KOLKATA (miningweekly.com) - India’s Ministry of Coal has issued policy guidelines for allocation and development of isolated small coal patches spread across the country, as a short-term measure to boost coal production and cope with acute shortages faced by several key industrial sectors.
The Ministry of Coal has identified 20 isolated and small coal patches, each with estimated reserves averaging around 10-million tons, which unlike coal blocks, remain unexplored because small uneconomic sizes make them unviable for development by large user industries.
However, against the rising demand-supply gap of coal in the country, India’s Ministry of Coal has taken the view that the isolated coal patches could be developed in shorter gestation periods if allocated to local industries that fall under categories of small and medium sectors.
This new policy guidelines aimed to achieve such an objective.
Ministry of Coal director P S S Reddy said in a notification that it has been decided that isolated small coal/lignite pockets would be allotted to mineral development corporations of local state governments, which may develop these blocks as per existing guidelines or government dispensation route.
The director has kept a 15-day window to seek feedback and comments from various stakeholders, following which the ministry would initiate moves to formalise the guidelines into rules through appropriate government notification.
Isolated coal patches have been left out of the purview of the National Mineral (Development and Regulation) Bill 2010 that is currently pending before the Indian Parliament. Coal Ministry officials said that under this new law, coal blocks would be allocated to users through auction.
However, since coal patches did not fall within the purview of this law, a separate policy guideline needed to be issued wherein the isolated coal patches could be allocated to mineral development corporations under local state government for either direct development or given over to private developers through sub-lease. This sub-lease arrangement would be entered into under conditions that coal produced would be for use by only local industries and not transported to other parts of the country by railroad.
Officials said that state-level local governments or mineral development companies controlled by the local governments often did not find it viable to develop isolated coal patches as primary leaseholders and instead preferred to focus on larger areas.
The new policy guidelines will facilitate the primary leaseholders to allocate the patches through sub-lease through an auction process, in the event local state government or their mineral development companies were unable to develop patches on their own.
India’s Coal Minister Sriprakash Jaiswal said that development of isolated coal patches would increase production and would be beneficial to local industries in vicinity of the coal patch.
“In my view auction is the only equitable basis for allotment of coal patches to user industries, and the policy guidelines will be implemented by governments of states under which the coal patches fall,” he added.
Jaiswal also said that the ministry would soon float global tenders for development of abandoned coal mines across the country. The Coal Ministry has identified 27 abandoned mines estimated to have reserves of 500-million tons and proposes to revive and develop these through joint ventures with global investors.
The Ministry of Coal’s initiatives on isolated coal patches and abandoned mines are firefighting measures to cope with projected supply shortfalls.
Ministerial figures revealed that total coal production in 2011 is forecast at 572,73-million tons against a demand of 654-million tons, leaving a shortfall of 82-million tons to be met through imports.