Coal news and updates

CIL to Supply Coal Beyond Normative Requirement to Non-Regulated Sector

Coal India adjusts policy to meet coal needs of industries like steel with long-term linkage auctions.

State-owned Coal India Limited (CIL) announced on Thursday that it will supply coal beyond the normative requirement to the non-regulated sector (NRS), including the steel industry. This change, effective from the upcoming tranche VIII linkage auction, allows for greater flexibility in coal distribution.

Coal India, which produces over 80 percent of the country’s domestic coal, has revised its policy to allow coal supplies beyond the annual contracted quantity (ACQ) to NRS customers in long-term linkage auctions. Previously, in these auctions, plants could only obtain coal up to their normative requirement, which is calculated based on a plant operating at 85 percent of its installed capacity for the entire year.

Under the new policy, customers can now procure coal in amounts exceeding their ACQ, addressing the sector’s need for more coal. "Enabling supply above ACQ limits will help the sector procure coal according to their needs," CIL stated in its announcement.

The eighth tranche of the linkage auction will begin with the cement and captive power plant sub-sectors. A senior CIL official highlighted that this policy shift is part of a series of customer-friendly initiatives aimed at increasing coal availability.

Several NRS consumers had previously appealed to CIL for coal supplies beyond the 85 percent plant capacity threshold to meet their full requirements. In response, CIL has introduced this change to accommodate those requests.

The company also introduced a performance incentive for coal supplies exceeding 100 percent of the ACQ. The premium for this incentive is set at 50 percent of the bid price.

Additionally, starting with the eighth tranche, CIL will allow inter-plant transfer of coal for NRS customers, enabling them to move coal from one plant to another within the same sub-sector group. The company has also removed extra charges for swapping coal transport between rail and road.

To further streamline operations, CIL has reduced the time between conducting linkage auctions. Previously, an auction would occur once every 18 months, but now, CIL plans to conduct one and a half auctions per year.