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COAL MINING ACTS

Nationalisation to Privatisation A Brief


1774 to 2003
The Research Collective - PSA

Year Event
1774 Commercial coal mining was initiated by M/s Sumner and Healthy of East India
Company in the Raniganj Coalfield along the Western bank of river Damodar
1853 After a century of slow growth, the advent of steam locomotives created a demand
for coal. Within a short span, production rose to an annual average of 1 million tonne
(mt) and India could produce 6.12 mts. per year by 1900 and 18 mts per year by 1920
1900 Production rose to 6.12 mts
1920 Production rose to 18 mts during the first world war
1942 Production rose to 29 mts during the second world war
1951- In the 1st 5 year plan the need for increasing coal production efficiently by systematic
1956 and scientific development of the coal industry was discussed
1956 The National Coal Development Corporation (NCDC), a Government of India
Undertaking with the collieries owned by the railways as its nucleus, was set up. At
the same time, the Singareni Collieries Company Limited (SCCL) which was set up in
1945, became a Government company under the control of Government of Andhra
Pradesh. SCCL is now a joint undertaking of Government of Andhra Pradesh and
Government of India sharing its equity in 51:49 ratio.
1971 Government of India initiates nationalisation of private coal mines. Unscientific
mining practices, poor working conditions of labour in some of the private coal mines
and inadequate capital investment by private coal mine owners to meet the
increasing energy needs of the country were some of the reasons for the
governments decision. The nationalisation was done in two phases - first with the
coking coal mines in 1971-72 and then with the non-coking coal mines in 1973.
1971 Coking Coal Mines (Emergency Provisions) Act, 1971 provided for taking over in
public interest of the management of coking coal mines and coke oven plants.
1972 Coking Coal Mines (Nationalisation) Act, 1972 was passed under which management
of all 226 coking coal mines and the coke oven plants other than Tata Iron & Steel
Company Limited (TISCO) and Indian Iron & Steel Company Limited (IISCO and DVC
were nationalised on 1.5.1972 and brought under the Bharat Coking Coal Limited
(BCCL), a new Central Government Undertaking.
1973 Coal Mines (Taking Over of Management) Act, 1973, extended the right of the
Government of India to take over the management of all 711 coking and non-coking
coal mines in seven States including the coking coal mines taken over in 1971.
1973 This was followed by the nationalisation of all these mines on 1.5.1973 with the
enactment of the Coal Mines (Nationalisation) Act, 1973 which now is the piece of
Central legislation determining the eligibility of coal mining in India. Under the Coal
Mines (Nationalisation) Act, 1973 Coal mining was mostly reserved for the public
sector. A public sector company named Coal Mines Authority Limited (CMAL) was
formed to manage these non coking mines.
1975 A formal holding company in the form of Coal India Limited (CIL) was formed in
November 1975 to manage both the companies.
1976 By an amendment to the Act in 1976, two exceptions to policy were introduced viz.(i)
captive mining by private companies engaged in production of iron and steel and (ii)
sub-lease for coal mining to private parties in isolated small pockets not amenable to
economic development and not requiring rail transport. Considering the need to
augment thermal power generation and to create additional thermal power capacity
during the VIII Plan period, the Government decided to allow private participation in
the power sector.
1993 The Coal Mines (Nationalisation) Act, 1973 was amended with effect from 9th June,
1993 to allow coal mining for captive consumption for generation of power, washing
of coal obtained from a mine and other end uses to be notified by Government from
time to time, in addition to the existing provision for captive coal mining for
production of iron and steel.
Under the powers conferred on the Central Government by Section 3 (3) (a) (iii)(4) of
the Act, another Gazette Notification has been issued on 15.3.96 to allow production
of cement as an end use for captive mining of coal.
The June, 1993 amendment to the Act as well as the Gazette Notification of 15.3.96
apply to both the public sector and private sector companies desiring to mine coal
for captive consumption. The restriction of captive mining does not apply to the
Government-owned Coal Companies and mineral development like CIL and SCCL and
the Mineral Development Corporations of the State Governments.
1997 Ministry of Power proposes an amendment to the Coal Mines (Nationalization) Act,
1973 to promote non-captive private mining of coal.
Before the Bill could be introduced in the Parliament, this Ministry received a strike
notice from the trade unions demanding withdrawal of the Bill. The matter was
discussed with them on several occasions. While the unions recognized that a
demand supply gap will remain at the end of the IX Plan, they insisted that increased
production by the nationalized coal companies should be made possible by
increasing budgetary support to them. It was explained to them that provision of
budgetary support to Coal India Ltd. has been stopped since 1995-96 and it is not
possible for the Government to restore the support.
1998 In 1998, the matter was examined afresh and it was felt that certain standards would
have to be maintained in non-captive coal mining by the private sector so that the
pre-nationalization ills of the nature of unscientific mining, environmental
degradation, exploitation of labour etc. observed in private coal mining do not recur.
A proviso to the Bill providing for powers of the Central Government to lay down
such standards for the private companies in terms of location and minimum size of
the coal and lignite mines having regard to the rational, coordinated and scientific
development and utilization of the coal and lignite resources, was evolved.
2000 The pricing of coal has been fully deregulated after the Colliery Control Order, 2000
was notified with effect from 1st January 2000 in supersession of the Colliery Control
Order, 1945.
1999 The Cabinet approved the proposal of the Ministry of Coal to amend the Coal Mines
(Nationalization) Act, 1973 for allowing non-captive coal mining by Indian companies.
The matter was referred to the Standing Committee on energy for consideration.
2000 The Standing Committee recommended adoption of the Coal India (Regulation of
Transfers and Validation) Bill, 2000. The Act came into force, with effect from its
publication in the Gazette of India on 8.12.2000.
Trade Unions operating in the coal industry sought withdrawal of the bill.
2002 A Memorandum of Settlement was signed between the Coal India Management and
the five central trade union organizations representing workers of the coal industry
on 1.8.2002.
2003 Before Electricity Act 2003 the electricity sector was guided by The Indian Electricity
Act, 1910 and The Electricity (Supply) Act, 1948. Generation, distribution and
transmission were carried out mainly by State electricity boards. Due to politico
economic situation the cross subsidies reached an unsustainable level. For purpose
of distancing state govt. form tariff determination The Electricity Regulatory
Commissions Act, was enacted 1998. The Electricity Act, 2003 was enacted to allow
competition and participation of private companies in the sector.
Generation of electricity has been delicensed and captive generation freely
permitted i.e. any generating company may establish, operate and maintain a
generating station without obtaining a licence under this Act. Hydro-projects would
however need concurrence from Central Electricity Authority. The Act also de-
licenses distribution in rural areas and brings in a licensing regime for distribution in
urban areas. However, as per the Act, only 16 states in India have notified what
constitutes as rural areas and therefore the rural distribution is yet to be freed up in
nearly one third of the country.