New Delhi: Stating that out of 87 auctioned coal mines till date, only a few have been successful in receiving financing support, Additional Coal Secretary M Nagaraju urged banks and financial institutions to expedite financing in the coal sector. Delivering the inaugural address at a stakeholder consultation in New Delhi to promote ‘Funding of Commercial Coal Mines in India’ on Monday, Nagaraju stressed on the imminent need for financing coal mines.
The meet focused on major concerns pertinent to the financing of commercial coal mining and solicited feedback/suggestions from all stakeholders. Given coal mining is capital intensive, the coal mine allocatees highlighted possible bottlenecks being faced in availing financial assistance like, high cash margin in BG issuance, stringent pre-disbursement conditions, negative outlook of coal sector in the banking fraternity, etc, and requested relaxations in the same. The banks expressed their willingness and assured flexibility to finance coal mines subject to demonstration of, among other things, project viability, equity infusion visibility etc in the presence of a detailed business plan.
Based on the feedback, the Nominated Authority suggested some enablers to facilitate ease of coal financing in India such as banks, FIs may designate a nodal officer for coal mine financing, establish detailed policies, explore participation in initial stages (Vesting Order/EC/FC and other approvals), and coal mine allocatees to formulate detailed business plans showcasing project viability before approaching banks for financing needs.
Presentations were made by Ajitesh Kumar, Director, Ministry of Coal on the commercial coal mine auctions process and extant enablers for funding commercial coal mines and Ashok Sharma, CGM, State Bank of India (PFSBU) on SBI’s commercial coal funding policy. Dr Sanjay Kumar, Director, the Department of Financial Services (DFS), also addressed the meet and showcased the support of DFS, Ministry of Finance, to facilitate coal mine funding.