Coal news and updates

Cement sector relaxes on amendment in validity of LoAs

September 13: The cement companies in India are feeling relaxed after the Ministry of Coal recently relaxed the clauses issued in the New Coal Distribution Policy after extending the validity of the Letters of Assurances (LoAs) to non-power consumers, including the cement sector and captive power plants.

"The ministry has granted relief and advised concerned coal companies not to take coercive action against the power utilities," Secretary General of Cement Manufacturers Association (CMA), N A Viswanathan, said.

The ministry on September 4 had issued an amendment on the validity of LoAs issued under the NCDP as per which all the LoAs will be valid for a period of 12-14 months during which the holders were required to achieve milestones pertaining to projects as stipulated in the LoA, failing which these were liable to be cancelled and the EMD forfeited.

It also said that the validity could be further extended by the competent authorities on the recommendations of the Standing Linkage Committee (Long Term).

"The earlier conditions of the automatic termination of LoAs and forfeiture of EMD on non-achievement of milestones pertaining to projects and plants as stipulated in the LoA, have been done away with. Instead, in such a situation, LoA holders will be only ‘liable' for such action," Viswanathan, said.

CMA had earlier requested the ministry and Ministry of Commerce to not take any coercive action against the Notice for Withdrawal/Cancellation of LoA and encashment of "Commitment Guarantee" and "Additional Commitment Guarantee" against 17 pending cases of its member units with SECL.

In its letter, CMA had said that it was not in line with the decision taken in case of power plants, against which similar notices were issued for withdrawal of cancellation of LoA and encashment of Commitment Guarantee and Additional Commitment Guarantee.

"The current office memorandum has removed the disparity and placed the cement sector also in parity with the power utilities on the applicability of relief," the CMA Secretary General said.