2 days Ago
New Delhi: The coal ministry is in the process of proposing changes in the way coal auctions are done so that small businesses from a diverse range of sectors are able get steady and long-term supplies of the fossil fuel. It will shortly circulate a draft note for the Cabinet outlining changes in the policy on auction of linkages—industry jargon for supply contracts—to benefit small businesses in sectors such as steel, cement, fertilizers and captive power producers. It will also advocate setting up a separate window of e-auctions for long-term coal linkage without ‘end-use restrictions’ that determine what the coal is being used for.
These e-auctions are conducted by state-run companies including Coal India Ltd. E-auctions allow spot and short-term purchases. Radical change in policy This would mark a radical change in policy as, so far, only power companies and companies in non regulated sectors, mostly large steel and cement makers have been allowed to participate in long term coal supply auctions, with restrictions on the use of coal.
The policy under works is largely focused on micro, small and medium enterprises (MSMEs) from the non-power sectors, which also fall under the category of non-regulated sector or NRS. Their exclusion has meant that MSMEs have to depend on spot e-auctions, prompting them to turn to imported coal in order to get some long-term certainty of supply. This would allow not only MSMEs but also coal washeries and traders to tie up long-term s.
