OREANDA-NEWS. March 28, 2012. The Investment Commission, set up by the Government of India, had recommended that investment in coal mining in India should be enhanced through bidding for coal blocks and inducement of competition through a ‘use or lose’ policy.

The three-member commission, comprising Deepak Parekh, Dr Ashok Ganguly and Tata Sons Chairman Ratan Tata, which worked from December 2004 to December 2009,  had made about 1,400 recommendations on increasing investment in the country for faster economic growth, through 16 key sectors in infrastructure, manufacturing, services and the knowledge economy.

In its report, ‘Investment Strategy for India’, finalised in February 2006 (available at http://www.finmin.nic.in/reports/InvestmentCommissionReport.pdf), the commission had stated that the country should aim for an investment of USD 15billion by 2010 for coal mining. For this, the commission made a composite set of recommendations:

“Carve out specified viable mining blocks from Coal India (CIL) for captive exploitation. Alternatively, encourage the subsidiaries of CIL to induct strategic partners from leading mining companies — partners could develop existing blocks on a production share basis.

“Offer all mines that have been closed by CIL to the private sector — in case there are viable recoverable reserves.

“Adapt the NELP model for private sector participation in coal mining by offering good quality coal blocks for bids:

“As in NELP, award to be based on a quantitative evaluation of financial package / bid, technical capability, financial capability and work programme.

“Fixed royalty payments per tonne extracted, as currently notified, to be offset against upfront bid amount.

“Institute a “use or lose” policy for all blocks, to prevent hoarding and ensure best competitive use.

“Permit 50 percent FDI under the automatic route.

“Permit merchant sale of coal by coal mines.”

Therefore the commission’s proposals categorically were for bidding, more productive usage of coal blocks, and measures to prevent hoarding and to ensure competitive usage.

On the power sector, the commission recommended establishment of 25-30 sites for mega projects, for a total of 35,000MW with an investment of over USD 30 billion through competitive bidding on tariffs.

The full text of the recommendations of the Investment Commission clearly disprove slanted reporting in an article in an Indian newspaper, that the Government of India’s Investment Commission had made a “proposal to allot Coal India blocks to private companies”.