New Delhi: The government on Friday approved a new policy framework for auctioning coal linkages that will allow coal to be allocated for any industrial use and exports, the Cabinet Committee on Economic Affairs (CCEA) said in a statement. The committee, chaired by Prime Minister Narendra Modi, cleared the Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU) through the creation of a new “CoalSETU window” under the Non-Regulated Sector (NRS) Linkage Auction Policy of 2016.
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According to the government, the CoalSETU window “adds to the series of coal sector reforms being undertaken” and is designed to ensure fair access, wider participation and better utilisation of domestic coal resources.
The policy will allow long-term coal linkages to be auctioned “for any industrial use and export” through the new window, where “any domestic buyer requiring coal can participate in the linkage auction,” the statement said. The government clarified that coking coal will not be offered under this window.
Under the existing NRS policy, coal linkages are auctioned only to specified end-use sectors such as cement, steel (coking), sponge iron, aluminium and other industries excluding urea, including captive power plants. The new window expands access by removing end-use restrictions for eligible domestic buyers.
The government said a re-examination of the current structure of coal supplies to the NRS was required “looking at the current and future market dynamics and for the purpose of ease of doing business and for accelerated utilisation of existing coal reserves and reduce dependence on imported coal for meeting country’s energy requirement.”
It added that, in line with the commercial mining reforms that removed end-use restrictions for coal block allocation, the linkage auction policy has now been modified “for allocation of coal linkages on auction basis on long-term for any industrial use and export by adding another window/sub-sector.” Traders will not be allowed to participate in this window.
The Cabinet said auctions under the existing NRS end-use sub-sectors will continue, and specified end users may also bid under the CoalSETU window.
The coal linkage obtained under the new window will be permitted “for own consumption, export of coal, or any other purpose (including coal washing) except resale in the country.” Linkage holders will be allowed to export up to 50 percent of their coal linkage quantity, the government said.
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Companies may also flexibly use coal obtained under this window across their group entities. The government said that allowing linkages to washery operators is expected to increase the availability of washed coal domestically and reduce imports. It added that washed coal “will also find takers outside the country and therefore, the washed coal may also be used for the purpose of export.”
