They were not able to get any linkage or letter of assurance (LoAs) for coal to meet their fuel needs since after the New Coal Distribution Policy (NCDP) was framed by the coal ministry in 2007.
Private sector industries such as cement, steel and aluminum will be able participate in coal block auction. For the last 10 years these industries were left to fend for themselves to buy coal from the open market, affecting their capacity as well as the employment generation.
They were not able to get any linkage or letter of assurance (LoAs) for coal to meet their fuel needs since after the New Coal Distribution Policy (NCDP) was framed by the coal ministry in 2007.
The Cabinet Committee on Economic Affairs (CCEA) chaired by Prime Minister Narendra Modi on Wednesday laid down a new framework to make the coal available in a fair manner to the end-users through auction, making it clear that the government "does not seek to maximise revenue" in supply of coal.
In a bid to ease doing of business, a senior government official said under the new policy there will not be premature termination of FSAs of non-regulated sector. The existing FSAs with Central Public Sector Enterprises (CPSEs) may continue to be renewed on expiry; for additional linkages, CPSEs may participate in auction. For auction of linkages, separate quantities shall be earmarked for sub-sectors of the non-regulated sector. The sub-sectors could be cement, sponge iron/steel, aluminium. Auctions would be conducted by CIL/SCCL.
The Supreme Court its judgements in August and September, 2014 had declared 204 coal mines/blocks allocated since 1993 as illegal on the ground that the procedure followed was arbitrary. Following this judgment, e-auction of coal mines was conducted. An Inter-Ministerial Committee (IMC) was constituted in the Ministry of Coal in January 2015 to consider and examine various structures and implementation models for implementing the competitive bidding for .auction of coal linkages/LoAs and to recommend the optimal structure that would meet the requirement of all the stakeholders.
After deliberations with stakeholders under the NCDP, a new system of issuance of LoA was introduced for power, cement and sponge iron sectors. Under this system, requests for linkage/LoA are forwarded to the administrative ministries for their recommendation.
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