The Ministry of Coal has further liberalized the framework under which coal links can be exchanged in the country. Linkage is the assurance of coal supply from Coal India Limited to the consumer. Such commitments are binding and coal can not be passed to other customers.
The strict nature of these obligations led some players to end up with gas, which had to be ferried far longer distances. This has led to increased costs and increased the burden on the Indian Railways. In order to unravel this situation, a coal linkage rationalization exercise has been undertaken by the Center.
“The coal linkages from coal companies have been rationalized in order to reduce the distance in transportation of coal from the coal mines to the consumer. The exercise shall help in reducing the load on the transportation infrastructure and easing the evacuation constraints,” an official statement said.
Until now, coal linkage rationalization exercises have been limited to the power sector and have resulted in a change in the movement of 63.12 million tons of coal with an annual potential savings of approximately 3769 crore, according to the statement.
The new methodology announced on Tuesday for streamlining linkages, covering power as well as the Non-Regulated Sector (NRS), for all types of consumers and coal swapping with imported coal has also been allowed.
Transfer of coal amounts shall be allowed on the gross Calorific Value (GCV) equivalence and shall apply only to non-coking coal.
This arrangement is only allowed in the same sector. The NRS (non-regulated sector) can therefore only exchange links with NRS and power (regulated sector) with Power.
Participation in the scheme is voluntary and the arrangement between the parties rationalizing / swapping coal by rail and/or sea mode is bilateral. Coal India Limited is a nodal agency for the rationalization / swapping of coal linkages.
The Committee shall oversee the implementation of the scheme and address key implementation issues. The savings accrued during the process shall be transferred to Indian Railways or power distribution companies, as stated in the statement.
