Centre to finalise policy paper on fuel linkages by June, says Coal Secretary

Coal Secretary Anil Swarup on Sunday said the Centre will finalise the policy paper to bring in transparency in offering fuel ‘linkages’ for assured supply from Coal India (CIL) by June 30.

He declined to comment on whether the old linkages would be scrapped and the existing beneficiaries would be asked to clear the new screening system.

“Linkages were granted in an opaque manner in the past. Following the Supreme Court ruling on coal block allotment, we cannot continue with the same,” the Coal Secretary said on the sidelines of an interactive session with the city-based Coal Consumers’ Association of India (CCAI).

“We don’t have all the answers on how to go about it. We have asked SBI Caps to suggest options. They have made a presentation. The final report is still awaited,” he added.

In the past, such linkages were granted by the standing linkage committee (SLC), headed by the Additional Coal Secretary. Assurances were granted based on the recommendations of the ministries of steel, cement, power and the State governments.

The lack of transparency in the decision making became apparent when the Manmohan Singh government issued linkages to 1,08,000 MW worth electricity generation capacity, ignoring repeated reminders from the CIL board about the unavailability of coal.

The steel and cement manufacturers at today’s meeting said the system of granting linkages should be transparent. But, considering the shortage of coal, they feared that there will be aggressive bidding for such linkages, ignoring the long-term viability of the industry.

Given the aggressive bidding by steel and cement companies for coal blocks, CCAI members anticipated a mad rush for linkages if the government decided to auction them.

The government should either auction linkages after the supply crunch eases or they should create a bigger open market for coal. Increased offerings on spot sales by CIL were recommended.

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