The Hindu Business Line : Coal linkages: Fertiliser, power remain core sectors

Policy overhaul
New policy to be notified within two weeks
System of e-bidding for non-core producers to go
Power units far from mines to get 90% of needs at CIL-notified prices

Phalguna Jandhyala

New Delhi, Aug. 30 Steel, railways and cement, which were in the ‘core sector’ category for the allotment of coal linkages, are set to lose their status, with only power and fertiliser sectors set to be classified under this group in the new coal distribution policy.

The policy, which is aimed at overhauling the guidelines for the allotment of coal to various sectors, has been cleared by Prime Minister Dr Manmohan Singh, who is also the Coal Minister.

“There are some modifications that have been made by the Prime Minister, but it is too early to elaborate on what the changes are,” a senior official in the Coal Ministry told Business Line.

However, the official added that the new policy would be notified within a couple of weeks.

Apart from changing the status of sectors, the existing system of e-bidding for non-core producers is set to be done away with.

Currently, the core group comprises power, fertilisers, steel, railways, defence and cement.

“But in the new policy, only power and fertiliser sectors will be considered as core sectors for the purpose of awarding coal linkages,” the official said.

“This plan is to give assured supplies to only those sectors that have to sell their products in a controlled price regime, given the increase in demand for coal linkages.”

The official added: “Since only the power and fertiliser sectors operate in a market where the prices are controlled by the Government rather than being determined by demand and supply, it has been decided that they would continue to be in the core sector.”

On the other hand, those in the non-core sector will be able to purchase coal through e-auction.

The e-auctioning system was discontinued in December last year after the Supreme Court raised questions on the transparency of such auctions, as there were different reserve prices for different sectors.

“The Coal Ministry, however, believes that the online auction will be transparent as there will be a single reserve price of coal for all competing sectors,” the official said.

“This is why the system is being re-introduced, which was one of the suggestions of the TL Shankar Committee on restructuring of the coal sector.”

According to the official, the existing practice of allocation for non-core sectors is on first-come-first-served basis, a process known as e-bidding, where the price was fixed and the quantity decided later. “But, in the e-auction system, where around 50 million tonnes would be made available, there would be a single price for all the bidders,” the official added.

The policy also proposes to meet 90 per cent of the coal requirement of the power units which are far from the mines as long-term linkages at prices notified by Coal India Ltd (CIL).

For power plants situated close to the pitheads, 100 per cent supply will be ensured, again at CIL-notified prices.

All the other sectors would get 70 per cent of their requirements at the notified prices.

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