The government is likely to levy cess on companies using opencast coal mining technology to incentivise underground mining operations. The money raised through cess would also be used for cross-subsidising underground mining operations.
There is also a proposal for providing additional tax and import duty concessions on capital equipment to improve the economics of underground mining. The energy coordination committee headed by Prime Minister Manmohan Singh has suggested setting up of an inter-ministerial committee to examine the issues.
The Committee of Secretaries had asked the coal ministry to formulate a policy based on economics, royalty, taxes and incentives to promote underground mining activities. ?Coal India Ltd (CIL) has already set up a committee to look into ways to increase underground coal production to 75 million tonne in the Eleventh Plan. Based on the committee?s recommendation, the decision of levying a cess on opencast coal mining will be taken,? a senior government official told FE.
Of the 360 million tonne (mt) of coal produced by CIL, only 46 mt comes from underground mines. Underground coal mining has taken a big hit over the years. The total underground coal production in the country is just 45 mt, a sharp reduction from the 1970s when underground coal production was 65mt.
At the time of the Coal Mining (Nationalisation) Act, 1973, underground coal production constituted around 70% of the country?s total production but now, it constitutes only 15% of the total coal production of the country.
The country is likely to face a severe shortage of coal 20-30 years down the line if underground mining is not revived, he added.