Coal India revises policy, will allow supplies to non-regulated customers

State-owned Coal India Limited (CIL) revises norms and shall now allow coal supplies beyond annual contracted quantity (ACQ) to non-regulated sector (NRS) customers in long term linkage auctions. Enabling supply above ACQ limit helps NRS customers procure coal suiting their requirement.

This would be applicable from Tranche VIII linkage auction onwards, which is scheduled to commence shortly. 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” said a senior official of CIL. Previously, in NRS linkage auctions the end user plants were allowed to obtain linkages up to their normative requirement.

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The standard norm to calculate the requirement was, the quantity of coal that a plant would need if it operated at 85 percent 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 percent of the ACQ had to step off the auction process to procure coal. But, several NRS consumers have requested CIL for supply of coal beyond utilization of 85 percent plant capacity to meet their full requirement.

While the eligibility quantity in the long term NRS linkages is 85 percent of plant capacity, the sector can now access coal over ACQ. There shall be an in-built provision of performance incentive to CIL for the quantum of actual coal supplied above 100% of the ACQ.

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The premium for performance incentive is set at 50% of the bid price. So far in the seven tranches of long-term linkage auctions conducted for NRS customers, since the introduction in 2016, CIL has booked 177.6 million tonnes (MTs) of coal.

Additionally, CIL has permitted interplant transfer of coal beginning the eighth tranche. This means NRS customers who won the bid can transfer coal from one plant to another plant, 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, now CIL is conducting one and a half linkage auctions each year.

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