The government has decided to auction Coal linkage parallel to Coal blocks auction.CIL has asked the government to follow a transparent process for linkage auction within a tentative timeline.
The Ministry is set to move towards linkage auction after experiencing success in two phases in which 33 Coal blocks were auctioned. Meanwhile the Central has planning in which CIL will offer quantities through auction linkage.
Earlier the Indian Government was providing coal on subsidized prices through linkage to end users. Along with the cancellation and auction of Coal blocks, the ministry has taken another step and is now determined to provide linkage Coal through auction.
A meeting of the Inter-Ministerial Committee regarding Coal linkage auction was held on 9 Mar’15. The Central has decided that CIL will provide indicative quantity that is to be auctioned through competitive bidding, along with the grade and type of coal to users of bulk quantity. It was also discussed that first priority will be given to operational plants or to those that are ready for operation, and to those who are not allotted any linkage or captive coal block.
It was also decided at the meeting that duration of coal linkage would be fixed at 10 years, because most of the projects have a loan repayment tenor of 10-15 years. According to existing norms, Fuel Supply Agreements (FSAs) are inked between CIL and its customers for a period of 20 years.
The meeting discussed different rules for regulated and non-regulated sectors.
The next meeting between SBI Caps (SBI Capital Markets Ltd) and members of IMC (Inter-Ministerial Committee) is scheduled for today.
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