- India has the world’s 5th largest coal reserves, and more than half of total electricity production is through thermal power plants that burn coal to produce electricity.
- To speed up the production of coal, the government is mulling over the scheme to allow the owners to surrender coal mines if they are unable to produce.
- The surrendered mines would be re-auctioned to ensure that production can start as soon as possible.
In the last few weeks, countries in Europe and East Asia are facing a power crisis. However, India has maintained an uninterrupted power supply to its consumers and industries, and the primary reason behind this is the country being Atmanirbhar in coal production.
India has the world’s 5th largest coal reserves, and more than half of total electricity production is through thermal power plants that burn coal to produce electricity. But the supply of coal in the country is still lower than the demand, and if the companies can produce more coal, they will not only capitalise on domestic but also on international demand.
Therefore, in order to speed up the production of coal, the government is mulling over the scheme to allow the owners to surrender coal mines if they are unable to produce and is also removing the penalties imposed on surrender.
“To expedite production from allocated coal blocks and for ease of doing business, a scheme will be prepared to allow surrender of coal blocks to those allocattees where present allocattee is not in a position to develop the coal block due to technical reasons,” according to the Coal Ministry’s agenda for 2021-22.
The surrendered mines would be re-auctioned to ensure that production can start as soon as possible, and India does not face interruptions in power supply in the coming festive season.
India’s total coal production registered a marginal decline of 2.02 per cent to 716.084 million tonnes during the last fiscal year. The country had produced 730.874 million tonnes (MT) of coal in FY’20, according to provisional statistics of 2020-21 of the coal ministry.
Of the total coal production, 671.297 MT was non-coking coal, and the remaining 44.787 MT was coking coal. The public sector produced 685.951 MT, while the remaining 30.133 MT was produced by the private sector.
In the last few months, the coal sector went through unprecedented reforms, with commercial mining being allowed for the first time and the end of the monopoly of Coal India Limited, the inefficient public sector company which kept India backward in coal mining for decades.
The demand for coal in the country is much higher compared to what state-owned companies can produce. Therefore, the thermal power plant companies and other industries which use coal are forced to import from the countries like China and Australia. And, these companies are forced to import not because there is a lack of coal deposits in the country but due to the lack of mining capacity of Coal India Limited, which had a monopoly over the sector till a few months ago.
Therefore, the Union government allowed commercial mining of coal. Many coal mines owned by Coal India Limited and some other private companies are lying idle because they are unable to produce. The latest scheme would transfer the coal mines to the producers who can start the production as soon as possible.
Given the fact that India has the fifth-largest coal reserves (106 billion tonnes) in the world, the country would be ‘Atmanirbhar’ in the coal sector and power sector as soon as commercial mining by private players picks up the pace.