India closer to ending decades-old state monopoly on coal

India closer to ending decades-old state monopoly on coal

In a move to reform its ailing energy sector, India has paved the way for private sector companies to mine coal commercially in the country.

The 27-page decree published on the coal ministry’s website this week may end a four-decade monopoly by nationalized Coal India. This as it states that any company or joint venture “may carry on coal mining operations in India, in any form either for own consumption, sale or for any other purpose”.

"The entire coal sector was lying idle; it's an attempt to bring it to life once again," Finance Minister Arun Jaitley said, according to Bloomberg.

The ordinance came after the Supreme Court cancelled more than 200 coal permits in September, declaring the previous process of awarding them illegal and throwing the sector into transitional turmoil.

To date private companies in sectors such as power and steelmaking have been handed use of so-called “captive” coal mines, with output used to fuel their plants rather than sold on the open market.

But New Delhi’s latest decision could change that, bringing big repercussions for Coal India, the state-owned group that controls some 80% of the country’s total production.

Both, the company and the coal sector have been plagued by inefficiencies, poor infrastructure and red tape. It has largely failed to better meet the electricity needs of India's 1.25-billion population.