The Indian Cabinet Committee on Economic Affairs has ended the monopoly of the state-run coal mining company Coal India in the coal mining sector and has approved the methodology for auctioning commercial coal mining blocks, which are now opened to the private sector. Forward auctions to select commercial coal developers will be held in the future and the auction process will be based on the amount companies agree to pay as auction fees per ton. So far, private aluminium and electricity private producers were allowed to bid for captive coal mines only but the new norms do not have such restrictions.
The revenues earned from the auctions will be allocated to the states where the coal blocks are located. Indian and foreign private companies will be allowed to bid for coal mines without any end-use price restrictions. The auction of mines will be conducted in a transparent manner and the government is currently in the process of identifying mines.
The Indian coal mining sector was nationalised in 1973 and this new legislation is expected to lift supplies, boost investments and regulate prices. The government also hopes this decision will raise domestic coal output and reduce imports.
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