CIL to supply coal beyond normative requirement to non-regulated sector

New Delhi: State-owned Coal India Limited (CIL) on Thursday said it will supply coal beyond the normative requirement to the non-regulated sector, including steel.

The decision, taken on November 13, will be applicable tranche VIII linkage auction onwards, which is scheduled to begin soon.

PSU Watch is now on Whatsapp Channels. Click here to join

Coal India, which accounts for over 80 percent of domestic coal production, has tweaked the policy provision to permit coal supplies beyond the annual contracted quantity (ACQ) to non-regulated sector (NRS) customers in long-term linkage auctions.

Earlier, in NRS linkage auctions, end user plants were allowed to obtain linkages up to their normative requirement.

The standard norm to calculate the requirement is the quantity of coal that a plant will need if it operated at 85 percent of its installed capacity for a whole year. The actual supply of coal through linkage auctions was up to this determined quantity.

Any customer seeking above 85 percent of the ACQ had to step off the auction process to procure coal.

Enabling supply above ACQ limit will help the sector procure coal according to their need, Coal India Ltd (CIL) said in a statement.

The eighth tranche auction starts with cement and captive power plant sub-sectors.

"We have introduced a slew of customer-friendly initiatives recently to make increased availability of coal easier to our consumers and this is one such step," a senior official of the company said.

But, several NRS consumers made a plea to CIL for supply of coal beyond utilisation of 85 percent plant capacity to meet their full requirement.

"Taking cognizance of their representations CIL has introduced the progressive step," the company said.

"There shall be an in-built provision of performance incentive to CIL for the quantum of actual coal supplied above 100 percent of the ACQ. The premium for performance incentive is set at 50 percent of the bid price," the company said.

Further, CIL has permitted inter-plant transfer of coal beginning the eighth tranche. This means NRS customers who won the bid can transfer coal from one plant to another, owned by them, within the same sub-sector group.

Swapping the mode of coal transport from rail to road and vice-versa is also permitted now for NRS at no extra cost.

The frequency between conducting two linkage auctions is also narrowing down considerably. Earlier, each linkage auction would draw out for a year and a half. In a turnaround, CIL is conducting one and a half linkage auctions each year.

(PSU Watch– India's Business News centre that places the spotlight on PSUs, Bureaucracy, Defence and Public Policy is now on Google News. Click here to follow. Also, join PSU Watch Channel in your Telegram. You may also follow us on Twitter here and stay updated.)