Make use of successful coal auctions

Make use of successful coal auctions

The response to India’s maiden auction of coal blocks for commercial mining seems to have been fairly good: of the 38 blocks up for auction, 19 received multiple bids, and were successfully auctioned. We need to speedily operationalise the mines, step up efficiency in coal beneficiation and transition to net zero emissions along a low-carbon path.

The 19 blocks have a combined peak-rated capacity of 51million tonnes (MT) per annum. Domestic coal output is about 700 MT, but we also imported nearly 200 MT of coal in 2019, the bulk of it non-coking steam coal readily available in our large reserves.

The heavy reliance on a coal monopoly for years has clearly stultified production, and at a huge national cost. Note that coal imports add up to over Rs 1.5 lakh crore annually. The target is to raise domestic coal output to just over 1,100 MT by 2023. In tandem, we need to gainfully boost capacity for coal beneficiation at pitheads and streamline evacuation for heightened productivity in supply.

In the auction, 76 bids were received and revenue share was the bidding parameter. As many as 65% of the bidders were from non-end-user sectors such as real estate and infrastructure.

The way ahead is to have independent regulatory oversight for coal mining. In parallel, we need to proactively raise thermal efficiencies in power, steel, cement and other coal-intensive sectors, with fast-paced diffusion of high efficiency coal technologies such as coal-gasification combined-cycle plants.

The US-India Strategic Energy Partnership needs better leveraging, to gain from the US Department of Energy’s Coal FIRST (Flexible, Innovative, Resilient, Small, Transformative) initiative to develop 21st-century energy systems, including via coal gasification.