Coal ministry eyes asset monetization worth nearly ₹55,000 cr in FY25

New Delhi: The union ministry of coal is targeting monetization of assets worth ₹54,721 crore in FY25, about 9% higher than the ₹50,118 crore target set in FY24.

In the 11 months to February, the ministry had surpassed its FY24 target, having monetized assets worth ₹55,148 crore.

"The projected target with reference to asset monetization plan for FY 24-25 is ₹54,721.06 crore. ₹55,148 crore of asset monetization has been done in FY 2023-24 till February 2024 against NITI Aayog Target of ₹50,118 crore," the coal ministry said in response to a mailed query.

A person aware of the development said commercial auction of mines and development of mines through the ‘mining developers and operators’ (MDO) model would be primary routes to asset monetization for the ministry. The ministry engages third-party MDOs including private players in coal mines through global tenders.

"The target would be higher than FY24. In FY25 too, it is likely to be achieved comfortably as in the case of this fiscal (FY24). Auctions and MDOs, (in which) mines of public sector companies are given to an MDO for development, would be the primary ways of monetization," the person said.

In 2020, the government opened up coal for commercial mining by private players and has so far auctioned 91 mines. However, over the years the interest in mines among private firms has seen a saturation with the captive requirement of several companies largely being met. The government has made efforts to make coal mining and the auction process more lucrative.

The Centre has kept the requirements flexible with no restriction on utilization of coal, whether for captive consumption or commercial purposes, and has reduced the upfront payable amount among other relaxations. The government also gives a 50% rebate on the final offer if the quantity of coal under the terms of purchase is produced earlier than the scheduled date.

In February, the ministry announced that it has received 33 bids for 13 coal mines out of 27 mines put on the block in the ninth round of auctions.

For FY25, the ministry has targeted 186.63 million tonnes (mt) of production from these captive and commercial coal mines, and in January it said that plans were in place for production to be increased to 225.69 mt during FY26, with an eventual target of 383.56 mt by FY30. It said six mines with a cumulative peak rated capacity (PRC) of 14.87 mt have already begun production within three-and-a-half years of the start of the commercial coal mines auction in 2020.

The ministry earlier in March also launched the monetization process for the 2-mt-per annum Dugda Coal Washery of Bharat Coking Coal Ltd (BCCL), which is likely to add to its monetization targets. The ministry is looking at auctioning old and non-operational washeries to private steel companies that can renovate and utilize them for washing domestic coking coal to be used in their blast furnaces, thereby lowering the import dependency for the mineral.

On 20 March, Mint reported that three more abandoned washeries including Mohuda and Madhuband would also be put on the block.

The coal ministry has fared well in terms of monetization backed by its commercial mines auctions.

Monetization of assets is taken up under the National Monetization Pipeline prepared by the Niti Aayog. The Press Trust of India in February reported that the central government and central public sector enterprises are estimated to monetize assets worth ₹1.50 trillion in FY24, against a targeted ₹1.75 trillion.

Under the National Monetization Pipeline, the aggregate monetization potential has been estimated at ₹6 trillion over a four-year period, during FY22-25.