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India’s window for using coal reserves may last 20-30 years: Pralhad Joshi

India’s coal requirement is expected to go up to 1123 million tonnes (mt) by 2023 from the present levels of around 700 mt.Premium
India’s coal requirement is expected to go up to 1123 million tonnes (mt) by 2023 from the present levels of around 700 mt.

  • Aditya Birla Group’s EMIL Mines and Minerals Resources, Adani Enterprises, Aurobindo Realty and Infrastructure, Boulder Stone Mart, JMS Mining, Jindal Power, Vedanta, Hindalco and APMDC among winners in coal mine auctions

New Delhi: Coal minister Pralhad Joshi on Monday said India’s window for using its coal reserves may only last for another 20-30 years.

The statement comes at a time when fossil fuel investments are losing sheen and global energy investment landscape is rapidly evolving, with a focus on environmental, social and governance (ESG) investing.

While addressing a press conference on the last date of the commercial coal mine auctions that began on 2 November, Joshi appealed to the governments of the coal bearing states to cooperate with the successful bidders to help expedite the fuel’s production.

While transitioning to a green economy, India has also called for a reset on climate debate on coal as a fuel. India plans to have 175 gigawatts (GW) of clean energy capacity by 2022, which is further to be scaled up to 450 GW by 2030.

“And this is the time that there is a huge opportunity for growth," Joshi said as the auction process for the Gare Palma IV/7 coal mine in Chhattisgarh was still on, which is set to attract the highest revenue share or premium over and above the floor price.

As part of the two-stage auction process, a bidder has to quote the percentage revenue share over the reserve price. There will be no restriction on the sale and utilization of coal from these mines.

India’s coal requirement is expected to go up to 1,123 million tonnes (mt) by 2023 from the present levels of around 700 mt. The earlier plan was to mine 1.5 billion tonnes of coal by 2020. Despite having the world’s fourth largest coal reserves and the second largest producer of the fuel, India is also the world’ second largest coal importer.

A total of 19 coal mines spread across Madhya Pardesh, Jharkhand, Odisha, Chattisgarh and Maharashtra were auctioned since the commercial coal mine auctions began this month. The mines are being awarded on a revenue-sharing basis, while earlier blocks were allocated to companies on the payment of fixed amounts per tonne.

Joshi said that the results of these auctions have been ‘historic’ and added that with 19 coal mines being auctioned, it was the highest done in any of the 10 tranches offered after 2015. A total of 115 coal mines have been auctioned over the last 10 tranches.

Indian coal sector has welcomed the move for commercial coal mining.

“Government of India’s decision to open coal sector for commercial mining is a welcome and bold step. First and foremost, it is a message to state owned monopolies that now that the Government is willing to business with anyone and everyone, they might as well have a hard look at their efficiency norms and performance parameters," said Sanjay Kumar, director, personnel at Western Coalfields Ltd, a Coal India Ltd subsidiary.

While a total of 38 coal mines were initially put on auction by the coal ministry, a total of 19 mines are finally being bid out. There were initially 76 bids from 42 companies for 23 coal mines, with the remaining 15 mines not getting any bids. Also, four mines got only one bid, putting these 19 mines out of the auction process.

The successful bidders are Aditya Birla Group’s EMIL Mines and Minerals Resources Ltd (Bandha and Radhikapur East), Adani Enterprises Ltd (Gondulpara and Dhirauli), Aurobindo Realty and Infrastructure Pvt Ltd (Urma-Paharitola, and Takli-Jena-Bellora North and South), Boulder Stone Mart Pvt Ltd (Gotitoria—West and East) and JMS Mining Pvt Ltd (Urtan North and Urtan).

Also, Jindal Power Ltd (Gare Palma IV/1), Vedanta Ltd (Radhikapur West), Hindalco Industries Ltd (Chakla), Andhra Pradesh Mineral Development Corp. Ltd (Brahmadiha), Fairmine Carbons Pvt Ltd (Rajhara North—Central and Eastern), Sarda Energy and Minerals Ltd (Sahapur West), Yazdani International Pvt Ltd (Marki Mangli II) and Chowgule and Company Pvt Ltd (Sahapur East) have placed the winning bids.

These 19 coal mines have a rated production capacity of 51 mt annually and will help generate the state governments an annual revenue of around Rs7000 crore. An upfront payment of 1048 crore will be made to the state governments, and will be adjusted later.

Joshi said that while the Jharkhand government had expressed apprehension over revenue in the present covid situation, he was happy to share that with 2,690 crore in direct annual revenues from its coal mines auctioned, the state will be the highest revenue earner amongst peers whose mines have been bid out in this tranche.

The Jharkhand government has also filed a suit in the Supreme Court regarding these commercial coal mine auctions.

Responding to a query about Supreme Court stating that any actions are provisional and will be subject to the orders of the apex court, Joshi said, “Whatever the Supreme Court has said is a direction to all of us and naturally it will be followed."

ABOUT THE AUTHOR

Utpal Bhaskar

"Utpal Bhaskar leads Mint's policy and economy coverage. He is part of Mint’s launch team, which he joined as a staff writer in 2006. Widely cited by authors and think-tanks, he has reported extensively on the intersection of India’s policy, polity and corporate space.
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