New Delhi: The Union Cabinet Committee on Economic Affairs, chaired by the Prime Minister Narendra Modi, has approved the Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU). The decision provides for the creation of a new “CoalSETU window” under the Non-Regulated Sector (NRS) Linkage Policy to enable the use of coal for any industrial purpose and exports. The move is part of the government’s ongoing coal sector reforms.
Under the revised policy, coal linkages will be allocated through auctions on a long-term basis for any industrial use and export by introducing a separate CoalSETU window in the NRS Linkage Auction Policy, 2016. Any domestic buyer requiring coal will be eligible to participate in these auctions. Coking coal will not be offered under this window.
At present, the NRS linkage policy provides for auction-based allocation of all fresh coal linkages to sectors such as cement, steel (coking), sponge iron, aluminium and others, excluding fertiliser (urea), including their captive power plants. These allocations are restricted to specified end uses.
Considering current and future market dynamics, the need to improve ease of doing business, accelerate utilisation of existing coal reserves, and reduce dependence on imported coal to meet the country’s energy requirements, the government reviewed the existing coal supply arrangements for the NRS. In line with the opening up of the coal sector for commercial mining, which allows allocation of coal blocks without end-use restrictions, the policy has now been modified to permit auction-based allocation of coal linkages on a long-term basis for any industrial use and export through an additional window or sub-sector. Traders will not be permitted to participate in this window.
The existing auction framework for specified end-user sub-sectors in the NRS will continue. Specified end users will also be allowed to participate in the CoalSETU window.
Coal linkages obtained under this window may be used for own consumption, export of coal, or any other purpose, including coal washing, except resale within the country. Coal linkage holders will be permitted to export up to 50 per cent of their allocated coal quantity. They will also have the flexibility to utilise coal across their group companies based on operational requirements.
With demand for washed coal expected to rise, allocation of coal linkages to washery operators is expected to increase domestic availability of washed coal and reduce imports. Washed coal may also be exported, as it is likely to find demand in international markets.
BI Bureau
