Central, State PSUs can now sell coal commercially

Blocks can also be auctioned for coal gasification

Central and state public sector enterprises can now be allotted coal mines for commercial sale of the fuel.

The Cabinet Committee on Economic Affairs has allowed the companies to do so under the provisions of the Coal Mines (Special Provisions) Act. The government-owned companies will need to pay a one-time upfront amount of 10 per cent intrinsic value of the coal in the mine as well as a monthly royalty based on the amount of fuel mines.

The one-time upfront payment will have to be made in three instalments in the first year of allotment.

An official statement said that this would meet the demand for coal from medium, small and cottage industries. “This shall also enhance domestic production of coal to meet the demand of national economy, thereby reducing import,” the statement said.

“It is expected that the incremental coal produced from such coal mines would cater to the unmet demand of the coal in the country especially of medium, small and micro industries and bridge the gap between demand and supply considerably,” it added.

It may be recalled that the Coal Mines (Special Provisions) Act also treats joint ventures between PSUs and private companies as a government company as long as a PSU holds 74 per cent stake in the venture.

In another decision, the CCEA also approved a policy for development of underground coal gasification in coal and lignite bearing areas.

“A policy on the lines broadly similar to the existing policy for Coal Bed Methane (CBM) development on revenue sharing basis will be adopted for offering the blocks through competitive bidding,” an official statement said.

PSUs will be awarded blocks for underground coal gasification on a nomination basis.

An inter-ministerial committee under the Ministry of Coal will identify the areas as well as decide on the blocks for competitive bidding and those for nomination to PSUs.

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