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Informist, Thursday, Nov. 21, 2024

 

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KOLKATA – Coal India Ltd. Thursday said it is considerably relaxing its coal supply norms for non-power sectors, allowing companies from cement, steel, and other sectors to purchase more than the annual contracted volume of coal. The relaxation is also applicable to power plants owned by private companies. Coal India will levy a performance incentive of 50% over the bid price in linkage auctions for the non-power sectors to supply coal beyond the annual contract volume.

 

This is a major shift in policy Coal India has followed for non-power sectors over the past eight years. Under the revised policy, steel and cement companies will not only be able to purchase more coal than what they had agreed to buy, but also use the coal at plants anywhere in the country, and also transport the coal through rail or road network as deemed fit. The new policy will be effective from the long-term coal linkage auction that is expected to commence shortly.

 

Under the current policy, companies from the non-power sectors that bought coal through long-term coal linkage auction were supplied coal up to their normative requirement. The standard norm to calculate the requirement was the quantity of coal that a plant would need if operated at 85% of its installed capacity for a whole year, the Maharatna company said in a statement.

 

The actual supply of coal through linkage auctions was up to this determined quantity. Any customer seeking above 85% of the contracted volume had to step off the auction process to procure coal.

 

Coal India will also allow steel and cement companies to swap the mode of coal transport without any extra cost, and these companies can also use the coal at any plant them deem fit. So far, steel and cement companies were allotted coal by Coal India based on the plant.

 

These companies had to previously commit specific end-use of coal plant-wise before Coal India made the allotment. They had to also select the mode of transporting coal when such allotment was done and Coal India levied a fee if the mode of transport was changed after the sales contract.

 

So far in the seven long-term linkage auctions conducted for non-regulated sector customers since the introduction in 2016, Coal India has booked 177.6 million tonnes of coal, the company statement said. Non-regulated sector refers to coal consuming sectors other than power sector.

 

An official with Coal India told Informist that the move will help the state-owned company clear its pithead coal stocks of around 65 million tonne lying idle in the mines due to demand shortfall from the power sector. "Demand from the power sector fell short of our internal projections especially during the monsoon and there is enough coal in the country now," the official said. "It will also help us substitute the coal which the non-regulated sector uses with Indian coal."

 

In August, Coal India had relaxed purchase norms for government-owned power generation companies, allowing them to buy more than the contracted volume of coal.

 

On the National Stock Exchange, shares of Coal India ended down 1.5% at INR 406. End 

 

Reported by Avishek Rakshit

Edited by Ashish Shirke

 

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