Coal supply agreements of steel, cement and captive power plant producers with Coal India will be honoured till they lapse and will not be terminated for the purpose of auctioning coal linkages. Instead, the FSAs which are expiring from 2015-16 onwards will not be renewed.
An inter-ministerial committee looking into the proposed auctions of coal linkages in its meeting recently decided that existing fuel supply agreements (FSAs) for the non-regulated sector will not be terminated or foreclosed. Further, the coal from such FSAs will be made available for the linkage auctions, the minutes of meeting of the inter-ministerial committee stated.
“Besides, 25 per cent of the incremental production of Coal India during 2015-16 over 2014-15 and subsequent years may also be auctioned as linkages,” it added.
At the meeting, SBI Capital Markets also presented its final report on the proposed methodology of the auctions.
“The sector wise demand-supply analysis was presented and the high ratio of unmet demand was discussed. Members (at the meeting) also agreed that for supplementary analysis of demand, inputs from industry associations and ministries may be incorporated,” the minutes stated.
Relief for urea firmsUrea manufacturers can also expect some relief. An official from the Department of Fertilisers at the meeting said that since input cost is a pass through under the New Urea Policy 2015, competitive bidding will increase the subsidy burden of the government. Therefore, it was decided that the existing system of coal supply to urea units will continue.
As per the final draft of the methodology of auction, it was decided that the linkages which will go under the hammer will have a tenure of five years.
There will also be provisions for third party sampling of coal. Coal India and Singareni Collieries Company Ltd will also be required to chart out annual or six-monthly auction calendars.