Government’s plan for sector wise linkage auction would be a fair chance for non-regulated sectors as they will participate under their own methodology. Currently CIL’s price structure is different for regulated and non-regulated sectors.
After contemplating coal auction linkage process carefully, now the government has prepared a structured methodology for non-regulated sector. Cement, iron & steel including sponge iron, aluminium and fertilizer fall in the category of non-regulated sector.
The coal ministry has decided to supply domestic coal under linkage auction and coal e-auction route in which 90% of coal will be supplied by CIL through long term FSAs and the rest 10% of the quantity will be directly sold in e-auction.
Key Points considered by the Government for Linkage Auction
- Earlier the ministry had allotted direct linkage to the selective companies on low price as compared to the market price and still government has not given any justification for the same. On the other hand, the final product is completely market driven; low pricing shows inequality among the competitors.
- The government has formed an Inter-Ministerial Committee (IMC) for evaluation of various phases and proper recommendation for optimal structure.
- CIL will allocate coal to suitable units with assurance to minimize variation on grade difference as well as reduce transport distance.
- The government will provide linkage for five years and would be reviewed under cyclic intervals.
- CIL will set an initial floor price for given quantity that would be based on CIL’s ROM Price.
- The one year notice period will be provided by the government to the existing linkage holders as they make plans and arrangement for alternatives.
Leave a Reply