India aims to tighten coal reform plans

India's coal ministry is seeking the view of stakeholders on its proposed auction of coal blocks for commercial mining. This is part of plans to further tighten its reform agenda that aims to boost domestic coal output and reduce imports.

The ministry wants stakeholders to respond by 31 January on a consultation paper it has issued that summarised the proposed auction plans. It expects stakeholders — including consumer industries such as power generators, steel and cement makers — to weigh in on key parts of the proposal, including the national coal index, before a decision is made on the auction plans that recently moved after facing delays.

The ministry also issued a list of 74 coal blocks tentatively identified to be tendered out in several tranches of the proposed auction. It is also seeking industry feedback on the mines before a final list is prepared for the first round of bidding.

But the note suggests that the policy could encourage firms to export coal, a move that may dent plans to boost local supplies and slash imports. India is a net importer of coal, although very small volumes are exported to neighbouring countries such as Nepal, Bhutan and Bangladesh.

A successful bidder will be "free to sell coal in any manner" including exporting the fuel, according to the consultation paper. This could keep miners focused on the international market that could fetch higher prices than the local market. However, there are likely to be few takers for low-grade Indian coal in the seaborne market.

"The issue of exports is theoretical," a coal ministry official told

Argus

. "If Indian coal production becomes surplus, then only will this issue arise."

Indian thermal coal imports in December grew by 1.4mn t from a year earlier to 15.5mn t, data from shipping agency GAC show. Imports for 2019 grew 14.4mn t to stand at 185.5mn t. But growth slowed from a rise of 23.9mn t in thermal coal imports in 2018 against 2017.

Imported coal partly made up for a shortfall in domestic supply as state-controlled producer Coal India, which meets more than 80pc of India's coal needs, reported a drop in annual supplies to power plants in 2019, a first in several years.

By Saurabh Chaturvedi