Govt increases tenure of coking coal supply for non-regulated sector

The government has increased the tenure of coking coal supply to up to 30 years under the coal linkage granted in auction for non-regulated sector like steel.

The development comes at a time when Coal India Ltd (CIL), which accounts for over 80 per cent of the domestic fuel output, is connecting with non-regulated sector for domestic coal which is available in abundance in the country.

"The government has now approved revised tenure for the coking coal linkage in the non-regulated sector linkage auction. It has been approved that the coking coal linkage in the non-regulated sector linkage auction may be granted for a tenure up to 30 years," the coal ministry said in a letter to CIL on Monday.

Laying down the guidelines for auction of coal linkages of non-regulated sector, the policy provided that "the tenure of new Fuel Supply Agreements (FSAs) may be as decided by the Ministry of Coal subject to a maximum of 15 years", the ministry said.

Thus, the policy for auction of linkages of non-regulated sector stands modified, the ministry said asking CIL to take further action accordingly. The country on the one hand has abundance of domestic coal, while on the other hand there is a slump in demand of the dry fuel. To boost coal demand, the government has announced a slew of measures like increased supply for linkage consumers.

It has also announced several relief measures for CIL consumers, including the power sector. Coal Minister Pralhad Joshi had earlier written to state chief ministers asking them not to import the dry fuel and take the domestic supply from CIL. The Centre had also asked generating companies, including NTPC, Tata Power, Reliance Power to reduce the import of the dry fuel for blending purposes and replace it with domestic coal.