India’s coal sector has seen a slew of critical reforms in the last eight years. These bold steps have enabled the government to successfully meet an unprecedented spike in power demand due to heatwaves and high temperatures, a record number of electricity connections, and the post-pandemic economic recovery. These policy interventions have also helped the coal and mineral mining sector to grow in a responsible, sustainable and industry friendly manner.
The Coal Mines (Special Provisions) Act, 2015, ended decades of malpractice and arbitrary allocation of resources, ensured the availability of coal for sectors such as steel, cement, and power utilities, and augmented coal production by transparent allocation of mines through auctions. Ten tranches of auctions have been held between 2015 and 2020, and 35 coal blocks have been auctioned.
To ensure the availability of coal to the power sector, the government introduced the Scheme for Harnessing and Allocating Koyala Transparently in India (SHAKTI) in 2017. Prime Minister (PM) Narendra Modi also launched the auction for commercial mining of coal in 2020, which brought transparency, ease of doing business, and investment opportunities to the sector. The end-use restrictions for utilisation of coal were removed, and 100% foreign funds allowed for more investment and bringing in competition. The 2020 reforms created a free market for coal, with private participation bringing competition and greater efficiencies.
Many procedural changes were also introduced towards the coal sector’s development and regulation, such as the 50% rebate for early production, allowing single bid and liberal entry norms. Since the launch of the commercial coal auctions in June 2020, four tranches have been completed. To date, 47 blocks have been auctioned with a peak rated capacity of 101.5 MTPA. These blocks will generate approximately ₹11,172 crore in revenue and potential employment for more than 117,000 people. In addition, captive coal producers have been allowed to sell 50% of their production in the open market after meeting the demand of their end-use plants.
{{/usCountry}}Many procedural changes were also introduced towards the coal sector’s development and regulation, such as the 50% rebate for early production, allowing single bid and liberal entry norms. Since the launch of the commercial coal auctions in June 2020, four tranches have been completed. To date, 47 blocks have been auctioned with a peak rated capacity of 101.5 MTPA. These blocks will generate approximately ₹11,172 crore in revenue and potential employment for more than 117,000 people. In addition, captive coal producers have been allowed to sell 50% of their production in the open market after meeting the demand of their end-use plants.
{{/usCountry}}The government knows that coal will be the most important energy source in India, so clean coal technologies and diversification are the way forward. We are committed to scaling up mining activities in an environmentally sustainable way. The National Coal Gasification Mission took a definite direction, with the finance minister announcing four pilot projects in the 2022-23 Budget.
To incentivise more participation and increase coal production, the rebate of 20% was increased to 50% for successful bidders using their coal for coal gasification and liquefaction. As a result, coal public sector units (PSUs) have prepared an investment plan of almost ₹2.5 lakh crore by 2030 in new business technologies, and new mine development projects. NLC India is the first PSU to achieve a solar power generation capacity of more than 1 GW. Coal/lignite public sector units have planted almost 100 million trees or saplings.
In a more recent step, a one-time window has been granted to PSUs for surrendering non-operational coal mines without penalty. Around 16 coal blocks will be freed by PSUs. Another significant reform includes merging five types of e-auctions and offering coal through a single e-auction window.
To utilise land after mining, we approved the policy for optimal use of land acquired under the Coal Bearing Areas (Acquisition & Development) Act, 1957. The policy will unlock land for coal and energy infrastructure projects, which will encourage investment in backward areas. With this most recent reform and many more underway, the coal sector is ready to take on all challenges.
In the last eight years, domestic coal production has increased by 37.3%, and domestic coal offtake has increased by 43%. Domestic coal production has increased from 716 MT in FY21 to 777 MT in FY22, a growth of 8.5%. The coal production from captive mines during the same period increased from 66 MT to 86 MT, a growth of 30%. Domestic coal offtake has increased from 691 MT in FY21 to 818 MT in FY22, a growth of 18.4%. Under PM Modi, the coal sector has emerged after an eclipse.
Pralhad Joshi is Union minister of coal and minesThe views expressed are personal