Centre approves commercial mining of coal blocks

The Centre on Tuesday approved the major reforms in the coal sector by allowing private companies to bid for coal mines for commercial production.

The Union Cabinet chaired by Prime Minister Narendra Modi approved the methodology for auctioning of coal blocks for commercial mining, Union Coal Minister Piyush Goyal told reporters here after the cabinet meeting.

The decision of the government to allow private companies to bid for commercial mining is an important reform in the coal sector and will ensure affordable and reliable supply of coal, the minister said. This will not only boost the domestic production of coal but also reduce the dependence on imported fossil fuel.  

The auction process will be transparent and companies, which submit highest bids for the coal blocks will win the bid, he said.

In commercial mining, there is no end use clause or pricing restriction, he said.

The decision of allowing commercial mining will end the monopoly of public sector under Coal India Limited in coal sector. This will also help to bring latest technology in coal mining as well as to boost the domestic production of fossil fuel, the minister added.  

The minister also said that the government has started the process of identifying the coal mines to be auctioned and no timeline was set for starting the auction.

With the coal accounts for 70 % country's electricity generation, the Ministry of Coal target to produce 1 billion tonne of coal by 2022.