CIL to offer 34 underground mines to private operators on revenue-share basis

Coal India is planning to offer 34 underground coal mines to private operators on revenue-sharing basis
Alt="Coal India Limited CIL"
CIL to offer 34 underground mines to private operators on revenue-share basisPSU Watch

New Delhi: In a bid to extract coal from its closed and discontinued underground coal mines, Coal India Limited (CIL) has announced its plan to engage private operators. Coal India is planning to offer 34 underground coal mines to private operators on revenue-sharing basis, said an official statement on Wednesday. “Coal India Limited (CIL) in a bid to tap the latent coal reserves of some of its closed and discontinued underground mines has awarded 23 such mines on revenue sharing model to successful bidders of the private sector. The cumulative peak rated capacity of is 34.14 million tonnes/year (MT/Y) while the total extractable reserves are estimated at 635 MT,” said the statement.

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CIL has already identified these 34 discontinued mines where good quality coal reserves are lying dormant but it may not be financially viable for CIL to mine them. “CIL has decided to tender and offer these mines to willing private sector players who are prepared to operate and produce the dry fuel and share part of the revenue with CIL,” said the statement.

Coal India has not exploited its underground coal mines due to lack of technologies and the hight cost of mining involved. Currently, most of its production comes from opencast and mixed coal mines. However, the PSU is planning to ramp up production from underground coal mines to 100 MT by 2030. In FY2024-25, Coal India aims to produce 42 MT of coal from underground coal mines.

Where are these 34 underground coal mines?

Of the 34 identified mines, the West Bengal-based Eastern Coalfields Limited and Jharkhand-based Bharat Coking Coal Limited account for 10 each. Five mines from Western Coalfields Limited, four from South Eastern Coalfields Limited, three from Mahanadi Coalfields Limited and two from Central Coalfields Limited add up the remaining.

Successful bidder will have to offer highest revenue-sharing: CIL

The successful bidder is the one who offers the maximum revenue to the authority, which is the coal company. The minimum revenue to be shared is 4 percent. The contract period is for a maximum of 25 years.

“The advantages are conservation of resource, effective substitution of imported coal for non-regulated sector with good quality coal locked up in these mines and provision of livelihood to the local communities where these mines are revived. From environmental point of view there would be no land degradation as the mining infrastructure is already in place. CIL is also identifying few more mines for the purpose to attract wider participation with bid norms relaxed,” said the statement.

Rebate in revenue share if coal is sold for use in gasification

On the total quantity of coal sold exclusively for coal gasification or coal liquefaction purpose in a year, a 50 percent rebate on the contracted percentage of revenue share of the authority will be provided to the operator.

The successful bidder, or the mine operator, to whom the mine shall be handed over on “as is where is” basis, can also utilise the existing infrastructure and project facilities without any additional payment to the authority. In the case of a consortium, foreign bidders are allowed to participate as second or third members of the consortium, as per Government e-Marketplace (GeM) portal.

Alt="Coal India Limited CIL"
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The mine operator shall act as the agency responsible for selling coal mined from these mines at market-driven price through an auction process on behalf of the authority. They shall have the freedom to adopt their preferential method of technology and deployment of mining machinery to extract coal from the mines.

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