NDA government must focus on coal sector reforms 3.0, ET EnergyWorld

New Delhi: The new NDA government led by Prime Minister Narendra Modi must use its third term to act on its unfinished coal sector reform agenda. The key energy subsector is the basis of many key industries, and the latest stage of its reforms could lead to lower coal prices and better availability.

The government may consider at least four key reforms. First, further opening it to private sector investment. When the government opened up the sector in 2020 to allow commercial coal mining, it allowed the auctioning of coal mines without any end-use restrictions.

Now she could work on a further program of liberal reforms so that the private sector finds it worth investing in and getting a return. As part of this, underground coal mining, which is much more environmentally friendly, should be promoted. The government could also allow auction of Coal India (CIL) coal without end-use restrictions for washing purposes. Currently it depends on the end use.

So, coal from Coal India is currently undergoing end-use auction for industries like cement, paper etc. In the third phase of reforms, the government could take the opportunity to make coal auctioned CIL without end-use, in a manner similar to commercial coal mining by private sector that is not used by the end user.

The second key area of ​​reform could be promoting alternative uses of coal. Given the significant improvement in coal availability, the country may have a coal surplus in the next 2-3 years. If the surplus is not used for other purposes, production will suffer. For example, coal gasification could be a high priority area for the government.

As the third reform measure in the coal sector, the government must focus on improving mechanized coal handling. Currently, India transports about 16 percent of its total coal production mechanized. There is a possibility of a significant increase in this number soon, as much of the necessary basic infrastructure has already been put into operation.

It’s finally time to launch the long-awaited coal trading exchange. It could be created by the exchange operator so that the government only provides a platform to sellers and buyers of fuel. A coal trading exchange could be similar to platforms of this type in the energy and natural gas sectors.