The Indian government has set an ambitious goal of achieving coal gasification and liquefaction of 100 million tons of coal by the year 2030. To support this mission, the Ministry of Coal has formulated a policy that offers a 50 percent rebate in revenue share for future commercial coal block auctions, provided the coal is used for gasification and constitutes at least 10 percent of the total coal production. To facilitate the availability of coal for new gasification plants, a separate auction window under the Non-Regulated Sector (NRS) has been created.
The efforts to promote coal gasification have yielded positive results, as evidenced by India’s robust coal production growth. In the April-June quarter of the financial year 2023-24, coal production increased by 8.55 percent, reaching a total of 223.36 million tons, compared to 205.76 million tons in the same period of the previous financial year.
Coal India Limited (CIL) has played a significant role in this growth, achieving an impressive production of 175.48 million tons between April and June 2023, marking a remarkable growth rate of 9.85 percent compared to the previous year.
The Ministry of Coal has been committed to allocating more coal mines through auction and has completed six rounds of commercial auctions to date, with the 7th round currently in progress. A total of 86 coal blocks have been successfully auctioned under commercial mining in these six rounds, with Vesting Orders issued for 74 of them.
One encouraging sign of the strong supply of coal in the market is the substantial decrease in coal prices. The National Coal Index (NCI) experienced a significant decline of 33.8 percent in May 2023 compared to May 2022. This index takes into account coal prices from various sales channels, including notified prices, auction prices, and import prices. The decline indicates sufficient coal availability to meet the growing demands in the Indian market.
The NCI for non-coking coal and coking coal also saw declines of 34.3 percent and 32.6 percent, respectively, in May 2023 compared to May 2022. The availability of abundant coal has contributed to the downward trend in the index, which had reached its peak in June 2022.