The Ministry of Coal has directed the state owned navratna coal firm Coal India Limited (CIL) to continue its coal supplies to the various consumers on a tapering basis.
The directive has been issued by the ministry in the wake of representations received from different consumers who have been alloted coal blocks. In their representations, these consumers had alleged that CIL has stopped supply of coal, to their units consequent upon the issue of policy guidelines by the ministry dated February 26, 2010 on the issue of Letters of Assurance (LoA) or allocation of coal on tapering basis to consumers in sectors like power, cement and sponge iron.
Tapering Linkage is the short-term linkage which is provided to those coal consumers who have been allocated captive coal blocks for meeting the coal requirements of their linked end use plants (EUPs) in such cases where the production of coal from these blocks does not synchronize with the requirement of the EUPs.
The coal ministry has issued a recent directive to A K Sarkar, director (marketing), CIL to restore the coal supplies to the consumers on a tapering basis.
This matter has been examined by the ministry in consultation with the Coal Controller. The Coal Controller has been advised to work out the requirement and other details for different consumers for regularization of tapering linkages as per the above mentioned policy.
The work in this connection is being carried out by the Coal Controller and the process is expected to be completed by the end of May 2010.
In view of this exercise, the coal ministry has now approved that as a temporary measure, during the transition period of the implementation of the new policy on tapering linkages, CIL should maintain status quo to supply coal to all existing consumers up to May 31, 2010.
The transition provision has been made to enable the Coal Controller and CIL to finalize and implement the new guidelines by the end of May.
The procedures for grant of tapering linkages are expected to be similar to the procedures being followed for the grant of LoA for the new consumers.
Tapering linkages would be considered by the Standing Linkage Committee (long-term) and approved by the coal ministry.
The tapering linkage shall be considered in those cases where the EUPs linked to the coal blocks are already in existence or in such cases where the EUPs are likely to come up in the near future.
For the purpose of tapering linkage, the capacity of EUP linked to the coal block alone shall be taken into consideration.
The coal blocks allocated to a state government for commercial use will not be eligible for tapering linkage.
The tapering linkage may be approved by the coal ministry from the date of allocation of the coal block (zero date) and till the scheduled date of commencement of production as per the milestones indicated in the coal block allocation letter.
The coal supply to the consumers would be to the extent of normative requirement as per the New Coal Distribution Policy which provides for meeting 100 per cent of normative requirement for power and fertilizer sectors and 75 per cent of the normative requirement for the other sectors.
