CCEA Approves Methodology to Auction Commercial Coal Mines to Private Sector (Download PDF)

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The Cabinet Committee on Economic Affairs (CCEA) approved methodology for auction of coal to private sector under Coal Mines (Special Provisions) Act, 2015 and Mines and Minerals (Development and Regulation) Act, 1957. Opening of coal sector to commercial mining by private entities ends 41 year old monopoly of state owned Coal India Ltd (CIL) allowing power, cement, and steel producers to source fuel more efficiently.

CCEA Approves Methodology to Auction Commercial Coal Mines

CCEA Approves Methodology to Auction Commercial Coal Mines

CCEA Approves Methodology to Auction Commercial Coal Mines

BackgroundSupreme Court in its September 2014 order cancelled 204 coal mines and blocks allocated to various Government and Private Companies since 1993 under the provisions of Coal Mines (Nationalization) Act, 1973.

In pursuance of this order, Parliament enacted Coal Mines (Special Provisions) Act, 2015 to bring transparency and accountability for allocation of coal mines by way of auction and allotment for the sale of coal.

New Methodology

  • The auction will be ascending forward auction whereby bid parameter will be price offer in Rs. /tonne which will be paid to State Government on actual production of coal.

There Shall Be No Restriction on the Sale and Utilization of Coal from Coalmine.

  • The entire revenue from auction of coalmines will accrue to coal bearing States. It will incentivize these states to utilize this increased revenue for growth and development of backward areas and their inhabitants including tribals.

  • What is the Significance of New Methodology? The methodology gives highest priority to transparency, ease of doing business and ensuring that natural resources are used for national development.
  • It will open up commercial coal mining for private sector and will help in boosting the economy.
  • It is most ambitious coal sector reform since nationalization of this sector in 1973.
  • It will bring efficiency by moving coal mining from era of monopoly to competition and enable use of best possible technology.

  • It will also attract higher investments and create more jobs in mining sector.

  • It will also lead to the availability of low cost power as 70 % of India’s electricity is generated from thermal power plants. States in Eastern part of the country will be especially benefited from this new methodology.

- Published/Last Modified on: May 24, 2018

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