India lets private firms into coal mining | Business| Economy and finance news from a German perspective | DW | 21.10.2014
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India lets private firms into coal mining

In a move to reform its ailing energy sector, India has pledged to open up the coal mining industry to private companies. It said this would end a four-decade monopoly by nationalized Coal India mid-term.

As Indian Prime Minister Narendra Modi steps up reforms to revive the struggling economy, the government in New Delhi has issued an executive order aimed at liberalizing the country's energy sector and making it more efficient in the face of frequent blackouts across the nation.

The right-wing government approved an ordinance to allow the auctioning of coal mines to private companies. In a first phase, companies could exploit mines for their own use, but would later on also be permitted to sell coal, it said.

"The entire coal sector was lying idle; it's an attempt to bring it to life once again," Finance Minister Arun Jaitley said in a statement.

The decree came after the Supreme Court canceled more than 200 permits for coal mines in September, declaring the previous process of awarding them illegal and throwing the sector into transitional turmoil.

Mounting energy demand

The ordinance's new auction system was to replace the policy of allocating coal mines based on recommendations from a panel of bureaucrats, which the court ruled was faulty.

India's coal mining sector has been plagued by inefficiencies, poor infrastructure and red tape. It has largely failed to better meet the electricity needs of India's 1.25-billion population.

Coal provides nearly 60 percent of the Asian nation's overall electricity output. Blackouts are common across the country, especially during peak summer months amid a surging demand from a fast-rising middle class.

hg/ng (dpa, AFP)

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