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FICCI welcomes Govt's move to introduce a methodology for rationalisation of coal linkages for regulated, non-regulated sectors

Jun 10, 2020

NEW DELHI, 10 June 2020: FICCI welcomes 'the government's initiative as the coal linkage rationalization provision is expected to reduce the landed cost of coal. As fuel will be 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 arrangement between the parties rationalising/swapping coal through rail and/or sea mode shall be bilateral.


Mr Vipul Tuli, Chairman, FICCI Power Committee and MD, Sembcorp Energy acknowledged the move to permit the coal linkage swapping for rationalizing transport as a forward-looking measure. He added that the move will not only bring-in cost efficiency but also increase the availability, which usually gets marred due to transport hurdles.


Government of India has announced rationalization of coal linkages from coal companies. 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 rationalization of linkages/swapping of coal will be permitted across coal consumers from public sector and private sector, and across domestic coal linkage and imported coal.


Unlike the past rationalization provision, which was only for 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 Limited (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 / consumers shall register on the electronic platform for rationalisation and submit the requisite information.