Govt may allot 15 blocks to PSUs for commercial coal mining

New Delhi: Moving ahead with its decision to open up the coal sector for commercial mining, government has identified 15 blocks to be alloted to central and state PSUs for undertaking production and sale of the dry fuel.

With the allotment, the Centre's monopoly over mining and sale of coal will come to an end.

"As many as fifteen blocks have been identified for allotment to state and central PSUs for commercial mining," a top official told PTI.

Preliminary exploration in most of these blocks through initial drilling has been done, which is known as regional exploration, the official said.

In the initial stage of exploration, Geological Survey of India (GSI) undertakes regional exploration of large areas to find out the broad availability of coal seams, geological structure, resources etc, he said.

Detailed exploration of the blocks will follow once they are allotted to state or central PSUs, the official added.

Last month Coal Secretary Anil Swarup had said, "We are preparing groundwork for commercial mining... We are looking at a few mines and the work has been undertaken to identify mines."

"The ministry is working towards creating a platform (for commercial mining) "in the next 3-4 months", he had said.

For the first time in over 40 years, the government is throwing open the coal sector for commercial mining, which at present is being undertaken by the central PSU Coal India.

The Cabinet recently gave its approval for allotting coal mines to central and state PSUs for sale of coal, especially to medium, small and cottage industries, under the provisions of the Coal Mines (Special Provisions) Act, 2015.

The decision was in line with the government's target of doubling coal production to 1.5 billion tonnes by 2020. Of this it has fixed a target of 1 billion tonne of coal production by Coal India by 2020.

Coal India accounts for over 80 percent of the domestic production and has a target to produce 550 million tonnes of coal this fiscal.

The government has made it clear that the decision for commercial mining will not impact Coal India.

It also said that commercial mining "will also enhance domestic production of coal to meet growing demand of the economy, potentially cutting down imports".

It has said that the coal-bearing states will get additional revenue from such coal 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 is 10 percent of the intrinsic value of coal in the mine, in three instalments in the first year of allotment.