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Govt to invite bids from private players for coal mining soon

28 Oct 2013 Evaluate

In order to meet India’s growing coal demand, the government will soon invite bids from private players to kickstart coal mining in a public-private partnership (PPP) mode in the country, which would also end the monopoly of public sector unit Coal India. The decision to invite bids was taken by a nine-member high-level committee, headed by coal secretary and having senior officials from the finance ministry, Planning Commission as well as the law ministry. According to the proposal, the coal mines will remain in the ownership of the public sector while the private partner will receive a mining charge on the coal mines. Further, sale of such coal will be undertaken by the public entity, which grants the PPP concession.

The move will also be helpful to check the widening current account deficit (CAD) of the country by reducing the coal imports. In spite of world's fifth largest in terms of reserves and third-largest producer of coal, India's domestic output has failed to keep pace with demand over the past few years. At present, Indian domestic coal demand is around 35 percent higher than domestic supply, resulting into a high deficit of which a huge part is being met by costly imports from Indonesia, South Africa and Australia. In the previous fiscal, India imported $16 billion worth of coal. 

India is the world's third-largest producer of coal and the fifth largest in terms of reserves. Presently, Coal India is the only producer of domestic coal, which is struggling to meet domestic requirement. Thus, the government is of the view that involvement of private players will produce faster and cheaper coal for the country. Acute coal shortages in the country has become primary reason for power deficit in the country as coal-fired plants account for 57% of India's installed electricity capacity. 

 

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