Meeting the demands from non-regulated sector, state-run miner Coal India will now allow coal supplies beyond annual contracted quantity to the non-regulated sector customers in long-term linkage auctions.
The world’s largest coal miner has tweaked its policy provision to enable supply above the annual contracted quantity (ACQ) limit to the non-regulated sector (NRS) customers, helping them procure coal suiting their requirements.
In a stock exchange filing on Thursday, Coal India (CIL) said it took the decision on November 13, and the new provision would be applicable from tranche VIII linkage auction onwards, which is scheduled to commence shortly. The eighth tranche auction starts with cement and captive power plant sub-sectors.
Apart from cement and captive power plants (CPPs), sponge iron and a host of other industries would benefit from the CIL’s latest decision.
“We have introduced a slew of customer-friendly initiatives recently to make increased availability of coal easier to our consumers and this is one such step” said a senior official of CIL.
Notably, in August Coal India paved the way for allowing coal supplies beyond annual contracted quantity to the country’s thermal power plants, including independent power plants (IPP). With this, CIL had done away with the earlier provision which allowed coal supplies up to a maximum of 120 per cent of ACQ to power plants and IPPs.
In case of NRS linkage auctions, previously the end-user plants were allowed to obtain linkages up to their normative requirement. The standard norm to calculate the requirement was the quantity of coal that a plant would need if it operated at 85 percent of its installed capacity for a whole year. The actual supply of coal through linkage auctions was up to this determined quantity. Any customer seeking above 85 percent of the ACQ had to step off the auction process to procure coal.
But, several NRS consumers requested CIL for supply of coal beyond utilization of 85 percent plant capacity to meet their full requirement. Taking cognizance of their representations, the company has introduced the progressive step.
While the eligibility quantity in the long-term NRS linkages is 85 percent of plant capacity, the sector can now access coal over ACQ.
“There shall be an in-built provision of performance incentive to CIL for the quantum of actual coal supplied above 100 per cent of the ACQ. The premium for performance incentive is set at 50 per cent of the bid price,” according to the stock exchange filing.
So far in the seven tranches of long-term linkage auctions conducted for NRS customers, since the introduction in 2016, CIL had booked 177.6 million tonnes (MTs) of coal.
In another customer-friendly measure, the coal miner has permitted interplant transfer of coal for NRS customers beginning the eighth tranche. This means NRS customers who won the bid can transfer coal from one plant to another plant, owned by them, within the same sub-sector group.
Swapping the mode of coal transport from rail to road and vice versa is also permitted now for NRS at no extra cost. The frequency between conducting two linkage auctions is narrowing down considerably. Earlier, each linkage auction would draw out for a year and half. Now, CIL is conducting one-and-half linkage auctions each year.