Finance Minister Nirmala Sitharaman unveils reforms in mineral mining sector

Finance Minister Nirmala Sitharaman on Saturday announced commercial mining of coal by the private sector, ending government monopoly in the sector.

In her fourth tranche of the economic package, she said commercial mining will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne.

The move will bring competition, transparency and private sector participation in the coal sector.

"Commercial mining of coal on a revenue-sharing basis would help more coal availability at market prices. So this will be far more efficient...Liberalised entry to allow people to participate for a range of coal blocks and those who produce well before the deadlines incentive would also be given," the finance minister said.

Earlier, only captive consumers with end-use ownership could have participated in the bidding. But now any party can bid for a coal block and sell it in the open market.

Stating that entry norms would be liberalised, the minister said that nearly 50 blocks will be offered immediately for the bidding, she said.

This is being done to reduce import of substitutable coal and increase self-reliance in coal production, the government said.

"India which has the third-largest valued coal availability in its existing and untapped mines and we still import coal. Sometimes the energy sector suffers because of non-availability of raw material so the regulations are required. Regulations are required when there is a shortage. This country has abundant coal and we are regulating it," she said.

Against the earlier provision of the auction of fully explored coal blocks, now even partially explored mines will be auctioned, a move that will allow the private sector participation in exploration.

Also, the government will invest Rs 50,000 crore for building evacuation infrastructure.

The minister said that "Rs 50,000 crore will be spent by the Government of India for creating evacuation infrastructure...Rs 50,000 crore is given to ensure that evacuation infrastructure is provided."

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The move will help in evacuation of coal by Coal India which is targeting one billion tonnes of production by 2023-24 as well as fuel production from private blocks.

The sum of Rs 50,000 crore also includes "Rs 18,000 crore worth of investment in the mechanised transfer of coal (conveyor belts) from mines to railway sidings," the minister said adding that the measure will also help reduce environmental impact.

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Coal gasification and liquefication will be incentivised through rebate in revenue sharing, the minister said adding coal bed methane (CBM) production would also be encouraged.

" In order to convert coal into gas we are providing incentives...Incentives so that the coal also be used and environmental commitment is honoured and we benefit from gasification of coal," the finance minister said.

Coal bed methane (CBM) extraction rights will be auctioned from Coal India Ltd mines.

"Coal bed methane will also be auctioned. These coal beds with Coal India but untapped can benefit the country. Coal bed methane will happen through auctioning," the minister said.