The Hindu Business Line : Coal supply pacts to be mandatory for power utilities

New Delhi, Oct 14 The new coal distribution policy, likely to be notified soon, will make it mandatory for all consumers to conclude fuel supply agreements with concerned coal companies.

“At a recent meeting with the power utilities it was decided that those who do not have any formal long-term coal linkage and are drawing coal on a short-term basis or where enhancement of long-term linkage is yet to be approved by the Standing Linkage Committee, should take expeditious action for getting the allotments approved,” an official in the Coal Ministry told Business Line.

The proposed policy, which has got the green signal from the Prime Minister’s Office, envisages supply of 100 per cent of the coal requirement of the power utilities. However, if a power company is producing more, it can approach coal companies for obtaining more than what has been sanctioned or look at imports so that stocks are built up.

Meanwhile, the plans of Coal India Ltd to re-launch the process of e-auctions could face a hurdle with the new policy envisaging meeting 100 per cent of the requirement of power utilities.

“One of the changes proposed by the PMO is to provide 100 per cent linkage to power utilities. Based on the draft policy CIL hoped to re-introduce the system of e-auctions but this might not happen in the near future,” the official said.

The Coal Ministry hoped to increase the level of coal sold through e-auction from the present 30 million tonnes to around 50 million tonnes. “The additional coal requirement would have been met from the cut in allocations to the power sector. We are now looking at other options to re-launch the e-auction process,” he added.

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