Govt plans mega sops to attract local, global cos to coal mining

Economy


New Delhi: The government is likely to offer major rebates on revenue share to winners of commercial coal block auctions in order to attract investments from local and global miners. This follows the announcement on Saturday by finance minister Nirmala Sitharaman on liberalising commercial coal mining as part of the Rs 20-lakh crore Atmanirbhar Bharat stimulus. Companies that start early production from the blocks will be offered 50% rebate on revenue share payable to the government. The rebate will start from the day of production till the scheduled commencement date of mining agreed at the time of awarding of the block, sources said.

Similarly, a rebate of 50% of revenue share is proposed to be given on coal produced in excess of the scheduled target in a financial year. A further rebate of 20% is proposed on coal used for gasification or liquefaction, they said. “The rebate rates have been increased substantially considering the need for investments in the country as being sought under the Atmanirbhar Bharat stimulus,” aperson in know of the development told ETon condition of anonymity. Earlier the government’s revenue share was proposed to be reduced by 10% if the winning bidder starts the mine a year earlier than the agreed timeline and by 20% if production starts two years ahead of plan. The Union Cabinet this week is likely to consider the revenue-sharing model of auction for coal and lignite mines. The coal ministry expects to start auction of about 50 coal blocks, including some large mines, within 10 days of Cabinet approval.

Given the easy entry and exit norms, the government expects participation from Indian companies such as Hindalco, Jindal Steel & Power, JSW Energy, Adani Group and Vedanta, and global miners like Peabody, BHP Billiton and Rio Tinto. The government also proposes to increase the tenure of Coal India contracts for raw coking coal to up to 30 years as an import substitution measure.

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The revenue-sharing model is based on recommendations of an expert committee headed by former chief vigilance commissioner Pratyush Sinha that was formed after the fourth and fifth rounds of auctions received atepid response from the industry. Ramanuj Kumar, partner, Cyril Amarchand Mangaldas said doing away with eligibilty criteria and introducing revenue share is expected to attract more players in coal mining. “However, getting investors for partially explored blocks may prove challenging,” he said.



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