[op-ed snap] Canary in coal mine

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Mains Paper 3: Economy | Infrastructure: Energy, Ports, Roads, Airports, Railways etc.

Prelims Level: The Coal Mines (Special Provisions) Act of 2015, Cabinet Committee on Economic Affairs, etc.

Mains Level: Steps taken by the government to improve the condition of Coal Sector in India.


News

Permission given to commercial mining firms

  1. The Central government has allowed the re-entry of commercial mining firms into the sector

Background

  1. India’s coal industry was predominantly driven by the private sector after Independence until the Indira Gandhi government decided to transfer all coal holdings to Coal India through the Coal Mines (Nationalisation) Act, 1973
  2. The key reason cited for taking coal out of the private sector’s hands was that it was essential to meet power needs

Why is this step imortant?

  1. India has a high dependence on coal for power generation
  2. Despite an aggressive push for renewable and nuclear sources, 70% of electricity generation is through coal-fired thermal plants
  3. In recent years there has been a significant surge in imports as Coal India, despite its rich coal-bearing belts and increased output, is unable to keep pace with demand from new power plants
    (Coal India accounts for over 80% of the country’s coal supply)

Cabinet Committee on Economic Affairs recently cleared the methodology to be followed for auctioning rights

  1. In September 2014, the Supreme Court cancelled the allocation of 204 coal mines to public and private players, after the CAG report
  2. An ordinance was brought in(at that time) and a transparent auction process was evolved for the affected mines
  3. The intention was to ensure that there are no supply shocks for power producers on account of abrupt disruptions in mining operations
  4. Enabling provisions for commercial mining and sale of coal were already included in the Coal Mines (Special Provisions) Act of 2015
  5. Now, the Cabinet Committee on Economic Affairs has now allowed their operationalisation by clearing the methodology to be followed for auctioning rights
  6. The government says the move will boost energy security, making coal affordable and creating jobs
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