Centre approves CoalSETU window for auction of coal to boost industrial use,export

New Delhi: The Centre on Friday announced a new policy CoalSETU, under which the government allows linkage holders to export up to 50% of coal capacity.

"The Union Cabinet Committee on Economic Affairs chaired by Prime Minister Narendra Modi approved the Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU)," Information and Broadcasting Minister Ashwini Vaishnaw told reporters here.

This is part of series of coal sector reforms being undertaken by the Government. This policy is meant to make coal supply smoother, efficient, and more transparent, Minister said.

The new coal policy will allow allocation of coal linkages on auction basis on long-term for any industrial use and export by adding a separate window named CoalSETU in the NRS (Non-Regulated Sector) Linkage Auction Policy of 2016 wherein any domestic buyer requiring coal can participate in the linkage auction, Vaishnaw said.

The coal linkage holders may flexibly utilize the coal obtained under this window as per their requirement amongst its group companies.

Linkage holders can now export up to 50 per cent of their quantity and flexibly utilise the fuel among group companies as needed, the statement said.

The minister further said that the country has produced so much coal that we can start looking at exports, and the government is now focusing on the promotion of coal exports.

Nepal, Bangladesh and Bhutan have immediate requirements of coal which can be met from this export policy.

However, the Minister clarified that coking coal, which is used mainly by steel plants, will not be sold through this window. Traders will also not be allowed to participate.

The policy is also expected to increase the supply of washed coal in India, which could further reduce the need for imports and open opportunities for exporting washed coal as well, a statement said.

At present, coal auctions for the non-regulated sector, including cement, steel, sponge iron, aluminium and captive power plants, are restricted to specific industries. As per the new window, companies can bid for long-term coal supplies for industrial use.

"Looking at the current and future market dynamics and for accelerated utilisation of existing coal reserves, there was a need to have a fresh look at the current arrangements of coal supplies to the NRS, and extend the linkages in NRS to coal consumers without any end-use restrictions," the statement said.

The existing auction system for these specified industries will continue. But under the new CoalSETU window, even the non-regulated companies can bid if they want additional coal without usage restrictions, the statement added.

The coal linkage obtained under this window shall be for own consumption, export of coal, or any other purpose (including coal washing) except resale in the country. The coal linkage holders may flexibly utilize the coal obtained under this window as per their requirement amongst its group companies, the statement said.