India plans to lease abandoned coal wells to private mining companies, a government official said Friday, in an effort to increase production as power outages exacerbate a sweltering heatwave.
Coal provides more than two-thirds of India’s energy needs and the country has shrugged off the cost of transitioning to renewable energy, although the unusually warm climate illustrates the threat of climate change caused by burning fossil fuels.
Rising temperatures have resulted in increased demand for energy in recent weeks and has left India facing a shortage of 25 million tons at a time when spot coal prices have skyrocketed since the start of the year. year.
“We have always believed that coal was a very maligned industry,” Coal Ministry official Anil Kumar Jain said at an industry event.
“We used to be hailed as bad guys because we were promoting fossil fuels and now we’re in the news (because) we’re not providing enough.”
The government plans to lease more than 100 dormant state-owned coal mines to private miners on a revenue-sharing basis.
Officials said they will “do away with red tape” to encourage bids from mining giants Vedanta, Adani, and others.
India needs one billion tons of coal to meet domestic demand every year.
Most of its needs are met by domestic producers, with a record 777 million tons of coal extracted in the year to the end of March.
The government says it plans to increase domestic coal production to 1.2 billion tons over the next two years to support the country’s post-pandemic economic recovery.
“We are very happy that the economy is recovering and that energy is required. The malls are full, the restaurants are full, “Jain said.
Despite pledges to increase its renewable energy capacity to 175 gigawatts by 2022 and 500 gigawatts by 2030, Indian Coal Minister Pralhad Joshi said coal needs will double by 2040.
“There has never been as much demand for electricity as there is today. There has never been as much heat from the sun as there is today, ”Joshi said.
The scheme announced on Friday is the government’s latest step towards liberalizing India’s mining industry and calling on private companies to profit from the world’s fifth largest coal reserves.
“This will guide the country in how mineral rich countries like Brazil, Canada, Australia, South Africa have created wealth and generated jobs,” said Vedanta mining chief V. Shrikant.