Lok Sabha Question No. 123 (STARRED), answered on 2021-07-28
Subject: Reforms in Coal Sector
Ministry: COAL
Asked by: Shankar Lalwani

## GOVERNMENT OF INDIA MINISTRY OF COAL

## LOK SABHA STARRED QUESTION NO - 123

TO BE ANSWERED ON 28.07.2021

## REFORMS IN COAL SECTOR

## *123. SHRI SHANKAR LALWANI:

Will the Minister of COAL be pleased to state:

(a) whether the Government has formulated schemes for making several important reforms in the  coal  sector  keeping  in  view  the  Aatmanirbhar  Bharat  Campaign  and  if  so,  the  details thereof;

(b)whether the Government has formulated schemes to grant approval to commercial mining in coal sector and to provide financial assistance for producing gas from coal and if so, the details thereof; and

(c) whether the Government has formulated any concrete scheme to reduce the import of coal and to increase its domestic production capacity and if so, the details thereof?

## ANSWER

## MINISTER OF PARLIAMENTARY AFFAIRS, COAL AND MINES (SHRI PRALHAD JOSHI)

(a) to (c): A statement is laid on the Table of the House.

## Statement referred to in reply to parts (a) to (c) of Lok Sabha Starred Question No. 123 for  answer  on  28.07.2021  asked  by Shri  Shankar  Lalwani regarding Reforms  in  Coal Sector.

(a): Government has made following important reforms in the coal sector:

(i) Methodology for auction of coal and lignite mines / blocks for sale of coal / lignite on revenue sharing basis and tenure of coking coal linkage was issued on 28.05.2020.

(ii)  Amendments  have  been  made  in the Coal  Mines  (Special  Provisions)  Act,  2015 [CMSP  Act]  and  the  Mines  and  Minerals  (Development  and  Regulation)  Act,  1957 [MMDR Act] through  Mineral  Laws  Amendment  Act,  2020  enacted  on  13.03.2020  to ensure wider participation and competition in auction of coal mines. The amendments in the Acts would enable the following:

-  Allocation of coal blocks for composite prospecting license-cum-mining lease which will help in increasing of the inventory of coal/lignite blocks for allocation.
-  Repetitive and redundant provision requiring previous approval of Central government even in cases where the allocation or reservation of coal/lignite block has been made by the Central Govt. itself has been done away with.
-  Provided flexibility to the Central Govt. in deciding the end use of Schedule II and III coal mines under the CMSP Act.
-  Companies which do not possess any prior coal mining experience in India can now participate in auction of coal blocks.

(b): Yes, Sir. Methodology for auction of coal and lignite mines/blocks for sale of coal/lignite on  revenue  sharing  basis  was  issued  on  28.05.2020. So  far,  20  coal  mines  have  been auctioned for sale of coal under this methodology. Salient features of the Methodology are as under:

-  Based on Revenue sharing mechanism. Floor percentage at 4%.
-  Applicable to fully explored as well as partially explored coal blocks.
-  Upfront amount is based on value of estimated geological reserves.
-  Successful Bidder to pay monthly revenue share based on percentage of revenue share quoted, total quantity of coal and notional or actual price whichever is higher.
-  Incentives for early production, gasification and liquefaction of coal.
-  Exploitation of Coal Bed Methane is allowed.
-  No  restriction  on  the  sale  and/  or  utilisation  of  coal.  More  flexibility  in  coal production schedule.

If the successful bidder consumes the coal produced either in its own plant(s) or plant of its holding,  subsidiary,  affiliate,  associate  for  coal  gasification  or  sells  the  coal  for  coal gasification  process,  a  rebate  of  20%  on  the  percentage  revenue  share  quoted  by  the successful bidder will be allowed on the total quantity of coal consumed or sold or both for gasification on an yearly basis, subject to the stipulated conditions.

(c):  As per the current import policy, coal is kept under Open General License (OGL) and consumers  are  free  to  import  coal  from  the  source  of  their  choice  as  per  their  contractual prices on payment of applicable duty. Following steps have been taken by the Government to reduce the import of coal and to increase its domestic production:

i. An Inter - Ministerial Committee (IMC) has been constituted in the Ministry of Coal for the purpose of coal import substitution. The representatives from Ministry of Power, Ministry of Railways, Ministry of Shipping, Ministry of Commerce, Ministry of Steel, Ministry of Micro, Small & Medium Enterprises (MSME), and Department for Promotion of Industry & Internal Trade (DPIIT), Central Electricity Authority (CEA), Coal Companies and Ports are members of this IMC. This Committee provides a platform for discussions on a larger forum with the Administrative  Ministries  so  as  to  guide  them  to  encourage  the  coal  consumers  of  their respective sector to eliminate imports of coal. On the directions of the IMC, an Import Data System has been developed by Ministry of Coal to enable the Ministry to track the imports of coal.

