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Web Exclusive | March 2013

Govt to introduce PPP model for coal mining

Government plans to raise coal output in the country by introducing public private partnership (PPP) model in the sector.

During 2011-12, India’s total coal output stood at 559 million tonne (mn t), short of the demand at 696 mn t, data from the Coal Controller shows.

Coal India, the world’s largest coal mining company that owns at least 400 mines in India, saw production growth of just 1 percent in 2011-12 to 435.84 mn t, lower than the growth it saw in earlier years, owing to bad weather.Land and environment related hurdles have prevented it from expanding in pace with demand.

Private and foreign mining companies say they would participate in the coal mining projects if the government gives more ownership rights. These mining companies are looking to see if the PPP model offers more than just an mine developer-cum-operator (MDO) role for them. According to the model of MDO in use currently at Coal India, private parties are just contractors.

Currently, Essel Mining is the MDO for two of Coal India’s mines—the 20 million tonne per annum Bhubaneshwari mine in Orissa, which are a year old, and Rajmahal in Jharkhand, which has just started to operate.

These operations are fee-based, where the MDO gets a fixed amount for every tonne of the coal extracted. Likewise, Adani has MDO contracts with some state governments for mining coal.

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