Coal ministry works out criteria to deal with representation of cement companies

The standing linkage committee for long term supply of coal to cement sector has come up with set of criteria to deal with the   pending letters of assurances (LoA), otherwise known as  fuel supply assurances to 20 companies in the cement sector.  Upon non achievement of stated objectives or milestones as generally referred, the ministry had issued notices for cancellation of LoA for coal supply to these companies.

The committee set up by South Eastern Coalfields Limited under aegis of Coal ministry including representatives from power and industry department was formed upon Chhattisgarh High court direction. The High Court was approached by some of these companies for a stay on these cancellation notices which it heeded  to .  

 This pertains to the issue of 20 cement plants where milestones or landmarks proposed to be achieved by the respective companies through use of coal were found deficient.   These 20 cement plants belong to ACC, Ambuja Cement, Birla Corp, ULTRA TECH Cement, Century Cement, and J K cement, Jaiprakash Associates, Shriram Cement, Manihar Cement and Mangrol Cement.   After issuance of cancellation of LoA notices, some of these companies represented by Cement Manufacturers Association of India petitioned to Chhattisgarh High Court for stay on cancellation notices till their respective representations are heard and resolved.  

 These criteria  will now work as the guideline for resolving their respective representation.  Some of the criteria include  condonation of delay in respect of milestones already archived and not, grant of three month time from the date of respective LoA for achieving milestones and  entitled coal quantities to be worked out by considering the total clinkers capacity of the plant.  According to official sources, coal is used to manufacture clinker and thus total eligible coal quantity will be at the rate of 17 per cent of the clinker capacity as the normal quantity.

Sources explained that this clinker capacity based eligible coal quantity will be the criteria to be used for all letter of assurance (LoA) holders from now on.  Besides, environmental clearance for clinker will be mandatory.  The extension time for meeting the milestones will be given to these companies till end of October 2014.

For the cement sector, 43 letters of assurances in total have been signed  

Meanwhile the ministry has clarified that there is no proposal to allow consumers in the power, steel and cement sectors to swap fuel linkages between associated companies and special purpose vehicle. However, a policy in respect of automatic transfer of coal linkage while scrapping of old plants by replacing them with new units in respect of public sector / state public sector power plants is being formulated.