India Delays Private Coal Mining

India is to delay yet again the full entry of private companies into the country’s coal mining industry.

It has been expected that there would be a bill in the forthcoming Budget session that would allow the auctioning of coal mines to companies without the restriction of captive use, however the Prime Minister’s Energy Coordination Committee recommended that the bill be moved only after a consensus is arrived.

Trade unions have been expressing their opposition to the bill since it was cleared by the standing committee in 2001, opposition that has been successful in delaying the bill. Now, once again, the government has delayed the bill and is to wait for a ministerial panel to report on the matter. At present, private industries are allowed a role in coal mining only for captive use.

The coal ministry had proposed a lump sum payment plan for auctioning coal blocks, instead of the royalty and profit-share system used in oil or gas concessions. The bid amount would be realised in instalments over 10 years and bidders asked to make their offer above the floor price worked out on the basis of the government's estimate of coal reserves in a block. Preference would be given to companies proposing to set up washeries or end-use industries in coal-bearing states and proceeds from the bids would accrue to the government of the state where the coal block is situated.