Lok Sabha Question No. 68 (STARRED), answered on 2017-12-20
Subject: Pricing and Distribution of Coal
Ministry: COAL
Asked by: JYOTI DHURVE

## GOVERNMENT OF INDIA MINISTRY OF COAL LOK SABHA STARRED QUESTION NO.68 TO BE ANSWERED ON 20.12.2017

## Pricing and Distribution of Coal

## *68. SHRIMATI JYOTI DHURVE:

Will the Minister of COAL be pleased to state:

- (a)  the  number  of  committees  operating  under  the  Ministry  for  allocation  of  coal  to  bulk consumers;
- (b) the role of Coal Transport Facilitation Committee;
- (c) whether the Government proposes to cut down its control over pricing and distribution of coal in view of the emerging trade scenario; and
- (d) if so, the details thereof ?

## ANSWER

## MINISTER OF COAL IN THE MINISTRY OF COAL AND RAILWAYS

(SHRI PIYUSH GOYAL )

A statement is laid on the table of the House.

## Statement referred to in reply to parts (a) to (d) of Lok Sabha Starred Question No.68 for answer on 20.12.2017 asked by Shrimati Jyoti Dhurve.

- (a)  : A Standing Linkage Committee has been constituted under the Chairmanship of Additional Secretary (Coal) by the Government of India, Ministry of Coal, for allocation of coal linkages to bulk consumers.
- (b) : No Madam. There is no Coal Transport Facilitation Committee in Ministry of Coal. However, supply  of  coal  is  monitored  by  a  Sub-Group  constituted  by  Infrastructure  Constraints  Review Committee which looks into the issues of critical power houses.
- (c) & (d): 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 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.  The  Ministry  of  Coal  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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