In Short:
The Coal Ministry plans to allow domestic buyers to auction and acquire coal for up to 15 years without specifying its use. This proposed change, part of the NRS Linkage Auction Policy, aims to support industries like cement and steel, which are vital for infrastructure. Consultations with stakeholders have begun, and new auctions will follow existing end-use ones, aiming to boost manufacturing and job opportunities.
Exciting News from the **Coal Ministry**!
The **Coal Ministry** is stirring things up with a fresh proposal aimed at revamping the non-regulated sector (NRS) Linkage Auction Policy from 2016. The objective? To create a brand new opportunity that allows any domestic buyer to participate in auctions for coal, enabling them to secure this vital commodity for up to 15 years without any strings attached regarding how they use it.
Long-Term Access to Coal
In a recent note, the **Coal Ministry** outlined its vision to provide long-term coal linkages to domestic buyers. This means that companies could get coal for their own use, for resale, or for whatever other purpose they deem fit. To realize this, adjustments to the existing NRS Linkage Auction Policy from both 2016 and 2020 would be necessary.
The idea is gaining traction as consultations with various stakeholders have already kicked off. A comprehensive approach paper detailing the proposed adjustments has been circulated, inviting feedback from all interested parties.
Why This Matters
This move is particularly significant for consumers in the NRS sector, including industries like **cement**, **steel**, **sponge iron**, and **captive power units**—all of which play a crucial role in our nation’s infrastructure development. The demand for long-term coal linkages without stringent end-use restrictions has been voiced for quite some time, and it’s finally getting the attention it deserves.
A New Auction Window
According to the **Coal Ministry’s** proposal, the establishment of an auction window dedicated solely to non-specific end-users within the NRS Linkage Auction Policy would be a game changer. This means any domestic buyer in need of coal could participate in this auction. The new window will be termed “coal linkage for own consumption, sale, or for any other purpose.”
The existing auctions focused on specified end-users will continue as is, but this new window represents an exciting opportunity for greater access.
What to Expect
Under the proposed scheme, auctions for this new window will roll out after those targeting end-use specific sub-sectors under the 2016 policy are completed. The base price for these auctions will be set at a reserve price not lower than the notified price, as determined by the coal companies, which include major players like **Coal India (CIL)** and **Singareni Collieries Company (SCCL)**.
It’s noteworthy that the tenure of the proposed fuel supply agreements (FSAs) could stretch up to 15 years. Additionally, the **Coal Ministry** has urged other ministries to finalize guidelines for coal consumption within their purview. If they don’t provide this information, assessments will default to norms established by coal companies.
Investment to Boost Employment
The government is ramping up its investment in the sector, primarily to bolster **India’s manufacturing capabilities** and stimulate job creation. Industries like **cement** and **steel** are pivotal for this growth trajectory.
In the fiscal year 2024, coal mining public sector undertakings dispatched nearly **163 million tonnes** of coal to the NRS sector, marking an impressive growth of about **22%** compared to the previous year. **Captive power plants (CPP)** accounted for the bulk of these dispatches, followed closely by **sponge iron**, **steel**, and **cement** sectors.
