Series of reforms being implemented to make coal sector more investor-friendly
The Ministry of Coal has introduced provisions for financing coal mines and flexible auction terms to encourage wider participation by Banks and Financial Institutions.
These are being undertaken as a significant initiative to liberalize the country’s coal sector such as introduction of Commercial Coal Mining, removing restrictions on the sale and utilization of coal.
The Ministry has auctioned 91 coal mines across seven tranches.
To enhance broader participation in these auctions, the Ministry is implementing a series of reforms in the coal sector making it more investor-friendly sector.
One key area of focus has been securing financial assistance to operationalize coal mines.
Industries have highlighted the challenges confronted in obtaining financial support from Banks and Financial Institution.
With the rising impetus of Environmental, Social and Governance (ESG) norms, most of the Banks and Financial Institutions are reluctant in engaging in projects related to coal, industry stakeholders had told the Ministry.
To address these challenges and streamline the financing process, the Ministry had conducted a ‘Stakeholder Consultation’ on “Funding of Commercial Coal Mines in India”.
The event was attended by coal mine allocatees and senior officials from financial institutions and banks. The consultation aimed to address concerns related to financing Commercial Coal Mining and gather feedback and suggestions from all stakeholders.
During the consultation, Banks have expressed their willingness to finance Coal Mines, provided project viability and equity infusion visibility were demonstrated through detailed business plans.
Recognizing that coal is expected to remain a primary energy source in the foreseeable future, Ministry requested the Department of Financial Services (DFS) to consider classifying the coal sector under the ‘Infrastructure Sector’.
This reclassification would enable banks and financial institutions to formulate policies more effectively to meet the increasing requirements of the coal sector in a time bound manner.
The Ministry invited response from Coal Mine allocatees to determine the quantum of financing imperative towards coal mine development and operationalization, along with the associated timelines meeting the requirement.
This collated information has been shared with Banks and Financial Institutions to help address industry demands efficiently, the Ministry said on 28 Oct 2023.
Banks and financial institutions have also undertaken steps to identify nodal branches that will act as a single window to meet the financing needs imperative for coal mine operationalization.
As of now, the State Bank of India (SBI) has extended financial assistance for the development of one Commercial Coal Mine, and others are under the process of doing the same.
Banks and Financial Institutions are also in the process of formulating board-approved policies to extend financial support in line with development and operationalization timelines.
Considering the significant transformation of Indian coal sector over the past four decades and the abundance of indigenous coal reserves, coal is envisaged to remain a primary source of energy for the foreseeable future, said the Ministry. Fiinews.com
