Indian Economy News

Coal ministry plans uniform model agreement for CIL, states to rope in private miners

Kolkata: In an effort to ensure a uniform model for engaging with private players in mining, the coal ministry is coming up with a model mine development operator (MDO) agreement.

Apart from Coal India (CIL), which would engage with private players as per the new MDO model, this will also serve as a guideline for state government-run miners as well for selecting private operators.

According to officials, the draft MDO model has already been prepared by the Coal ministry in consultation with CIL. This will be now vetted by the law ministry. Following this, it would be put before the CIL board for approval before being used, a source said.

Engaging private contractors for mining is already operational in CIL under MDO model, but there is likely to be an expansion of the current model to ensure greater participation from private players. Under this, CIL may go for long-term mining contracts with private players on a turnkey basis.

"Awarding contracts to operators in the last few years under an MDO model were on a piece meal basis and not on turnkey. Here, the miner would be handed over the mines for a much longer period and it would be awarded on a turnkey basis from production to transport till loading point," an official noted.

In fact a public private partnership (PPP) model for CIL to boost production was first mooted by the Planning Commission in 2012. Later, then Union Fianance Minister P Chidambaram, in his 2013-14 budget pitch had pressed for the PPP model, with Coal India as one of the partners to ramp up domestic coal production.

This plan may finally materialise with this new MDO model.

"Also, it will be handed over to all the state governments that have mines in the auction. All engage private miners for mining operation. This will work as a ready-made model agreement for state governments as well," the official added.

CIL, which accounts for over 80% of the domestic coal output, has missed its output target for several years in the past. However, the miner has been asked by the government to increase its production to 1 billion tonne by 2020 and CIL will be depending more on engagement with private players, especially for underground mining, to achieve this target.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.