Cabinet clears plan to auction coal for non-power sectors

New Delhi: To ensure regular coal supplies and a level-playing field to non-regulated sectors such as steel and cement, the government on Wednesday said coal linkages will be provided to them only through auctions, which will kick off later this month.

Fuel supply to non-power sectors was earlier being allocated by an interministerial committee.

“CCEA (Cabinet Committee of Economic Affairs) has approved allocation of coal linkages for non-regulated sector only through auction,” coal and power minister Piyush Goyal said.

“The exercise (for auction) will start in 7-10 days... It should take 2-3 months as happens in an auction to finalise that. Let us put it about April-end, we should be able to put it in operation,” coal secretary Anil Swarup said.

The Supreme Court had in 2014 cancelled allotment of 204 coal blocks made since 1993 on the grounds that the allocation process was “non-transparent, irregular and arbitrary”.

Following the apex court’s order, the government last year conducted e-auction of coal minest. The three rounds, in which around 15 blocks were put under the hammer, earned a revenue of `3 lakh crore for the central government.

The CCEA has clarified that all allocations of coal linkages for non-regulated sector — cement, steel/sponge iron, aluminium, and others (excluding fertiliser (urea)), henceforth will be auctioned. The tenure of the Fuel Supply Agreement (FSA) will be decided by the coal ministry.

However, companies which have long-term fuel contracts with Coal India will continue to get supplies until their term expires. Also, 25% of the excess fuel produced by Coal India would be made available for e-auction.

Central public sector enterprises can also participate in the auction.

“The framework attempts to make the coal available in a fair manner to the end-users. The proposed auction methodology leads to the price through a market mechanism; it does not seek to maximise revenue,” the official statement said. “It ensures that all market participants of non-regulated sector have a fair chance to secure coal linkage, irrespective of their size.”

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.