For the first time in more than 40 years, India will allow private mining companies to mine and sell coal, with 23 mines to be auctioned during 2017, Bloomberg News reported Feb. 2, citing Susheel Kumar, the country's coal secretary.
Indian's Ministry of Coal will auction four mines to both state-run and private companies beginning April 1, with an additional 19 mines to be offered later in the year.
However, the coal produced from these additional mines will have to be used for specified projects such as power plants, steel mills and cement factories of the mine owners.
The move may allow winning bidders to sell the coal produced from the mines, currently allowed only for state-run companies such as Coal India Ltd.
Debasish Mishra, a partner at Deloitte Touche Tohmatsu LLP in Mumbai said the government will have to offer adequate incentives to compensate for the regulatory challenges of owning coal mines in India, saying the mines put up for auction will require reserves of over 1 billion tonnes to attract interest. The government should also give investors complete pricing freedom.