Business

New coal distribution policy announced

NEW DELHI: Giving an indication that it was serious about meeting challenges set under the XI Plan for the power sector and it was also keen on protecting the interests of farmers, the Union Government on Friday announced a new coal distribution policy giving top priority to power and fertilizer sectors.

Under the new policy, both power and fertilizer sectors would get as much quantity required at pre-determined prices.

“Since the power and fertilizer 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, but only under Fuel Supply Agreements, an official statement said here. All other consumers with requirement of more than 4,200 tonnes annually would be provided 75 per cent of their normative requirement.

The present system of classification of consumers into core and non-core sectors has been done away with. The Government has also changed the concept of granting coal linkages and introduced the feature of Letter of Assurance (LoA).

Such LoAs would be converted into Fuel Supply Agreements after specific milestones are achieved by the project promoters, the policy states.

Consumers granted LoA would have to furnish a bank guarantee equivalent to five per cent of their annual requirement of coal, which will be forfeited if the suggested milestones were not achieved within the stipulated period, it added.

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