The planning commission has finalized coal banking mechanism under which two private companies could exchange surplus coal available with them. The proposed mechanism does not involve public sector miner Coal India and stated that if a company starts mining coal from its captive mine before its end-use plant is ready, it can offer that coal to another company whose end-use plant is ready but whose mine is not explored. Meanwhile, to exchange surplus coal available with them, the agreement would have to be agreed commercially by both the companies after seeking approval from the Coal Ministry. Coal banking mechanism will be implemented only after Cabinet approval.
Earlier, public sector miner Coal India Ltd had expressed concerns for implementation of coal banking mechanism under which it will have to receive coal from private miners and commits itself for returning it to them in the future. Coal India reluctance over the mechanism had forced the panel to look at alternative ways to use surplus coal available with the companies. Meanwhile, most of private power producers have been maintaining that Coal India should be the custodian of surplus coal. It is estimated that the country will produce nearly 25 million tonnes of extra coal by 2015-16.
In order to meet India’s growing coal demand, the government will soon invite bids from private players to start coal mining in a public-private partnership (PPP) mode in the country, which would also end the monopoly of public sector unit Coal India. Furthermore, the government has approved the new methodology for auctioning coal blocks for providing upfront and production-linked payments and benchmarking of coal sale prices to ensure greater transparency in auctioning the fully explored coal blocks. The government is likely to auction 10 coal blocks in the month of March next year.
