The Cabinet Committee on Economic Affairs (CCEA) on Wednesday approved the auction route for awarding future coal linkages to non-regulated sectors as opposed to the prevalent practice of allocation by a linkage committee based on recommendation from nodal ministries.
“With this approval, all allocations of linkages/Letter of Assurance (LoAs) for non-regulated sector like cement, steel/sponge iron, aluminium and captive power plants shall henceforth be auction-based. The tenure of fuel supply agreement (FSA) will be as decided by ministry of coal from time to time,” the government said in a statement.
However, the CCEA approval will not lead to termination of existing linkages as of now. There will be no renewal of existing FSAs of non-regulated sectors, except for central public sector enterprises and fertiliser (urea) units, after completion of their current agreement tenure.
The existing FSAs with CPSEs will continue to be renewed on expiry while CPSEs will have to participate in auction for additional linkages.
“To start with, in the first tranche, the quantities corresponding to FSAs of non-regulated sector maturing in 2015-16 onwards and 25% of incremental Coal India Limited (CIL)/Singareni Collieries Company Limited (SCCL) production during 2015-16 over 2014-15 will be put up for auction,” the government said in a statement.