Following new mechanism of coal linkage through auction route, the ministry has decided to set floor price at CIL’s ROM rate, which would be sale to identified non-regulated sectors.
To take coal linkage auction ahead, the coal ministry has declared initial floor price, which will be based on CIL’s ROM (Run of Mine) price and the bidders will bid above this price for the relevant grade and ‘link quantity’.
The ROM price in the auction will be properly indexed by CIL/SCCL for subsequent years. The successful bid premium shall remain constant over the contract period.
Earlier, the government had said that coal linkages will be provided only through auction route to ensure coal supplies and a level playing field to non-regulated sectors such as steel and cement, which will kick off later this month.
The linkage auction process would take 2-3 months to finalize, which may start at the Apr’16 end.
In an official letter dated on 15 Feb’16 written by the ministry to CIL and SCCL mentioned that,
- If bids received for greater quantity than offered ‘link quantity’, premium will increase in steps.
- The auction stops when bids will be received for exact offered quantity i.e. ‘link quantity’.
- Maximum bid quantity by a particular bidder shall not exceed than the requirement of end use plant.
- For auction of linkages, CIL and SCCL shall write out an annual or six-monthly auction calendar.
- There shall be a provision for Third Party Sampling of coal supplied.
Government is planning to auction coal linkages of about 24 MnT in the first year. But, CIL is still in the process of firming up the quantity of coal to be put for auction.
[su_quote]”The Cabinet Committee on Economic Affairs, chaired by Prime Minister Narendra Modi, has given its approval that all allocations of linkages for non-regulated sector shall henceforth be auction based,” an official statement had earlier said.[/su_quote]
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