Coalmin targets projects worth ~41K-cr for asset monetisation

The Union coal ministry, along with Coal India (CIL) and Neyveli Lignite Corporation (NLCIL), will offer 60 projects worth ~41,042 crore for private investment, increasing the government’s national asset monetisation target to ~2.9 trillion.

These projects include coal washeries, coal gasification, first-mile connectivity for building coal silos/mechanised loading, and offering mines to private companies under the mine developer and operator (MDO) model. All these projects will be awarded in the current fiscal year, except 15 MDO projects that will be tendered between 2022 and ’24.

The coal ministry was not given an asset monetisation target when the Centre had set an ambitious ~2.5 trillion target for other ministries as the NITI Aayog was not optimistic that coal projects could garner large investments. There is a global push

towards being carbon-free and moving towards environmental, social, corporate governance (ESG) goals set by companies and investors. There were deliberations on altering monetisation models as the shift towards renewables is likely to dampen investors’ interest in the conventional energy source.

ESG targets entail reduced investment in fossil fuels. Several global financiers and companies have committed to step away from fossil fuel and allied sectors. Coal ministry officials, however, pointed out that the Indian coal sector was not facing this pressure and coal demand would drive investment.

“We are offering projects that will improve the supply and quality of coal. CIL is already outsourcing many mines under the MDO route. This is a revenue friendly idea for them. Leading companies and investors have shown their confidence in the sector in the last commercial coal auction. There is definitely an appetite for this sector,” said a senior coal ministry official.

Through the MDO route, the coal ministry is planning to also offer unutilised and abandoned mines for production. Currently, CIL offers its mines to private MDOS on a contract basis, where they are paid according to the amount of coal mined. Responding to NITI Aayog’s call for providing coal/lignite mines for asset monetisation, the coal ministry said, existing mines of CIL and NLCIL cannot be offered as they are operated under the Coal Bearing Areas (CBA) (Acquisition and Development) Act, 1957. Lands of CIL and NLCIL coal mines acquired under CBA and cannot be sold to a private firm.