Coal output levels from private commercial miners are unlikely to go up considerably in the medium to short term, given the issues related to land acquisition and regulatory clearances, rating agency Icra.
The statement comes in the wake of government deciding to open up coal sector to commercial mining by private entities.
However, the power plants already having fuel supply pacts with state run miners are unlikely to switch over to meeting their requirement from commercial miners in the medium term as such FSAs (fuel supply agreement) have been contracted at competitive rates, the rating agency said.
“Nature of coal blocks selected and a stable and predictable policy framework would be other important determinants of the success of the auction process,” the rating agency said.
The coal ministry had last month came out with the methodology for auction of coal mines, which largely aims at opening up the coal sector for private commercial mining and also looks at allowing 100 per cent foreign direct investment in order to create an efficient and competitive coal market.