An ordinance or executive order that allows commercial mining for domestic companies will lead to investments and surplus in the coal sector and state governments can start using the enabling provision in it after the first round of coal mine auctions, likely to be completed in three or four months, Finance Minister Arun Jaitley told NDTV today. (Watch the full interview here)
The Narendra Modi government promised on Monday to open up the coal industry to private players and moved closer to selling a stake in state-run Oil and Natural Gas Corp or ONGC as the PM picked up the pace on economic reform days after relaxing fuel price controls. (Read the full story here)
Using the ordinance, the cabinet agreed to allow private Indian companies to mine and sell coal at an unspecified future date, setting the stage for the biggest liberalisation of the industry in more than 40 years.
"In the first round we have given it to the actual users and this we intend completing in 3-4 months. After this is done, the government can immediately thereafter, so sometime thereafter, start using that enabling power which has been given under the enabling Act. Therefore it is a much needed step forward," he said.
Coal India accounts for 80 per cent of domestic coal output, but has missed production targets for many years. India has to import a large amount of coal because of large gaps between required and available coal supply, making India the world's third-largest coal importer despite having the fifth-largest coal reserves in the world.
The ruling BJP's success in the Maharashtra and Haryana assembly elections last week capped several days of action on the economic front and has given Mr Modi more room to cut through a thicket of regulations and state controls that he says holds back the country's economy.
On Saturday, the cabinet freed diesel pricing of government intervention and raised the price the government pays producers of natural gas by a third to $5.61 per million British thermal unit. (Read)
The moves make the state-run ONGC more attractive to investors by reducing the hefty discount on crude oil sales that the country's top oil producer must give to fuel retailers.
On Monday, top privatisation official met bankers in Mumbai to discuss the sale of a 5 percent stake in ONGC, Reuters reported.
"Merchant bankers have been appointed, advisors have been appointed. And the first two divestments that we intend doing is ONGC and Coal India itself," Mr Jaitley said.
The finance ministry hopes to raise up to $3 billion from the ONGC sale, almost a quarter of its target for asset sales for this financial year.