Industry chamber FICCI has welcomed the Central Government’s initiative on the coal linkage rationalisation provision as it is expected to reduce the landed cost of coal. With fuel being sourced from the nearest feasible coal mine going forward, it will significantly help optimise transportation. The savings thus achieved will need to be necessarily passed on to consumers. However, participation in the scheme shall be voluntary and arrangements between the parties rationalising or swapping coal through rail and sea modes shall be bilateral.
Vipul Tuli, Chairman, FICCI Power Committee & Managing Director, Sembcorp Energy acknowledged the move to permit the coal linkage swapping for rationalising transport as a forward-looking measure. He added that the move would not only bring-in cost efficiency but also increase the availability, which was often marred by transport hurdles.
The government had announced rationalisation of coal linkages from coal companies on June 9. Under this provision, consumers of coal may transfer coal linkages from one company to another based on the availability during the fiscal and future coal production plan of the company. The move is aimed at reducing the load on the transportation infrastructure and easing the evacuation constraints. The rationalisation of linkages and swapping of coal will be permitted across coal consumers from the public sector and private sector, and across domestic coal linkage and imported coal.
Unlike the past rationalisation provision, which was only for the power sector, the current methodology covers the non-regulated sectors as well. The coal source transfer is envisaged in terms of gross calorific value (GCV) and is applicable for non-coking coal only, and the arrangement will be allowed only within the same sector.
Coal India Ltd (CIL) will be the nodal agency for conducting the process of linkage rationalisation. A committee will address key issues in implementing the scheme. The willing participants and consumers shall register on the electronic platform for rationalisation and submit the requisite information.