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Government Approves Auction Of Commercial Coal Mining To Private Firms

Published on February 21, 2018
The government of India has allowed private companies to mine the fossil fuel for commercial use and this ended the monopoly of state-owned Coal India Ltd. This approval is considered be a major reform since coal sector's nationalisation in 1973.

Importance of the reform

It will bring efficiency into the coal sector by eliminating monopoly and starting competition and lower power tariffs. Investments will be pushed giving way for employment generation.

Who approved the proposal?

Cabinet Committee on Economic Affairs (CCEA) under the Chairmanship of Prime Minister Narendra Modi in order to bring competitiveness and technological advancement and hence bringing economic development.


  • A methodology for the auction of coal mines/blocks for sale of coal has been approved under the Coal Mines (Special Provisions) Act, 2015 and the Mines and Minerals (Development and Regulation) Act, 1957. 
  • The auction will be an ascending forward auction whereby the bid parameter will be the price offer is Rs./tonne which will be paid to the State Government on the actual production of coal. There shall be no restriction on the sale and/or utilisation of coal from the coal mine
  • Lagre, medium, as well as small mines, would be offered to private companies for mining.


  • Energy security through assured coal supply
  • Accountable allocation and affordability
  • Transparency and Ease of doing business 
  • Proper Utilisation of Natural Resources
  • Bringing down power tariffs

India's Coal Bearing Capacity

West Bengal, Odisha, Jharkhand, Chhattisgarh, and Madhya Pradesh are the major coal-bearing sates. India is believed to have reserves of 300 billion tonnes. The Supreme Court had in September 2014 cancelled 204 coal mines allocated to the different Government and private companies since 1993 under the provisions of Coal Mines (Nationalisation) Act, 1973.
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