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New coal policy to balance interests

business Updated: Oct 20, 2007 00:22 IST
Deepak Joshi
Deepak Joshi
Hindustan Times
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The government on Friday announced a new coal distribution policy, which seeks to facilitate the supply of assured quantities of coal to various categories of consumers at pre-determined prices in a regime of enforceable obligations on the part of both suppliers and consumers.

The new policy takes into consideration the regulatory regimes in which various sectors of the economy are functioning for classification of consumers and prioritisation of coal supplies in terms of quantities.

It also envisages an enlarged role for state governments in the supply of coal to small and medium industries. The e-auction sale of coal will also be re-introduced with certain modified features to encourage the emergence of a proper coal market in the country.

“Since the power and fertiliser sectors are operating in a price regulatory regime, coal to the extent of 100 per cent of the normative requirement of the units in these two sectors will be made by the coal companies as at present, but only under fuel supply agreement,” an official release said.

All other consumers with requirement of 4,200 million TPA of coal would be provided 75 per cent of their normative requirement. The present system of classifying consumers into core and non-core sectors has been done away with. The requirement of the defence sector and railways would continue to be met.

The government has also changed the concept of granting coal linkages to the project developers and introduced the feature of Letter of Assurance (LoA). “Such LoA will be converted into Fuel Supply Agreement after specific milestones are achieved by the project promoters in a period of two years in case of power plants and one year in case of other consumers," it said.