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An inter-ministerial committee has asked SBI Capital Markets to work out the mechanism to be adopted for auctioning of coal linkages.
In a meeting held on April 27, the IMC discussed various options about auctioning of linkages. However, with no conclusion emerging after the discussions, the IMC asked SBI Capital Markets to work out the details.
“Various auction methodologies were considered. The members of the IMC were of the view that bucket filling approach and ascending market clearing approach (followed in telecom radio spectrum auction) were better suited for this purpose,” according to the minutes of the meeting released on Wednesday.
At the meeting SBI Capital Markets’ representative suggested that if coal linkages are to be auctioned, there needs to be a greater emphasis on the confirmation of the grade of coal being supplied.
“Third party sampling mechanism should be used for the actual price payment,” the minutes of the meeting stated.
SBI Capital Markets also recommended a 10-year time frame for the coal linkages while other members suggested a five-year time frame similar to the five-year Fuel Supply Agreements currently.
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