For the first time, the coal ministry expects to discover market-determined prices for coal after it allots 16 coal mines to state government-run companies for commercial mining.

The allotments will be made by September and production is expected to start in a year or two after that, the Hindu Business Line has reported.

There will be no restriction on where the coal is sold from these mines and the prices at which it is sold, coal secretary Anil Swarup said on June 20.

“There will no restriction on pricing from our end. We hope this will lead to discovery of market-determined pricing of coal for the first time in the country. Right now Coal India is determining the price. With another entity coming in, some sort of a market will be created and price discovery will happen,” Swarup was quoted as saying. He expected the move to benefit small and medium enterprises.

Out of the 16 mines identified for commercial coal mining by state government-owned companies, eight will be given to the host state and eight will be available for public sector companies of other states. The host states for which eight mines have been reserved are Chhattisgarh, Jharkhand, Madhya Pradesh, Maharashtra, Odisha, Telangana and West Bengal.

The 16 mines have geological reserves of 2.137 billion tonnes and are expected to add an additional 40 million tonnes of annual coal production in India.

Read the report here