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India Removes Restrictions on Coal Block Bidding

Coal News - Published on Thu, 09 Jan 2020

Image Source: Coal Block Allocation
Indian Government has approved an Ordinance that would make the process of auctioning coal mines easier. The Ordinance will amend the Mines and Minerals (Development and Regulation) Act, 1957, and the Coal Mines (Special Provisions) Act, 2015. The Promulgation of Mineral Laws (Amendment) Ordinance 2020 would allow successful bidders or allottees to utilise the coal mine in any of its subsidiaries or holding companies. It would allow companies that do not have coal mine operations in India to also participate in coal block auctions, according to the minister. The Ordinance also provides for composite prospecting licence-cum-mining lease for coal and lignite blocks

The government plans to promote foreign direct investment in the sector by removing restrictions and eligibility criteria for participation in coal block auctions. Previously, there was a restriction that anybody, to participate, should have the coal mine operation in India. The end-use restriction had led to comparatively less participation in the coal block auctions. Of 204 coal block allocations cancelled by the Supreme Court in 2014

CII President Mr Vikram Kirloskar said “The opening up of coal sector without end-use restrictions will also boost both production and mining efficiency, besides substituting import of coal worth approximately INR 30,000 crore. Allowing commercial mining of coal will ensure assured coal supply, accountable allocation of coal and affordable fuel leading to affordable electricity prices for consumers.”

The Federation of Indian Chambers of Commerce and Industry has also welcomed the government's decisions to ease coal mining rules. FICCI Secretary General Mr Dilip Chenoy said "This decision will do away with the leeway provided to only steel, power and coal washeries and open the commercial coal mining bidding for all the firms. The Cabinet decision will also do away with end-use restrictions of the mining blocks and pave the way for the first leg commercial coal auctions within this fiscal. The move is expected to provide a big push towards efforts for auctioning of coal blocks for commercial sale. It will help attract investments from Indian and global corporates. This is also a major step towards realising the Government's target to completely stop coal imports by power plants by 2024.”

In August 2019, Indian Government had announced 100 per cent foreign direct investments under the automatic route for coal and lignite mining for captive consumption by power projects, as well as iron and steel, and cement units. The government also allowed auctioning of mines to all sectors.

According to FICCI, these moves "will probably help in clearing all the hurdles ahead of the upcoming auctions of commercial coal blocks".

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Posted By : Yogender Pancholi on Thu, 09 Jan 2020
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