India to end decades-old monopoly on coal

India has taken a historic step towards ending the state monopoly on mining and selling coal by auctioning 41 mines in the country, a move that allows private companies to enter the sector.

The announcement, which puts an end to more than four decades of state control over the coal industry, aims to solve a fuel shortage that threatens to reduce the nation’s industrial activity.

The measure also seeks to boost India’s economy to help it recover from the toll of the coronavirus pandemic.

The Ministry of Coal estimates the mines would generate 330 billion rupees (US$4.3 billion) of capital investment over the next five to seven years, boosting the nation’s output by as much as 225 million tonnes per year.

The authority also expects the operations to provide thousands of jobs — about 70,000 direct positions — and earn states extra annual revenue of 200 billion rupees (US$2.6 billion).

Technical bids, open even to companies with no mining experience, are due in August. After that, the government will begin auctioning the earmarked assets. Such a process will require bidders to propose a portion of revenue they’re willing to share with the government.

India is the world’s third-largest producer of coal, behind China and the United States. Yet it has heavily relied on imports because of mismanagement and an onerous bureaucracy in coal exploration, production and power generation. As a result, nearly a quarter of India’s 1.38 billion people have no electricity, according to the World Bank.

Prime Minister Narendra Modi described the announcement, which has been in the making for years, as a major step in the direction of achieving self-reliance.

India, which nationalized its coal industry in 1973, says the mines could contribute 15% of the country’s projected total coal production in 2025-26.

— This article first appeared in The Northern Miner and are part of the Glacier Resource Innovation Group.


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