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The Coal Ministry is planning to offer long-term coal linkages to the non-regulated sector (NRS) consumers, without end use restrictions, a move that will not only boost supply of the critical fuel but also aid companies in better planning of the key resource.
The development assumes significance as the NRS sector companies include cement, steel, sponge iron and captive power units, which are an important part of the infrastructure sector.
The government has been increasing its spending in the sector with an aim to expand India’s manufacturing capabilities and enhance employment generation opportunities and sectors such as cement and steel are critical for the growth of the sector.
Sources said the Ministry is already “contemplating” on the proposal. Currently, it is holding stakeholder consultations on this issue. Long-term coal linkages without end use restrictions have been a long-standing demand by the NRS sector.
Besides, the Ministry has been working on expanding coal production and is developing the logistics support for it, which means that more cargoes will be available for sale. Having long term linkages without end use restrictions will encourage more companies from the NRS sector to procure the dry fuel.
Accordingly, the Ministry is planning to amend the NRS linkage auction policy of 2016.
In FY24, the coal mining PSUs dispatched almost 163 million tonnes of coal to the NRS sector, a growth of around 22 per cent on an annual basis. Captive power plants (CPP) accounted for the majority of the despatch followed by sponge iron, steel and cement.
Rationale
A senior government official said that coal produced by Coal India (CIL) and Singareni Collieries Company (SCCL) is broadly distributed either through a coal linkage or via e-auctions conducted by coal companies. The dry fuel is also distributed to Micro, Small and Medium Enterprises (MSME) through State Nominated Agencies (SNAs).
Coal linkages to the power sector are granted under the provisions of SHAKTI policy and to NRS under the policy for auction of linkages for NRS (2016).
Coal through e-auctions (single e-auction window) and distribution through SNAs are governed under the provisions of the New Coal Distribution Policy (NCDP), 2007. The single e-auction window caters to all sectors.
“Thus, coal supplied under SHAKTI policy and NRS linkage auction policy are for specified end uses, while there is no end use restriction for coal supplied through e-auctions. Hence, long term coal linkages to NRS consumers without end use restrictions may not be possible under the ambit of present NRS linkage auction policy and an amendment will be required for the NRS policy,” the official explained.
Another senior official pointed out that analysing at the current and future market dynamics, higher availability and to reduce coal imports, there is a need to have a fresh look at the current arrangements of coal supplies to the NRS sector to move ahead from a regime of auction of coal linkages for not only specific end uses but also to a regime of coal linkages for coal consumers without any specific end use.
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