Lok Sabha Question No. 3203 (UNSTARRED), answered on 2018-03-14
Subject: Distribution of Coal
Ministry: COAL
Asked by: JYOTI DHURVE

## GOVERNMENT OF INDIA MINISTRY OF COAL

## LOK  SABHA UNSTARRED QUESTION NO. 3203 TO BE ANSWERED ON 14.03.2018

## Distribution of Coal

## 3203. SHRIMATI JYOTI DHURVE :

Will the Minister of COAL be pleased to state :

- (a) the manner in which the Government controls the price and distribution of coal in emerging trade scenario; and
- (b) the arrangement made for the allocation of coal to the bulk consumers?

## ANSWER

## MINISTER OF RAILWAYS AND COAL,

## (SHRI PIYUSH GOYAL)

- (a) & (b) :   Fixing the price of coal is not in the domain of the Government. Pricing is an operational decision of Coal India Limited (CIL) and Government does not play any role in it.  After  complete  decontrol  of  coal  prices  w.e.f.  01.01.2000,  CIL  fixes  the  basic  prices  of coal produced by CIL and its subsidiary companies. The coal companies fix the Coal price based on input costs, inflation index, market trends, etc.

The distribution of coal to different consumers is done through one or more of the following methods:-

1.  A  policy  on  ''Auction  of  Linkages  of  Non-Regulated  Sector''  was  issued  by  Ministry  of Coal (MOC) on 15.02.2016 vide letter No23011/51/2015-CPD (Pt-I). The highlights of the policy are:-

· All allocations of linkages/LoAs for non-regulated sector viz. cement, steel/sponge iron, aluminium and others [excluding fertilizer (urea) sector], including their CPPs, shall henceforth be auction based.

- There may not be premature termination of FSAs of non-regulated sector as of now. However, there will be no renewal of existing FSAs of non-regulated sectors [except FSAs of CPSEs and Fertilizer (urea)] which are maturing in 2015-16 onwards, after completion of their current agreement tenure.
- Existing FSAs with CPSEs may continue to be renewed on expiry. However, in case

CPSEs require linkages over and above the existing linkages, they may participate in auction of linkage.

-  For  auction  of  linkages,  separate  quantities  shall  be  earmarked  for  sub-sectors  of non-regulated sector.
2. MOC has formulated a new linkage policy for power sector called `SHAKTI (Scheme for Harnessing and Allocating Koyla (Coal) Transparently in India) vide letter No. 23011/15/2016-CPD/CLD dated 22.05.2017. The salient features of the new linkage policy are:-
- Fuel Supply Agreement (FSA) to be signed with Letter of Assurance (LoA) holders after ensuring that plants are commissioned, respective milestones met, all specified conditions  of  LoA  fulfilled  within  specified  timeframe,  where  nothing  adverse  is detected against the LoA holders.
-  Based  on  recommendations  of  Ministry  of  Power,  Linkages  shall  be  allotted  to State/Central Gencos/JVs.
- Linkages to IPPs shall be on auction basis.
-  Linkages  shall  be  granted  for  full  normative  quantity  to  Special  Purpose  Vehicle (SPV), incorporated by nominated agency for setting up of Ultra Mega Power Project, under Central Government initiative through tariff based competitive bidding on the recommendations of the Ministry of Power.
- Linkages to IPPs having PPA based on imported coal but not having linkage shall be on the basis of a transparent auction mechanism.
3.  The  consumers  of  small,  medium  and  other  sectors  who  have  coal  requirement  up  to 10,000 tonnes/year shall be eligible to obtain coal from the State Nominated Agencies(SNA), as per the provisions of New Coal Distribution Policy (NCDP), 2007.
4. As per the provisions of NCDP, 2007, around 10% of estimated annual production of CIL would  initially  be  offered  under  e-auction.  CIL  offers  coal  through  spot  auction,  special forward e-auction for power sector and exclusive e-auction for Non-Regulated sector to meet the requirements of different consumers of the economy.

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