NEW DELHI: The private sector will soon be able to mine coal and sell it to power plants, steel mills and other users, ending the decades-old monopoly of state-run Coal India Ltd ( CIL ) and its affiliates, marking a long-expected reform aimed at boosting investment and output. The move is also seen as lowering prices and imports while introducing better technology, apart from saving on foreign exchange and improving energy security. The coal sector was nationalised in 1973.The cabinet committee on economic affairs (CCEA) on Tuesday approved the methodology for auctioning coal blocks for commercial mining by the private sector.Allowing the private sector to enter coal mining is expected to lift supplies and moderate prices while boosting investment. Non-state coal mining had thus far been allowed only for captive use. The Coal Mines Special Provision Act 2015 provided for opening up commercial coal mining to private and public entities. The government had in 2016 awarded coal blocks to state mining corporations for commercial mining. Coal India and its affiliates account for about 80% of total coal output.The government will hold forward auctions to select developers for commercial coal blocks.“The auction process will be transparent like in the case of captive coal blocks and will be based on the amount companies agree to pay as auction fees per tonne,” coal minister Piyush Goyal told reporters after the cabinet meeting. The two-stage bidding will start with the invitation of technical bids and there will be no end-use or pricing restrictions on the commercial coal blocks, he said.He said the cabinet decision was the most-awaited reform in the coal sector and will help bring in new foreign technology and investment while raising coal output, reducing imports and saving foreign exchange.Coal secretary Susheel Kumar echoed Goyal’s sentiments. He said the objective of the reform is to improve productivity and sustainability. The revenue earned from the auctions will go to the states where the coal blocks are located. Goyal said it will lead to energy security as 70% of India’s electricity is from thermal power plants.The auctions will end the government monopoly in the coal sector and improve Coal India’s efficiency, he said. The government is in the process of identifying a few large and mid-sized coal blocks for auction for noncaptive purposes and is yet to fix timelines, Goyal said.“The auction will be an ascending forward auction whereby the bid parameter will be the price offer in rupees per tonne, which will be paid to the state government on the actual production of coal,” a statement issued by government said. “There shall be no restriction on the sale and/or utilisation of coal from the coal mine.”Industry welcomed the move and said the government should learn from earlier auctions and shift focus from earning revenue to raising output.“The government decision to auction coal blocks is indeed historic. This will invite many Indian and global companies to participate in the auction and further invest in India. It is a great step towards further liberalization of Indian economy and will give boost to employment generation and eradication of poverty,” said Anil Agarwal, chairman of Vedanta Resources.“Looking at the emerging coal shortages--it is a step in the right direction,” Association of Power Producers director general Ashok Khurana said. “However, the outcome would depend on the conditions governing the auction process. We hope the government will learn from the earlier auctions and make regulations conducive for competitive and sustainable price discovery. The objective of auction would need to shift from revenue maximisation to productivity and sustainability.”Khaitan & Co. partner Vanita Bhargava said the move will ease availability of coal and stabilise prices.