Auction method for coal linkages to be introduced

Aiming to bring transparency in allotment of coal linkages and their prices, the Ministry of Coal is working on the process to auction them to unregulated sectors like steel, cement or aluminium plants.

The Ministry has accepted the high level panel report on auctioning of coal linkages to unregulated sectors and has put the draft policy in public domain for comments.

A Coal Ministry official said the final auction policy will be ready in a month. Coal linkages are commitments by state-run Coal India to provide a particular amount of the fuel to a plant.
These linkages are currently provided on recommendations of an official committee.

The process to auction coal linkages will be different from that of coal blocks. After determining the available coal, bids will be invited at a price determined by the government.
The government would hike prices if the demand exceeds availability, which would prompt some players to opt out of the process. It would keep hiking prices until the demand matches the availability.

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