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Global Mining Industry: Indian government accelerates plans to open coal sector

Government accelerates plans to open coal sector
Government accelerates plans to open coal sector

The Indian government is stepping on the gas to provide the necessary regulatory and legislative framework permitting private investment in the coal mining sector, Miningweekly reports.

`Denationalisation’ was still a taboo word for political reasons, but the government was working on various fronts to reform and open up the coal-mining sector, starting with electronic auction of coal blocks within the next three to four months, an official in the Coal Ministry said.

The guidelines for the e-auctions would be announced by mid-November, followed by legislation to support the ordinance already issued, validating acquisition of the land above the coal blocks, which had been cancelled by the courts, the official said.

The Coal Ministry was also seeking advice from the Law Ministry on proposed amendments to the Coal Nationalization Act 1973 and the Mines and Minerals Development and Regulation Act 1957, the two pieces of legislation ensured coal mining was an exclusive domain of government-owned and -managed companies, he added.

The government was also working on creating a body – the Directorate General of Coal – to govern the sector, and to monitor and ensure transparency around all issues of production, investments and pricing. The body would be modelled along the lines of the Directorate General of Hydrocarbons, which acted as the regulator for the oil and gas sector in which government and private companies were major players, the Coal Ministry official said.

Last month, the Supreme Court cancelled the allocation of 214 coal blocks, which had been allocated by the government since 1993, on the grounds that the process was ‘arbitrary and illegal’. The Court directed that all blocks be taken back by the government within six months and put up for re-allocation through an auction process.

In the first round auction, tentatively scheduled for December to January, 74 coal assets would be put on the block.

A government panel comprising representatives from the Ministries of Coal, Power and Steel, and the Central Mine Planning and Design Institute Limited, would be set up to identify blocks suitable for various manufacturing sectors and to oversee the transfer of some of the already operating mines from their erstwhile owners to the new owners that emerge through the auction process.

While the government was cautious oft using labels like `privatisation’ or `de-nationalisation’, the terms and conditions of the auction would be framed and backed by new legislation granting much greater flexibility in operations and marketing of mine production by the successful bidders.

For example, it had been proposed that there would be no restrictions on end-use of coal by operators successful in securing blocks. Furthermore, any company registered in India would be eligible to bid at the auctions, which could mean that any global miner with an Indian subsidiary could enter the Indian coal sector, the official said.

As expected, trade unions operating in the Indian coal mining industry has raised the red flag, threatening to go on an indefinite strike from January 2015 to protest what it perceived to be the back door privatization of the Indian coal sector.

“The government is taking unilateral policy decisions on the coal industry. Trade unions have sought several meetings with the government and despite assurances of a meeting no definite response has been forthcoming,” Indian National Mine Workers’ Federation general-secretary S Q Zama said.

“We know how to counter the government. In 1999, even the then government had made attempts to amend the Coal Nationalization Act 1973, but we stood against it and prevented it and this will be repeated again,” he said.(By Miningweekly Staff)

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