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Assess coal needs of end users before auctions

An inter-ministerial committee (IMC) constituted for the proposed auction of coal linkages has told the coal ministry that it is necessary to ascertain the quantum of coal consumed by various end-use sectors before bidding out the fuel to them.

After deliberations with at least a dozen industry associations in a recent meeting, the inter-ministerial committee (IMC) of the coal ministry concluded that there is a need to assess sector-wise requirement of coal and ascertain its supply-demand position to help the panel take a final view on auctioning linkages. The government has planned to auction 10 million tonne of coal for the power sector and 4 MT for the unregulated sector like cement, steel, sponge iron and captive power sectors.

“It was felt during the course of the meeting that there is a need to assess sector wise coal requirements and the existing data in this regard need to be reconciled which will help in understanding the need of auction of coal linkages,” according to the minutes of the meet released by the coal ministry on Tuesday.

It entrusted SBI Caps to work out the supply-demand position and also asked steel industry, fertilisers and mines ministries to furnish coal consumption data in their respective sectors. The panel also recommended that the department of financial services of the finance ministry should provide the data on operational end-use industries and the quantum of exposure of banks in this connection.

Among the industry associations which attended the IMC’s meet on August 21, the Confederation of Indian Industry suggested that the government should consider an alternate method for auctioning given the shortfall in the fuel’s supply. The Sponge Iron Manufacturers Association representatives said under the proposed linkage auctioning mechanism, there should be separate category for iron and steel sector and it should not be linked with other sectors like cement, fertiliser and power plants.

Linkages are fuel supply pacts signed by Coal India Limited with its customers in which they are assured the supply of certain quantity of coal for meeting their production needs.

source: http://indianexpress.com