Govt weighs relaxations for underground coal miners

Centre is considering measures like 50% exemption in revenue sharing with states

- Rituraj Baruah Subhash Narayan

The government is considering giving a 50% exemption in revenue sharing with states and reduced bank guarantees to push underground mining, said two people aware of the development, amid growing demand from the power sector.

The move is based on the recommendations made by a committee set up by the ministry to suggest policy measures for to promote underground coal mining. Discussions are underway and a decision has not yet been made, the people said.

“Measures like 50% exemption in revenue sharing, which companies share with states and a lower amount for bank guarantees are being considered currently," said one of the two persons. Coal mining companies need to give a percentage of their revenue every month to states—a key parameters in bids for commercial mines with 4% revenue share kept as the base.

The second sop involves performance bank guarantees—needed to receive loans. As per tender documents, the PBG submitted for each auctioned coal mine is to be revised annually based on the National Coal Index (NCI) for the month of April in the beginning of the year.

However, earlier this year, the coal ministry relaxed the norms and decided that the first revision of the bank guarantee would be done upon the grant of permission for opening the mine.