Coal news and updates

391 applications from sponge iron sector pending with MoC for grant of LoAs

January 21: A total of 391 applications from the sponge iron sector were pending in the Ministry of Coal for the grant of Letters of Assurance (LoAs). This was disclosed in a meeting a standing linkage committee (Long Term) or SLC (LT) in its meeting on December 20, 2013.

Meanwhile, a total of 177 LoAs were granted for sponge iron sector till now. Of this, 181 Fuel Supply Agreements (FSA) have been signed and 14 LoAs have been cancelled while two LoAs that were issued to Grace Industries Ltd are pending.

The LoA to Grace are pending because there has been a change in the ownership of the Plant and the issue is pending for want of some clarifications sought from the party by the ministry.

It is to be noted that SLC (LT) for sponge iron was last held on November 6, 2007. It was not held thereafter due to the negative coal balance being reported by the CIL and its subsidiaries.

"Therefore no fresh linkages were considered and no review meeting was held to ascertain the status of linkages already granted," an official of Ministry of Coal said.

It was suggested in the meeting that considering the fact that 391 applications from sponge iron sector were pending in the queue, it would be advisable to stop acceptance of fresh applications as this demands could not be met.

However, Joint Secretary (Steel) said in the meeting that the issue needs further consideration as it was not clear about the road map for sponge iron sector as far as coal linkages were concerned.

He further stated that the ministry of steel would like to take up the issue separately with ministry of coal.

Incidentally, in view of the existing LoAs and negative coal balance reported by subsidiary coal companies of CIL, a decision was taken by SLC (LT) in respect of power in its meeting held on May 31, 2013 that receipt of fresh applications for LoAs from power sector be kept in abeyance for a period of two years.