India Set for First Coal License Auction

The Wall Street Journal reported that India has cleared the way for its first auction of coal mining licenses as well as for shale gas exploration. It has been working on policies for more than two years.

As quoted in the market news:

Separately, coal minister Sriprakash Jaiswal said the beginning of auctions to determine which companies will be given the right to mine for coal will speed up the coal-deposit development process and make it more transparent.

Until now, India has allotted coal-mining licenses based on the recommendations of a panel of bureaucrats. That method has been criticized by the federal auditor, which says it may have deprived the government of close to $30 billion of potential revenue between 2004 and 2011.

The government hopes competitive bidding will bring in more companies with the capital and the expertise needed to increase coal exploration and production. Many of the companies that received licenses in the previous rounds of allocations have yet to start mining.

The government is considering first auctioning four coal blocks with total estimated reserves of two billion metric tons of coal which is enough to generate about 10 gigawatts of power.

Click here to read the full report from The Wall Street Journal.