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India invites Coal mine bids ending decades-old State monopoly

18th June 2020

By: Bloomberg

  

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India officially started opening its coal sector to non-State firms, seeking to end a decades-long government monopoly on mining and selling the fuel.

The country on Thursday launched its first auction process, which will cover 41 mines, the Ministry of Coal said in a statement.

The Ministry expects the mines to generate 330-billion rupees of capital investment over the next five to seven years, and boost the nation’s yearly output by as much as 225-million tons.

Despite a global shift away from coal to cleaner energy like wind and solar generation, India is seeking to boost production as a way to help the country recover from the economic toll of the Covid-19 pandemic. The Ministry estimates the mines will directly employ nearly 70 000 people and earn states extra annual revenue of 200-billion rupees.

“States will earn higher revenues and local people people will get jobs,” Prime Minister Narendra Modi said at a ceremony marking the event. Private sector investment will bring in new capital and technology and help India reduce imports of the fuel, he added.

Technical bids are due Aug. 18, and the process is open to companies with no mining experience. That will be followed by auctions, which will require bidders to propose a portion of revenue they’re willing to share with the government. No date has been set yet for the auctions.

Anil Agarwal, chairman of Vedanta Resources and N. Chandrasekaran, chairman of Tata Sons, attended the ceremony through video-conference.

India brought coal mining under state control in 1973, with formation of Coal India in 1975. In 1993, the government allowed companies to mine coal for their own use. Modi started the process of further easing government control over the industry soon after his first term in New Delhi began in 2014.

Edited by Bloomberg

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