Coal rules eased to spur investment

Despite having the world’s fourth largest coal reserves, India imported 235 million tonnes (mt) of coal last year, of which 135 mt valued at ₹171,000 crore could have been met from domestic reserves, coal and mines minister Pralhad Joshi told reporters.

The Union Cabinet on Wednesday approved opening up of coal mining and further disinvestments, apart from deciding that the Centre will shoulder 60% of the expense for the North East Gas Grid project.

In an attempt to attract investments in coal mining, the Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020. (Bloomberg file photo)

It also extended the validity period of mining lease clearances ending in 2020 by two years.

In an attempt to attract investments in coal mining, the Cabinet approved the promulgation of Mineral Laws (Amendment) Ordinance 2020. The ordinance allows coal mining by any company present in sectors other than steel and power, and does away with the captive end-use criteria. While the move will help create an efficient energy market, usher in competition and reduce coal imports, it may also bring an end to state-run Coal India Ltd’s (CIL) monopoly.

Despite having the world’s fourth largest coal reserves, India imported 235 million tonnes (mt) of coal last year, of which 135 mt valued at ₹171,000 crore could have been met from domestic reserves, coal and mines minister Pralhad Joshi told reporters.

“Under the ordinance, requirement of previous approval in cases where allocation of blocks was made by Centre has been dispensed with to speed up the process of implementation of projects and ease of doing business,” a government spokesperson said in a tweet.

It comes against the backdrop of India’s gross domestic product (GDP) growth decelerating to a six-and-a-half-year-low of 4.5% in the September quarter amid slowing domestic and external demand.

The Centre has set a mining target of 1.5 billion tonnes of coal by 2020. Of this, 1 billion tonnes was to be from CIL and 500 million tonne from non-CIL sources, in line with the government’s push to raise natural resources production to kickstart economic growth. This has now been revised down to 1 billion tonne of coal by 2023-24.

“The government has been progressively liberalising the coal sector over the last several months to attract new investments, and getting rid of this archaic end-use restriction was a key step. It is expected that the government will also address other procedural issues that add to time delays and upfront cost of developing a mine,” Kameswara Rao, leader, energy, utilities and mining, PwC India, said in a statement.

As part of the National Democratic Alliance (NDA) government’s disinvestment agenda, the Cabinet Committee on Economic Affairs gave “in principle” approval for strategic disinvestment of equity shareholding of Minerals & Metals Trading Corp Ltd (49.78%), National Mineral Development Corp Ltd (10.10%), MECON (0.68%), Bharat Heavy Electricals Ltd (0.68%) and two Odisha state government units — Industrial Promotion and Investment Corporation of Odisha Ltd (IPICOL) (12.00%) and Odisha Mining Corp (OMC) (20.47%) in Neelachal Ispat Nigam Ltd.

The government has set an ambitious disinvestment target of ₹1.05 trillion for FY20, of which it has managed to garner only ₹17,364 crore so far. Strategic buyers will be identified through a two-stage auction process.

In another major decision for India’s northeast, the Centre will provide ₹5,559 crore for the construction of the North East Gas Grid project across Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, and Tripura.

The CCEA on Wednesday approved the marquee project of Indradhanush Gas Grid Ltd “with viability Gap Funding/Capital Grant at 60% of the estimated cost of ₹9,265 crore (Including interest during construction).”

Currently, India’s northeast region is in turmoil due to protests against the government’s contentious Citizenship (Amendment) Act, 2019.