NEW DELHI | Feb 02, 2017: Forty-four years after nationalising coal mines, the government will allow commercial mining by private companies this year, a top coal ministry official said on Thursday.

"The coal ministry has identified four blocks that will be bid out for commercial mining without specifying end-use for the mined coal," coal secretary Sushil Kumar told reporters in the presence of coal, power, renewables and mines minister Piyush Goyal.

Kumar, however, declined to identify the mines or give other details such as reserves and auction methodology. "The ministry will put out a consultation paper in public domain for feedback from stakeholder soon," he said.

The government had included provisions to allow commercial coal miming by private entities while amending the minerals and mining laws in 2015 after the Supreme Court in 2014 struck down allotment of 214 blocks made since 1993. Since the amendments to the law, the Centre has also been priming the market by allotting seven blocks to state government entities for commercial mining.

That decision to allot blocks for commercial mining by state entities -- though limited to selling the commercially-mined coal to small, medium and cottage enterprises -- marked the first big-ticket reform in the sector after blocks were auctioned on a prompt from the Supreme Court.

Since nationalisation of coal blocks in 1973, commercial coal mining has remained a monopoly of state-run behemoth Coal India, the world's largest Black Diamond miner. Full-on private entry will not change Coal India's status but will certainly challenge the world's largest Black Diamond miner to become more efficient.

According to government statements made from time to time, the decision to open up coal mining to private companies is aimed at enhancing domestic production of coal to 1.5 billion tonne a year by 2020. Commercial mining is expected to contribute 500 million tonne annually to feed unmet demand, especially from the medium, small and micro industries and potentially stop imports.

Private entry will generate additional revenue for coal-bearing states from such mines "equal to the amount of royalty on the quantity of coal produced on a monthly basis" during the lease period/life of the mine as well as one-time upfront payment, which could be 10% or more of the intrinsic value of coal in the mine.

Several Indian conglomerates such as the Adani, Reliance ADAG, Jindal, and GMR as well as global majors may be interested in bidding for blocks but the timing could prove to be an overhang. The country has turned surplus and exploring export options as demand has lagged rise in production and despatch.

(Source: http://timesofindia.indiatimes.com/)