Coal news and updates

Linkage duration for steel, cement may be for 10 yrs

March 20: The Inter-Ministerial Committee (IMC) set up to deliberate and decide on the coal linkage and LoA auctions, which met on March 9, 2015, has proposed, where the non-regulated sector (steel and cement) is concerned, that the duration of linkages may be considered for 10 years as most projects have a loan repayment tenor of 10-15 years, but the FSA would not be automatically renewed at the end of expiry period.

Importantly, an official release said, it was discussed that escalation linked to the index reflecting the price of finished goods, for example, LME for aluminium, or an index reflecting the price of similar grade of coal may be applied to the bid price. It was suggested that instead of linking the escalation to some index, a fixed percentage may be applied as this would help in keeping a cap on the upper price of coal for the bidder.

It was decided that CIL shall provide indicative quantity to be auctioned along with the grade and type of coal and tentative auction timeline. It was decided that SBICAP shall hold meetings with the ministries of steel, power, Department of Industrial Policy & Promotion (for the cement sector) and relevant industry bodies to discuss the approach on the proposed auction of coal linkages/ LOA.