Commercial mining to improve coal availability, attract FDI, say experts
Monday, May 18th, 2020
The government opening coal mining for the private sector would ensure better availability of coal and attract foreign investment in the sector, industry experts said on Saturday.
Finance Minister Nirmala Sitharaman in her fourth tranche of the economic package announced that commercial mining will be done on revenue sharing mechanism instead of the regime of fixed rupee/tonne.
“Commercial mining of coal on a revenue-sharing basis would help more coal availability at market prices. So this will be far more efficient…Liberalised entry to allow people to participate for a range of coal blocks and those who produce well before the deadlines incentive would also be given,” the finance minister said.
Welcoming the announcement Arvind Sharma, Partner, Shardul Amarchand Mangaldas said that the “government had recently permitted 100 per cent FDI in commercial coal mining and, pursuant to the recent announcement, I understand be that the auction process for commercial coal mining is to be kickstarted.
“This is a good measure and should ensure better availability of coal. We will also see a lot of foreign investment in this sector as global players will also participate in these auctions.”
“Since the auction seems to be based on revenue share and not a fixed price model, we should see better participation,” he said.
On CBM-based initiatives, Essar Oil & Gas Exploration & Production Ltd (EOGEPL) MD & CEO Vilas Tawde said, “Rs 50,000 crore in evacuation infrastructure would facilitate unlocking CBM potential in Coal India’s leased area, which is estimated to hold 90 TCF of CBM gas (unrisked),” he said.
The introduction of competition, transparency and private sector participation in the coal sector will automatically build transparency of mine valuations, force rigorous mine planning and compliance, invite investments for enhancing operational efficiency to justify the bids made at the time of mine acquisition, Saurabh Bhatnagar, Partner and National Leader, Metals & Mining, EY India said.
Government’s big plan to push coal gasification to replace natural gas in the fertilizer sector would help square energy and food security objectives,
Tirtha Biswas, Programme Lead at Council on Energy, Environment and Water (CEEW) said.
“However, ammonia produced from coal gasification has a carbon footprint that is 1.8 times higher than that produced from the conventional process using natural gas. This could potentially offset the emissions intensity reductions achieved through investments in renewables,” Biswas said.
Jindal Steel and PowerNSE -6.24 % Ltd (JSPL) Managing Director V R Sharma said, “Government has acknowledged the long pending demand of the steel industry. Incentivising the coal gasification process is a welcome move. We are proud of the fact that JSPL is the first company in the world to produce DRI through Coal Gasification route.
“India has third-largest reserves of coal in the world. Its gasification can help our country to reduce import of metallurgical coal and crude oil substantially.”
Coal gasification technology will also enable a cleaner way of using coal, he said.