New Delhi: Allocation of coal linkages for the non-regulated sector, which includes steel and cement, will be only through the auction route to ensure transparency, the government said today.
"Cabinet Committee on Economic Affairs has approved allocation of coal linkages for non-regulated sector only through auction," Power and Coal Minister Piyush Goyal told the media after the CCEA meeting.
"Sectors included are Cement, Steel/Sponge Iron, Aluminium, and others (excluding fertiliser, urea)," he said.
The framework attempts to make coal available in a fair manner to end-users, the minister said.
"Proposed auction methodology leads to price through a market mechanism; it does not seek to maximise revenue", he said, adding, "it ensures that all market participants of non-regulated sector have a fair chance to coal linkage, irrespective of size".
Coal Secretary Anil Swarup said that coal linkages for 24 million tonnes would go under the hammer in the first year. According to Reuters, Coal India Ltd will put up a quarter of its production for auction to non-power companies following Wednesday's decision by the cabinet, which was chaired by Prime Minister Narendra Modi.
Goyal had earlier said the government is considering a policy for coal linkage auction.
Letter of Assurance is issued on furnishing Commitment Guarantee followed by execution of fuel supply agreement (FSA) on the fulfillment of LOA conditions in the stipulated period of time.
Till now, Standing Linkage Committee has been deciding on allocation of long-term and short-term linkages for the sectors, including power and steel.