ii. The Annual Contracted Quantity (ACQ) of power plants has been increased upto 100% of the normative requirement, in the cases where the ACQ was reduced to 90% of normative requirement (non-coastal) or where the ACQ was reduced to 70% of normative requirement (coastal power plants). The increase in ACQ would ensure supply of more domestic coal to the power plants.

iii. In addition to the above, some other measures like Introduction of Facility of Usance LC (Letter of Credit) payment mechanism to help the consumer avail credit facility from bank, Special  Spot  auction  scheme  for  the  coal  importers  including  the  traders,  have  been introduced  to  help  in  curtailing  the  imports  of  coal.  With  the  concerted  efforts  of  various stakeholders,  the  import  of  coal  for  blending  purposes  by  the  domestic  coal  based  power plants in the country has reduced by about 56%, from 23.8 MT during 2019-20 to 10.4 MT during 2020-21.

iv.  The  focus  of  the  Government  is  on  increasing  domestic  production  of  coal.  Coal  India Limited (CIL) has taken the following steps to  achieve  the  target  of  augmentation  of  coal production capacity:

-  Implementing on-going projects in time bound manner to achieve targeted production as per schedule.
-  Introduction  of  Surface  Miners  in  Open  Cast  (OC)  mines  to  improve  operational efficiency and cater to environmental needs.
-  Introduction of Mass Production Technology in underground coal mines.
-  15  Projects  identified  with  a  Capacity  of  about  160  MTPA  (Million  Tonnes  per Annum) to be operated by Mine Developer cum Operator mode.
-  Capacity  addition  through  special  dispensation  in  Environment  Clearance  under clause 7(ii) of Environmental Impact Assessment (EIA) 2006.
-  CIL has taken steps to upgrade the mechanized coal transportation and loading system under 'First Mile Connectivity' projects.

v.  Launch  of  Commercial  Auction: Auction  of  commercial  mining  on  revenue  sharing mechanism from 5 coal bearing states (Jharkhand, MP, Maharashtra, Odisha and

Chhattisgarh) was launched on 18.06.2020 by Hon'ble Prime Minister. During this round of auction,  20  coal  mines  with  aggregate  peak  capacity  of  59  MTPA  were  successfully auctioned. Annual revenue likely to be generated from 20 mines recently auctioned for sale of  coal  at  Peak  Rated  Capacity  of  mines  is  around  Rs.7,419  crores.  Total  employment estimated  to  be  generated  by  these  20  mines  would  be  79,019  persons.  Further,  second Tranche of auction for commercial mining was launched by Ministry of Coal on 25.03.2021. In the II Tranche, a total of 67 coal mines/blocks are offered of which 37 are fully explored and 30 are partially explored blocks. The mines on offer are geographically spread over the coal bearing States. Further to cater to the demand of the coking coal consumers, 6 coking coalmines have also been put on offer. The cumulative PRC for the fully explored mines on offer  has  been  estimated  at  150  MTPA.  Technical  evaluation  of  Bids  is  currently  under process by Technical Evaluation Committee.

vi.  Concept  of  Rolling  Auction : Further,  in  order  to  expedite  the  process  for  conducting auction and to carry out more rounds of auction in a year, a mechanism of rolling auctions of coal  mines  has  been  planned.   Under  this  mechanism,  upon  completion  of  the  electronic auction  process  of  a  tranche  (i.e.  approximately  3-4  months  from  the  launch  of  auction process), the next tranche of auction would be launched for following mines:

-  Mines where no bid or only single bid was received in the previous tranche of auction (except for those mines where Ministry of Coal decides to go for second attempt of auction)
-  New mines, if any, identified by Ministry of Coal

vii.  Launch  of  PMU:  Project  Management Unit  (PMU) has been appointed by Ministry of Coal for handholding of coal block allottees for obtaining various approvals /clearances for early operationalisation of coal mines. PMU has completed initial consultations with the coal mine allocattees and has submitted its Report from time to time. Also PMU started visiting concerned Central and State Government officials to facilitate grant of clearances.

viii. Launch of Single Window Clearance: The Union government launched Single Window Clearance portal for the coal sector to speed up the operationalisation of coal mines. It is an unified platform that facilitates grant of clearances and approvals required for starting a coal mine in India.

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