No limits

New Delhi, April 7: The Congress-led government today clarified that it had not set any limits to foreign direct investment (FDI) in captive coal mining.

Santosh Bagrodia, the newly appointed minister of state for coal, said there was no limit on investment as long as the coal mined was being used by the specified end user.

Bagrodia, who has his roots in Calcutta, said, “We are not encouraging privatisation in coal mining, but there is no restriction on FDI in captive coal mining.”

This clarification will help end-user companies take on foreign investors for their captive mining ventures.

The government has already allocated coal mines to ArcelorMittal in and is likely to make similar allotments to Posco for plants being set up by these two global giants.

Bagrodia said his goal would be to increase coal production in the country.

“We have to maximise coal production at a minimum cost of production. And I will bring about complete transparency and fairness in the functioning of state-run coal companies.”

He said he would ensure mining accidents were reduced to zero in the future.

India is likely to offer about 30 coal fields after April for exploration and production to increase output.

The government is awaiting parliamentary approval for changes proposed in rules governing coal mining. The changes will allow the ministry to invite bids.

Currently coal bearing land is allocated to steel mills and power plants by the central government, but often questions of a lack of transparency arise in such allocations.

Officials said amendments to the Mines and Minerals (Development & Regulation) Act to introduce competitive bidding for coal blocks could change all that.

They said competitive bidding would be based on both technical and physical parameters as well as financial parameters.

Part of the money from the auction will be earmarked for rehabilitation and community development projects in the coal bearing areas, which are mostly on tribal lands. This has been done because of the spate of tribal unrest in the coal bearing states such as Jharkhand and Orissa over land acquisition.

To help “informed decision making”, no block will be allocated “unless it is explored in detail and an assessment of quality and quantity of extractable coal reserves made.” The cost of this exploration will be recovered from the successful bidder for the block.

The new rules also provide for part of the money generated from competitive bidding to be placed in a special fund for developing forest and tribal areas where these coal blocks are located.

Currently, about 60 per cent of the country’s total energy requirement in the country is met by coal.

Coal-based power generation accounts for around 70 per cent of the total power generation in India.

Coal demand in the country is expected to increase several fold in the next few years because of the burgeoning demand from power, steel and cement companies.

India has about 10 per cent of global coal reserves, estimated at over 92 billion tonnes, but these are of low quality and have to be supplemented by imports from China and Australia.