Auctions are the best way to allot coal mines. That's the word from the government, which met with coal mining companies to discuss the challenges and opportunities in commercial mining. But the government has also assured industry that their concerns regarding the viability of such mining will be addressed soon.
The government is keen on boosting commercial mining activity in the country. That was one of the key reasons behind the New Coal Mines Special Provisions Bill, which allows commercial mining by adding the required enabling provisions to the Coal Mines Act. But industry has been slow to take to the idea. Their main apprehension is that the current policy for mine auctions makes for an unviable surge in input costs.
Sanjay Sagar, joint MD and CEO, JSW Energy, says: "Current format on commercial mining is not attractive for the industry. Private sector should be assured of a level playing field for commercial mining."
To this end, industry body Ficci has proposed a couple of changes. This includes e-auctioning of prospective licences and mining licences for non-producing mines, and the e-auction of just mining licences for producing mines. Experts say this will make commercial mining more attractive for players, which will increase coal production and help India ease the on-going power crisis.
Partha Bhattacharya, former chairman, Coal India, says: "Coal India is not capable of meeting India's coal demand. Opening up of coal mining for commercial mining imperative. Commercial mining to drive competition and technology innovation. Commodity prices will eventually soften if commercial mining kicks off."
The industry report also recommends a transaction platform model for the commercial sale of coal. Under this, buyers and sellers can register with the platform, and electronic tracking of all transactions will be possible. The government says it will take these recommendations into consideration.
Anil Swarup, secretary, coal, says: "First step of discussing commercial mining with industry has been taken; more comprehensive industry discussions will be done; the government will ensure, Coal India will ensure affordable fuel for the power sector."
While Swarup admits that the auction process could be a little different for commercial mining, he is adamant that it's not the auction process itself, but companies that are to blame for high input costs.
Swarup adds: "Companies which have bid recklessly cannot blame the government for the coal auction."
The government's stance is clear. As things stand today, the auction process will not be side-stepped. However, industry can rest assured that the government will work towards enabling commercial mining of coal, since it is keen on hitting its mammoth one billion tonne coal production target.
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