New Delhi, Jun 18 (PTI) Opening of the coal sector to private players will generate jobs, reduce dependence on fuel import, stimulate the economy and catalyse the country’s path towards a USD 5-trillion economy, the industry said on Thursday.
Prime Minister Narendra Modi launched the virtual auction process for 41 coal blocks for commercial mining, which is expected to garner Rs 33,000 crore of capital investment in the country over next 5-7 years.
Industry body Ficci said that commercial mining will modernise the coal sector.
“This landmark reform will unlock country’s natural resources,” Ficci President Sangita Reddy said.
CII stated that the de-nationalisation of the coal sector will help in bringing new investment and advancement in technology.
“It is a watershed moment in the history of the coal sector for India. The step reflects the GOI’s firm commitment in moving towards AtmaNirbhar Bharat. It is also important to look at important aspects as quality of coal and coal prices at the outset so that the sector is streamlined in terms of policy and regulations to support India’s vision,” CII Director General Chandrajit Banerjee said in a statement.
The auction of coal mines for commercial mining and relaxation of FDI in the coal sector will create a lot of interest for companies engaged in the coal mining and associated activities such as mine developer and operator (MDO) sectors, Arvind Sharma, Partner, Shardul Amarchand Mangaldas & Co said.
The timing of launch of the commercial mining is critical since the reserves must be utilised to build the country before the focus shifts to entirely to renewable energy, he said.
Stating that launch of auction process for commercial coal mining was a transformative reform in the energy sector, Cyril Amarchand Mangaldas Partner Ramanuj Kumar pointed out that environmental concerns and delays are likely to result in muted interest from international investors.
“We expect strong interest from domestic mining and power companies since bid terms are attractive as compared to other mineral auctions,” Kumar said.
Tata Sons Chairman N Chandrasekaran was of the view that with reforms like this, the mining sector can easily contribute 5 per cent to India’s GDP.
Commercial mining will be a very successful initiative and it will generate huge amount of growth, significantly reduce imports and create lots of jobs, he said.
Vedanta Chairman Anil Agarwal also said that commercial mining will create infrastructure and people in the backward region will get employment.
“The bold decision taken by the Prime Minister to open up coal sector will result in massive job creation and generate a lot of revenue as we can replace coal import worth Rs 80,000 crore every year,” he said in a tweet.
“This will also support the industry to bring down the cost. In these difficult times, it will be very useful for the growth of the country,” he tweeted.
The Council on Energy, Environment and Water (CEEW) said while India’s coal demand is likely to increase in the next decade, the investment in green-field projects to expand production capacity must be examined more carefully.
“Import dependence is not a bad thing, especially if it defers or removes investment needs into new mines in pristine environments in the country, CEEW Research Fellow Karthik Ganesan said.
The government’s attempt to promote coal-gasification is also puzzling, he said, adding that from a climate standpoint, it defeats India’s efforts to rein in CO2 emissions.
“Power generation and industrial applications that use syngas are 40 per cent – 80 per cent higher in CO2 emissions, as compared to those that use natural gas. Syngas is not cheap either. Data from the IEA suggests we might as well unlock deep-water gas instead of pursuing syngas, given the delivered price could be 4 6 USD/mmbtu higher than conventional gas.
“Also, while the use of syngas reduces air pollution outcomes, as compared to burning coal, it comes with a significant risk of polluting underground water resources with phenols and aromatic compounds that are generated in-situ and that could migrate out of the generation wells,” Ganesan said.
In this auction process, 41 coal mines are on offer which includes fully explored and partially explored mines. These include 4 coking coal mines which are fully explored mines. These coal mines are located in states of Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra and Odisha.
The auction process will be a two-stage tender process with technical and financial bidding.