With an aim of raising domestic production and reducing imports, India is going to open up the coal sector for commercial mining. A tender for the auction of coal blocks by the coal ministry for commercial mining is on the anvil for June 11. As the investor sentiment is low because of the pandemic, a series of roadshows will be conducted to attract companies to the first round of bidding. Relying on the fact that India is one of the world's biggest resources of thermal coal, the government expects to garner interest from domestic and international mining companies, as well as foreign investors.
The auction will level the playing field in the coal sector, ending the monopoly of state-controlled Coal India (CIL). The company has missed its production target for the 15th consecutive financial year. Its supply of coal to the power sector has dropped 22 per cent to 31.95 million tonnes in April on the heels of depleting fuel demand in the country, induced by lockdown. CIL, being the world's largest producer of coal, is a primary supplier of coal to the Indian power sector. As the power sector witnesses a drop in fuel consumption, CIL is focusing on the process of removing the top soil and rock to expose coal seams in its open cast mines.
According to a report by PTI, the enhancement in overburden removal will enable CIL to accelerate production whenever the demand picks up and coal can be supplied to its customers at short notice. Over 95 per cent of CIL's production comes from its 171 open cast mines. The PSU removed 114.43 million cubic metres of overburden in its open cast mines in April 2020, as compared to 104.22 million cubic metres a year ago, registering an increase of 9.7 per cent.
As per a Central Electricity Authority (CEA) report, as on April 30, 2020, there were 50.89 MT of coal stocked up at the power houses in India, which is believed to last for 31 days. CIL itself has a pit-head stock of about 76 MT as on April 30. The PSU is pursuing states, especially southern ones, to increase the intake of domestic coal as a substitute for imported coal. It is looking to catapult its production to one billion tonne by 2023-24.
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