Commercial mining of coal will be allowed to end government monopoly in the sector, Finance Minister Nirmala Sitharaman said today in the fourth set of announcements on a Rs 20 lakh crore stimulus to shore up an economy battered by coronavirus and weeks of lockdown.
"Coal is a government monopoly. That government monopoly is being removed," Ms Sitharaman said, announcing commercial mining on a revenue sharing mechanism.
Nearly 50 blocks would be offered for bidding, she said.
"Coal beds will also be auctioned. Coal bed extraction will also happen through auctioning. Rs 50,000 crore will be spent by the government for creating infrastructure to evacuate mined coal," the Minister said.
Ms Sitharaman also talked about structural reforms in minerals, defence production, air space management, airports, power distribution companies, space and atomic energy in this tranche of the government's economic package.
For the ease of stakeholders in the mining sector, the Finance Minister also announced a seamless composite mining cum production regime.
"500 mining blocks will go up for auction under this. Bauxite and coal mineral blocks will be auctioned together. This will bring everything under one umbrella, instead of different activity auctioned to different players. This will enable a company to do things end-to-end. It will better facilitate the mineral sector," Ms Sitharaman said.
The distinction between captive and non-captive mines will be removed, she said, to allow the transfer of mining leases and sale of surplus unused minerals.
Energy and climate change analysts have reacted with despair at the push for increasing coal production at a time the need to cut emissions has never been greater.
"Nothing could be more ironical; on the one hand the country wants to be leader in the world in renewable energy and on the other it is increasing its dependence on coal. This decision will end up increasing fossil fuel use, which is contrary to India's commitment under the Paris Climate Agreement," said Ritwick Dutta, environmental lawyer.
"Polluting" coal power is already becoming more expensive than solar power. Aarti Khosla of Climate Trends said it's not though the centre is not making any headway in clean, renewable energy. "In the middle of a national lockdown and a 25-40 per cent collapse in Indian electricity demand so far, the government has announced completion of a $2 billion, 2 gigawatt solar tender at a near record low price... It is counter intuitive to be investing in a technology of the past, by giving a fillip to the coal sector," Ms Khosla said.
Tata Power CEO Praveer Sinha said, "There isn't enough time for any new coal plant to run its full life and there is excess capacity now (with slower growth conditions). Any coal plant in the early stage of construction should be revisited. The government already has plans for 30,000 megawatt of existing coal capacity to be closed as they are old."
Ms Sitharaman has been addressing a series of press conferences after Prime Minister Narendra Modi on Tuesday announced a Rs 20 lakh crore special economic package, equivalent to 10 per cent of India's GDP, for the country to become ''self-reliant'' and deal with COVID-19 crisis.