NEW DELHI: India will soon be setting up a coal trading platform as it gears up to bring in commercial mining in the coal sector. Under the proposal, the entire coal produced in the country will be traded on a platform called ‘Coal Exchange’.
Coal Exchange will be an online coal trading platform where the pricing will be determined in a transparent manner on the basis of demand and supply.
The setting up of India’s first coal trading platform is significant as it paves the way for the entry of multiple buyers and sellers in the coal sector. The coal ministry is likely to start auctions for commercial coal mining on June 11.
The exchange will deal with proposed gas exchanges, power bourses, or commodity exchanges. This will probably lead to the end of Coal India’s new Fuel Supply Agreements (FSA) regime.
However, Coal India Ltd is anticipated to be a dominant player in the coal mining sector as it has set a production target of one billion tons by the year 2024.
According to industry experts, the entire coal produced in the country would be traded on the coal exchange. This exchange would have the potential to turn the entire coal sector into an open market that will have no barriers to free-market activities.
A government official had stated that the nation will go ahead with the commercial coal mining procedure with the purpose of having more coal sellers in the market apart from Coal India and Singareni Collieries. Moreover, coal blocks have been allocated to the state-level PSUs for coal sales.
The Coal Exchange will be set up after the government addresses all the concerns related to the coal sector. Till now, the government had a monopoly on coal mining which is why, despite having abundant coal, India still imported coal.
The government has now decided to allow liberalised entries in the sector so India will soon have more sellers in the market besides Coal India.
The Government has already allotted coal blocks to state PSUs for the sale of coal
Union Finance Minister Nirmala Sitharam had announced reforms in the coal sector while revealing the fourth tranche of the Aatmanirbhar Bharat economic package.
Under the reforms, she informed that the government plans to bring in commercial mining in the coal sector on a revenue-sharing basis.
The Finance Minister had announced that Government monopoly in the sector will be removed and liberalised entries will be allowed to enable more participation by people.
She informed that India, despite having the third-largest valuable deposit of coal, still imported coal and sometimes energy sectors suffer because of this. Hence, the government decided to bring regulation to the sector.