In a bid to boost coal production and better utilisation of coal mines, the ministry of coal is looking at allowing both private and government companies to surrender non-operational coal mines without forfeiting bank guarantees.

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CNBC-TV18 learns from various sources that the ministry has floated a cabinet note on issues related to non-operational coal mines and has sought views from the related ministries.

The proposal seeks to allow private companies to surrender coal mines under genuine reason on case to case basis without forfeiting a bank guarantee. As of now, companies are allowed to exit a coal mine without forfeiting bank guarantees under the regional or partial exploration stage but not after fully exploring the coal mine.

The proposal also includes allowing both central and state government companies a one time window to surrender non-operational coal mines without any imposition of penalty. Out of 86 allocated and auctioned mines, 53 mines are non-operational and 42 coal mines belong to central or state government led companies.

“The companies both private and government face issues like land acquisition, difficult mining condition, environment and forest clearance, law and order issues. Many companies hesitate to surrender coal mines on account of the encashment of bank guarantees, similarly many good mines are allotted to government companies but are yet to come into operations. This move will allow companies to surrender mines, which can be auctioned, bring in ease of doing business and boost coal production” said a government official who wished not to be named.

This move also comes on the back of a rolling commercial coal auction started by the Ministry of coal which means the auction process will be conducted through the year, the mines which do not find a bidder, or new mines will be added continuously for auction.

In the past SAIL, Tata Steel has surrendered one coal mine each, and Jharkhand and Andhra Pradesh mining development companies have also sought alternate mines from the existing mines. Some companies Hindalco, GMR, Adani Power, JSW, NTPC, NMDC, NALCO, Vedanta amongst others have non-operational mines and may look at surrendering some coal mines.

(Edited by : Abhishek Jha)

First Published:Apr 6, 2021 12:02 PM IST