GoM meet on allowing commercial coal mining postponed

The meeting of the Group of Ministers (GoM) to evolve a consensus on opening up coal sector for commercial mining has been postponed.

The meeting, scheduled today, was to consider re-introduction of a bill to amend the existing Act governing coal mining, which allows only PSUs to undertake mining besides permitting private firms to extract coal for captive use. The new date has not been fixed as of now.

"The meeting of the GoM, headed by Finance Minister Pranab Mukherjee, to consider re-introduction of a bill to amend Coal Mines (Nationalisation) Act, 1973 has been deferred," said a Coal Ministry official.

The bill to amend the Act to allow private participation has been pending in Parliament for the last 10 years for want of political consensus amid opposition by trade unions.

The six-member ministerial panel, formed in 2009, has Finance Minister Mukherjee, Coal Minister Sriprakash Jaiswal, Labour and Employment Minister Mallikarjun Kharge, Mines Minister Dinsha Patel, Home Minister P Chidambaram and Planning Commission Deputy Chairman Montek Singh Ahluwalia as its members.

Earlier, Coal Minister Jaiswal had said the government, as part of the energy sector reforms, is trying to evolve a consensus on commercial coal mining to promote development of the sector.

"The bill is a step towards promoting liberalisation in the coal sector... It will also address the need for augmenting coal production in the country...through wider participation of private coal mining companies," a government paper said.

After nationalisation of the coal mines in 1973, the mining in the sector is done exclusively by the public sector companies, with Coal India Ltd (CIL) claiming over 82% of the production.

The private sector is allowed coal mining for meeting their captive requirements in sectors like power, steel and cement etc.

However, a Coal Ministry official said that although nearly 50 billion tonne of resources have been allocated to Central and State government corporations besides private companies for captive use, output from 28 blocks that are in
operation, was only 34.6 million tonnes last year.

The need to liberalise the sector was also felt in the wake of widening demand-supply gap of the dry-fuel.

According to government estimates, India faces a supply shortage of 142 million tonnes of coal, with the requirement of 696 million tonnes in the current financial year.

In the next 20 years, import dependence can go up to 55% of the demand, as per Coal Ministry estimates.