Cabinet okays coal auction for any industrial use, exports

New Delhi: The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, on Friday approved the policy for the auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU) with the creation of a new window in the non-regulated sector linkage policy to utilise coal for any industrial use and export. 

“The new policy, which is part of the coal sector reforms being undertaken by the government, will allow allocation of coal linkages on an auction basis on long-term for any industrial use and export by adding a separate window named CoalSETU in the NRS (Non-Regulated Sector) Linkage Auction Policy of 2016, wherein any domestic buyer requiring coal can participate in the linkage auction. Coking coal shall not be offered under this window,” a Cabinet communique said.

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The existing policy for auction of coal linkages provides for allocation of all fresh coal linkages to NRS, viz., cement, steel (coking), sponge iron, aluminium, and others (excluding fertiliser (urea)), including their Captive Power Plants (CPPs) to be auction-based. As per the present policy of NRS Linkage, the sub-sectors are for specified end users only.

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, there was a need to have a fresh look at the current arrangements of coal supplies to NRS, and extend the linkages in NRS to coal consumers without any end use restrictions.

In line with the opening of the coal sector for commercial mining, which allowed allocation of coal blocks without any end-use restrictions, this policy for auction of coal linkages for NRS has been modified for allocation of coal linkages on an 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 the proposed window, the statement said.

The present auction of coal linkages for the specified end-user sub-sectors in the non-regulated sector will continue. The specified end-users can also participate in this window.

The coal linkage obtained under this window will be for own consumption, export of coal, or any other purpose (including coal washing) except resale in the country, the statement said.

Coal linkage holders will be eligible to export coal up to 50 per cent of their coal linkage quantity. The coal linkage holders may flexibly utilise the coal obtained under this window as per their requirement amongst their group companies. Considering the demand for washed coal, which would increase in future, the coal linkages to the washery operators will result in increased availability of washed coal in the country and consequently reduce imports. Further, the washed coal will also find takers outside the country, and therefore, the washed coal may also be used for the purpose of export, the statement added.