CIL to supply coal beyond normative requirement to non-regulated sector

State-owned CIL on Thursday said it will supply coal beyond the normative requirement to the non-regulated sector, including steel.

The decision, taken on November 13, will be applicable to the tranche VIII linkage auction onwards, which is scheduled to begin soon.

Coal India, which accounts for over 80% of domestic coal production, has tweaked the policy provision to permit coal supplies beyond the annual contracted quantity (ACQ) to non-regulated sector (NRS) customers in long-term linkage auctions.

Earlier, in NRS linkage auctions, end-user plants were allowed to obtain linkages up to their normative requirement.

The standard norm to calculate the requirement is the quantity of coal that a plant will need if it operates at 85% of its installed capacity for a whole year. The actual supply of coal through linkage auctions was up to this determined quantity.

Any customer seeking above 85% of the ACQ had to step off the auction process to procure coal.

Enabling supply above the ACQ limit will help the sector procure coal according to their need, Coal India Ltd (CIL) said in a statement.

The eighth tranche auction starts with cement and captive power plant sub-sectors.

"We have introduced a slew of customer-friendly initiatives recently to make increased availability of coal easier to our consumers and this is one such step," a senior official of the company said.

However, several NRS consumers made a plea to CIL for a supply of coal beyond utilisation of 85% plant capacity to meet their full requirement.

"Taking cognizance of their representations, CIL has introduced the progressive step," the company said.

"There shall be an in-built provision of performance incentive to CIL for the quantum of actual coal supplied above 100% of the ACQ. The premium for performance incentive is set at 50% of the bid price," the company said.

Further, CIL has permitted inter-plant transfer of coal beginning the eighth tranche. This means NRS customers who won the bid can transfer coal from one plant to another, owned by them, within the same sub-sector group.

Swapping the mode of coal transport from rail to road and vice-versa is also permitted now for NRS at no extra cost.

The frequency between conducting two linkage auctions is also narrowing down considerably. Earlier, each linkage auction would draw out for a year and a half. In a turnaround, CIL is conducting one-and-a-half linkage auctions each year.