Coal linkage auction: Floor price may be at CIL's Run-of-Mine rates

The initial floor price for the proposed auction of coal linkages should be fixed on the basis of CIL Run-of-Mine price and bidders have to bid for premium above this price for the relevant grade, an inter-ministerial panel has suggested.

Run-of-Mine (ROM) is coal that is not graded according to quality or size.

There is also a proposal that in the proposed auction of coal linkages to non-regulated sector which covers cement, sponge iron, captive power and others through competitive bidding the maximum bid quantity by a particular bidder will not exceed the normative requirement of the end-use plant, an official said.

"For auction of linkages, Coal India (CIL) shall chalk out annual or six-monthly auction calendar and there shall also be a provision for third party sampling of coal supplied," the official added.

The government had last month informed CIL that the policy with regard to auction of coal linkages may take some more time to be finalised.

The government is considering a policy for coal linkage auction and has sought comments from stakeholders on the draft auction methodology which it has prepared.

An Inter-Ministerial Committee (IMC) was set up in January to consider various models, including auctioning of coal linkages/LoAs (Letter of Assurances) through competitive bidding as the selection process and to recommend the optimal structure that would meet the requirements of all the stakeholders.

Till now, Standing Linkage Committee was deciding on allocation of long-term and short-term linkages for the sectors, including power and steel.