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Coal ministry rejects Niti Aayog’s proposals on raising mining output

Power minister RK Singh has written to his coal counterpart Pralhad Joshi, emphasising the need to create open coal market which, in turn, will facilitate an open power market.

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Terming them ‘completely contrary to principles of transparency’, the Union coal ministry has rejected the recommendations of a high-level committee of the Niti Aayog on ramping up coal production. The panel had suggested to put an end to captive coal block allocation and conduct auctions only for commercial mining.

“Any sudden change in policy pushing for mining of coal for commercial use only as suggested in the report will disrupt supplies to the power sector,” coal ministry wrote to the think tank. “This has the potential to plunge the country into darkness,” the ministry’s letter reviewed by FE, added.

As reported by FE earlier, the Niti committee had also recommended the revision of a number of Acts to enable offering of coal blocks on exploration-cum-production lines on revenue sharing basis. The coal ministry said that the proposed method of allocation ‘is fraught with danger of losing government revenue that was precisely the raison d’etre of action leading to cancellation of mines on court intervention’.
The development comes at a time when the Union power ministry, which feels that power producers should be able to buy coal from open markets at competitive prices, wants the coal ministry to ramp up commercial mining.

Power minister RK Singh has written to his coal counterpart Pralhad Joshi, emphasising the need to create open coal market which, in turn, will facilitate an open power market.

To attract private players, the Cabinet, in 2018, had approved the auction methodology for commercial mining. However, private industry remained impassive to the new norms and the last two auction-tranches had to be cancelled due to the shortage to sufficient bidders. In February, 2019, the Cabinet allowed private companies to sell up to 25% of production from captive coal mines in the open market. Following that, the coal ministry has started the process of auctioning 27 coal mines. It will also allot 15 coal mines to PSUs.

Captive coal blocks produced only 25.1 million tonne (MT) in FY19, much lower than the peak output of 43.2 MT in FY15 when the Supreme Court had cancelled the licences of 204 such coal mines. However, a senior coal ministry official told FE that captive coal production would surpass the 43 MT mark in the ongoing fiscal.

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