KOLKATA (miningweekly.com) - The Indian government was likely to ease end-use norms for production from captive coal blocks, particularly those allocated to thermal power plants.

According to a Coal Ministry official, a policy easing restrictions on the use of coal from captive coal blocks was on the anvil and the Ministry was working to get it unveiled as early as next month.

The liberalisation of captive coal block regulation would come as a breather for the few thermal power companies facing penal action for diverting surplus production for either merchant sales or use in projects other than those specified in block allocation rules, the official said.

Under India’s Coal Nationalisation Act, coal mining was the exclusive domain of government companies. The only exception is captive coal mining from blocks allocated to companies by the government for use in specified projects like steel, power or cement plants.

The move to liberalise end-use norms had been initiated by the previous Indian government in 2013 but had been abandoned in the face of opposition from certain stakeholders, the official said.

Moreover, various Ministries had failed to arrive at a consensus on how the surplus coal production from captive coal blocks could be diverted, he added.

Among the proposals tabled was the creation of a ‘coal bank’ with major Coal India Limited (CIL), under which captive miners would be able to transfer surplus production with a clause permitting the drawback of such coal when required. However, CIL, the government-owned largest coal miner had declined to take on the responsibility as a 'coal banker’.

Simultaneously, granting captive miners the right to sell coal from captive blocks had been opposed by the Coal Ministry. The Ministry argued that such merchant sales would enable it to gain 'unintended profits’, as the rationale for granting captive blocks was to enable the miner to produce thermal power at competitive costs and keep consumer tariffs reasonable.

In view of the conflicts over various options on end-use of coal from captive miners, the Ministry was currently holding reviews with various stakeholders to reconcile differences between the requirement of miners and government priorities in the new policy, the official said.

One of the most viable options under consideration was to permit captive coal block miners, particularly thermal power generation companies, to transfer coal production from a block linked to a specified power plant to another plant operated by the same company which might not have a coal linkage or an operational mine, he added.