crisis.

Earlier, Coal India Ltd, its subsidiaries, and Singareni Collieries Company Ltd were the only entities permitted to sell coal on a commercial basis. The proposal to permit commercial coal mining will invite new and private players in the commercial coal-mining sector, and this will lead to many benefits resulting from competition. The intended liberalisation will go a long way in addressing India’s current needs to generate employment, increase investment in research and development, attract foreign direct investment, and ensure inclusive growth.

The opening up of the coal sector will also help in fulfilling the government’s Atmanirbhar Bharat Abhiyaan, and will help several economic sectors, especially power, steel, aluminium and unregulated sectors. With the quantum of coal resources available in the country, it is also noted that the subject reforms will open up export opportunities in the coal sector and will result in foreign exchange earnings.

Further, with the removal of end-use restrictions, the coal mined can be used for various purposes including coal gasification and liquefaction. The government has highlighted that as coal in India has low sulphur content, it is cleaner than other types of coal.

The government has indicated that it will provide lucrative rebates to successful bidders, and the same will assist in reducing their overall production costs and help maintain competitive pricing. This, in addition to the opportunity to harness coal bed methane, will increase value of the coal blocks.

The government has unleashed reforms that promise tremendous growth for the economy and all efforts should be taken to ensure that this initiative is not compromised because of regulatory and licensing hurdles.

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