Govt to seek Cabinet nod on coal linkage policy soon: Srcs
15 Oct 2015
On the long standing issue of coal linkages, the government is finally going to seek Cabinet nod on the auction policy soon. Coal linkage means that a coal consumer (power, cement, steel) is assured of the supply of coal, here for 5 years. Sources say that the Cabinet Secretary met the Coal Ministry officials last week to finalise the linkage guidelines. Advisor of SBI Caps has also submitted final report on coal linkages. The government has already announced foreclosure of linkage for the unregulated sector from July, 2016. This will stop the renewal of any coal linkage till the linkage auction policy is in place. While the first coal linkage auction is expected before March 2016, the government is mulling coal linkage route for public sector units (PSUs) and state run companies-- on whether the competitive bidding route or the allotment route be taken for the coal linkage supply to the PSUs. Meanwhile, the inter-ministerial committee (IMC) has recommended the nomination basis to be taken for allotment of urea utilities as the input cost of coal is a passthrough under 2015 urea policy. However, if a competitive bidding or auction is chosen, subsidy burden will increase significantly for the government. According to the policy, linkage auction will follow ascending market clearing approach where 25 percent of Coal India Limited' s production will be kept aside for unregulated sector, which includes iron, steel, cement and aluminium industries.
source: http://www.moneycontrol.com