Coal linkages via auction only: Cabinet

To ensure transparency in coal supplies to non-regulated sectors such as steel and cement, the Union Cabinet on Wednesday approved the proposal which says that coal linkages will be provided to them only through auctions, which will kick off later this month.

The government is planning to auction coal linkages of around 24 million tonnes in the first year.

As of now, coal linkages are given to public sector companies through Coal India Ltd’s mines for a specific period of time through government dispensation.

“The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval that all allocations of linkages / letter of assurance for non-regulated sectors like cement, steel, aluminium, etc, shall henceforth be auction-based,” an official statement said.

Stating that the process of giving coal linkages was not fully transparent, coal and power minister Piyush Goyal said that there were many complaints about the whole process.

“The auction process would bring transparency and an equal opportunity for all consumers,” he added.

Mr Goyal was addressing the media after the Cabinet meeting that was chaired by Prime Minister Modi.

Coal secretary Anil Swarup said, “The exercise (for auction) will start in 7-10 days ... It should take 2-3 months as happens in an auction to finalise that. Let us put it about April-end, we should be able to put it in operation.”

State-controlled Coal India Ltd and Singareni Collieries Company Ltd will put up a quarter of its production for auction to non-power companies.

“The framework attempts to make the coal available in a fair manner to end-users. The proposed auction methodology leads to the price through a market mechanism; it does not seek to maximise revenue,” the official statement said.

There may not be premature termination of fuel supply agreements of non-regulated sector as of now, it said.