FICCI welcomes new methodology for coal linkage rationalisation

• As fuel will be sourced from the nearest feasible coal mine going forward, it will significantly help optimise transportation, FICCI said

• Vipul Tuli, Chairman, FICCI Power Committee, said that the move will not only bring-in cost efficiency but also increase the availability

New Delhi: The new methodology released by the government for coal linkage rationalisation will reduce the landed cost of coal, FICCI said on Wednesday while welcoming the announcement. As fuel will be sourced from the nearest feasible coal mine going forward, it will significantly help optimise transportation. The savings thus achieved will need to be necessarily passed on to consumers. However, participation in the scheme shall be voluntary and arrangement between the parties rationalising/swapping coal through rail and/or sea mode shall be bilateral.

'Coal linkage rationalisation is a forward-looking measure'

Vipul Tuli, Chairman, FICCI Power Committee, and MD, Sembcorp Energy, acknowledged coal linkage rationalisation is a forward-looking measure. He added that the move will not only bring-in cost efficiency, but also increase the availability, which usually gets marred due to transport hurdles.

The new methodology

The government has announced rationalisation of coal linkages from coal companies. Under this provision, consumers of coal may transfer coal linkages from one company to another based on the availability during the fiscal and future coal production plan of the company. The move is aimed at reducing the load on the transportation infrastructure and easing the evacuation constraints. The rationalisation of linkages/swapping of coal will be permitted across coal consumers from public sector and private sector, and across domestic coal linkage and imported coal.

Unlike the past rationalisation provision, which was only for the power sector, the current methodology covers the non-regulated sectors as well. The coal source transfer is envisaged in terms of GCV (Gross Calorific Value) and is applicable for non-coking coal only, and the arrangement will be allowed only within the same sector.

Coal India Limited will be the nodal agency for conducting the process of linkage rationalisation. A committee will address key issues in implementing the scheme. The willing participants/consumers shall register on the electronic platform for rationalisation and submit the requisite information.