MNCs to get coal mine pie
PM Modi to woo MNCs to mine coal by setting up India arm
By : DC Correspondent
Update: 2014-10-23 03:06 GMT
New Delhi: India could allow commercial coal mining by foreign companies if they set up units in the country, opening the door for global giants like Rio Tinto to access the world’s fifth-largest coal reserves, a source familiar with the matter said.Prime Minister Narendra Modi’s decision to open commercial coal mining to private players is a key step towards bringing order to the country’s chaotic power industry and ending the chronic blackouts that impede its economic rise.
Nearly a quarter of a century after India embraced economic liberalisation, many businesses still rely on costly back-up generators for round-the-clock power and a third of its 1.2 billion people are still not connected to the grid. As of now, only Indian power, steel and cement companies can mine coal for their own consumption. Commercial mining is dominated by state-owned Coal India Ltd. But the government now plans to allow companies like Rio Tinto India to mine coal commercially after it completes the auction of 74 coalfields for the exclusive consumption of Indian companies’ power, cement and steel plants, said the source, who did not want to be identified as he is not authorised to speak to the media.
In a 27-page executive order posted on the Coal ministry’s website on Wednesday, the government said any firm incorporated in India may be allowed to mine coal for their own consumption or sale, ending a 42-year-old ban. The document did not make any direct reference to allowing foreign firms. Rio Tinto India managing director Nik Senapati declined to comment.
Other foreign players that may show interest in India are BHP Billiton and U.S. firm Peabody.A Coal India official said it would be natural for the government to allow deep-pocketed foreign companies to mine coal, given the need to invest heavily and quickly raise output. Opening up the industry would ultimately boost production of a raw material that generates three-fifths of India’s power supply, and it will pile pressure on Coal India to produce more.
Meanwhile, an Ordinance on coal mines said that all firms which had their coal blocks cancelled by the SC can bid in the e-auction after paying additional levy. The companies engaged in specified end use plants also qualify to participate in the e-auction, said the Coal Mines (Special Provisions) Ordinance 2014.
“A prior allottee shall be eligible to participate in the auction process subject to payment of the additional levy within such period as may be prescribed and if the prior allottee has not paid such levy, then its promoter shall not be eligible to bid either by itself or by way of a joint venture,” said the Ordinance which was made public on Wednesady.