Centre liberalises coal swapping regulations

?OUR BUREAU New Delhi | Updated on June 10, 2020 Published on June 10, 2020

The coal linkage policy has been designed according to Central government norms for allocation of coal among thermal power firms P_V_SIVAKUMAR

The Ministry of Coal has further liberalised the framework under which coal linkages can be swapped in the country. A linkage is a coal supply assurance from Coal India Limited to a consumer. These commitments are binding and the coal cannot be transfered to other consumers.

The rigid nature of these commitments resulted in some players ending up with coal that had to be ferried much longer distances. This led to increasing costs and putting more burden on the Indian Railways. To untangle this situation, the Centre has been undertaking a coal linkage rationalisation exercise.

"The coal linkages from coal companies have been rationalized in order to reduce the distance in transportation of coal from the coal mines to the consumer. The exercise shall help in reducing the load on the transportation infrastructure and easing the evacuation constraints," an official statement said.

Till now, coal linkage rationalization exercises were limited to the power sector and have resulted into altering the movement of 63.12 million tonne of coal with an annual potential savings of around ₹ 3769 crore, the statement said.

The new methodology announced on Tuesday for linkage rationalization, covers the power as well as Non-Regulated Sector (NRS), for all types of consumers and coal swapping with imported coal has also been permitted.

The transfer of coal quantities will be permitted basis the gross Calorific Value (GCV) equivalence and is applicable for non-coking coal only.

This arrangement shall be allowed only within the same sector. So the NRS (non-regulated sector) can swap linkages with NRS and power (regulated sector) with Power only.

Participation in the scheme shall be voluntary and arrangement between the parties rationalizing/swapping coal through rail and/or sea mode shall be bilateral. Coal India Limited shall be the nodal agency for conducting the process of linkage rationalization/swapping of coal.

A committee shall oversee the implementation of the scheme and address key issues in the implementation. The savings accrued in the process shall be  transferred to Indian Railways or the power distribution companies, the statement said.


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Published on June 10, 2020
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