Reforms initiated in 2014 transform coal sector, making it more efficient, transparent, investor-friendly and ensuring coal’s vital role in nation’s economic growth and energy security

By teadmin On Feb 28, 2024

India’s coal sector has embarked on a journey of reform and modernization, guided by the principles of sustainability and energy security. These transformative reforms have not only boosted production but also enhanced the efficiency and competitiveness in the coal sector with the broader goals of economic development and environmental conservation. Initiated in 2014, these reforms have addressed long standing challenges and unlocked the coal sector’s potential contributing significantly to the nation’s economic growth and energy security.

Key reforms of the decade encompass:

Enactment of CMSP Act- 2015-

The Coal Mines Special Provisions Act, 2015 was enacted to address the aftermath of the Supreme Court’s cancellation of 204 coal blocks allocations in 2014. The Coal Mines Special Provisions Act, 2015 Act played a crucial role in reforming the coal mining sector in India by introducing the transparent auction process, encouraged Private participation, generated revenue for the government, creating employment opportunities.

Mines and Minerals (Development and Regulation) Amendment Act:

The Mines and Minerals (Development and Regulation) Amendment Act, brought significant changes to the mining sector in India with a focus on enhancing transparency and efficiency in the allocation of mining licenses. This amendment allowed Composite Prospecting Licence-cum-Mining Lease (PL-cum-ML) specifically for coal.

Commercial Coal Mining:

In 2020, commercial coal mining auctions were launched by the honorable Prime Minister, marking the entry of private players into the coal sector. This move attracted investments, spurred competition, and led to increased efficiency and faster project implementation. As a result, over three lakh new jobs were created directly and indirectly, providing much-needed employment opportunities in coal-rich states. Since June 2020, a total of 91 coal mines, having PRC of more than 220 MT/ Annum, have been successfully auctioned.

Single Window for E-auction of coal: Government has approved in 2022 a new mechanism for e-auction of coal by the coal companies. This single e-auction window will cater to all the Sectors viz. Power & Non-Regulated Sector including traders. It would enable the coal companies to sell coal through the market discovered price mechanism and thus, implementing this policy will lead to the removal of Market distortions. It shall also increase operational efficiencies and lead to an increase in domestic coal demand by efficiency in domestic coal market.

Opening of abandoned/discontinued mines:

Amendments to the New Coal Distribution Policy (NCDP) now allow the sale of coal from Closed/Abandoned/Discontinued mines of CIL through transparent processes. The Ministry of Coal facilitates private-sector participation in re-opening abandoned mines, with 36 identified for re-opening on a Revenue Sharing basis, and LoAs issued for 13.

Guidelines for Mine Plan and Mine Closure Plans: On 29.05.2020, Ministry of Coal had issued a consolidated guidelines for submission, processing and approval of Mine Plan and Mine Closure Plan. Subsequently, Mine Plans/Mine Closure Plans are approved online through SWCS portal. This has significantly eased approval process.

Decriminalization to boost doing business-The Ministry of Coal has amended the Mineral Concession Rules, 1960 (MCR) to decriminalize its provisions. This amendment further promotes and boosts the government’s “Ease of Doing Business policy by decriminalizing sixty-eight (68) provisions of the MCR, while reducing the penalty for ten (10) provisions.

Transparency and Ease of Doing Business: Streamlined processes and online platforms like the Single Window Clearance System have simplified procedures and improved transparency in coal block allocation and mine operations.

FDI and Technological Advancement: Allowing 100% FDI in coal mining has attracted global expertise and advanced technologies, further boosting efficiency and productivity. It has opened new avenues while contributing to economic growth.

Coal Mines Surveillance and management System and Khanan Prahari App:

With Khanan Prahari and CMSMS, the Ministry of Coal enhances security for legal coal mining and protects natural resources. Khanan Prahari empowers citizens to report illegal mining, while CMSMS aids tracking and analysis, fostering transparency and coordination.

New sub-sector under the Policy for Auction of coal linkages of Non- Regulated Sector (NRS): A new Sub-sector “Production of Syn-Gas leading to coal gasification” has been created in 2022 under the NRS linkage auctions in order to encourage coal gasification technology so that new consumers requiring coal for coal gasification are incentivized. This will also mitigate the adverse impacts of conventional use of coal on the environment.

Integrated Coal Logistic Policy and Plan: The Ministry of Coal has formulated Integrated Coal Logistics Policy and plan aims to develop resilient and cost -effective coal evacuation logistic system. With 103 FMC projects in progress with total capacity of over 1000 MT costing about Rs 24,000 Crores. Of these, 31 projects with capacity about 290 MT have already been completed, underscoring the commitment to modernizing coal transportation.

Furthermore, in alignment with PM Gati Shakti, the Ministry has initiated 14 railway projects, addressing multimodal connectivity gaps with an investment of Rs 26,000 crores. Three of these projects are already operational.

Sustainable Practices: The Ministry of Coal has championed sustainable mining practices, promoting responsible coal extraction and rehabilitation of mining areas to minimize environmental impact and ensure the well-being of local communities. During the last 10 years significant work on environment conservation has been achieved by converting about 18,868 hectares of land into green cover through massive plantation of more than 423 lakh sapling. Similarly, 28 eco parks /Mine tourism site were established covering 261 hectares of land integrating 7 park with local tourism

Investment in Coal Gasification: Recognizing the importance of reducing emissions and mitigating climate change, significant investments have been made. A recent Cabinet approval has paved the way for a comprehensive scheme with a Rs.8,500 crore outlay, promoting Coal/Lignite Gasification Projects. Cabinet has also approved the proposals for equity investments for the establishment of a Coal-to-SNG Project at ECL command area through a joint venture of CIL & GAIL, and a Coal-to-Ammonium Nitrate Project at MCL command area through a joint venture of CIL & BHEL.

Diversification of Energy Sources: In line with India’s commitment to diversifying its energy mix, Ministry of Coal is actively promoting extensive diversification within CPSEs, establishing pit-head TPPs, Solar Power Plants, Coal /Lignite Gasification plants, critical Mineral exploration. Emphasizing the use of de-coaled land for cost-effective pithead thermal power plants, the Ministry’s directive aims to secure sustainable operations for both CIL and NLCIL, anticipating a future coal surplus.

These reforms have transformed the coal sector, making it more efficient, transparent, and investor-friendly. The Ministry of Coal is committed to sustaining this progress, ensuring coal’s vital role in India’s energy security and economic development, while prioritizing sustainability and social responsibility.