New CoalSETU Policy Enhances Coal Use for Industries
The Union Cabinet, chaired by Prime Minister Narendra Modi, has unveiled an innovative policy aimed at improving the efficiency and transparency of coal usage in India. This new initiative, termed the Coal Auction Policy for Seamless, Efficient & Transparent Utilisation (CoalSETU), introduces a dedicated “CoalSETU window” within the Non-Regulated Sector (NRS) Linkage Policy. With this policy, the government seeks to facilitate coal allocation for various industrial applications and exports, marking a significant step in the ongoing reforms within the coal sector.
Under the CoalSETU framework, coal linkages will be allocated through an auction process, allowing long-term access for any industrial use and export. This addition builds upon the existing NRS Linkage Auction Policy of 2016, enabling any domestic buyer with a need for coal to participate in the auction, although it excludes the auctioning of coking coal.
The present policy governs all fresh coal linkages for the NRS, specifically targeting sectors such as Cement, Steel (excluding coking), Sponge Iron, and Aluminium, while also integrating Captive Power Plants (CPPs), except for Fertilizer (Urea) related endeavors. Amid evolving market dynamics, this initiative is designed to streamline business operations and enhance the utilization of existing coal reserves, thereby reducing reliance on imported coal for fulfilling the country’s energy demands.
In alignment with the government’s push towards commercial mining, the revamped policy fosters flexibility by removing end-use restrictions for coal consumers in the NRS. However, it maintains the ongoing auction arrangements for specified end-user sub-sectors. Additionally, traders will be barred from participation in the new CoalSETU window.
Coal linkages secured through this new channel will be designated for the holder’s own use, exporting coal, or other purposes such as coal washing, but are not intended for resale within the country. Notably, linkage holders will have the opportunity to export up to 50% of the coal they acquire through this policy. Furthermore, they will be able to allocate coal obtained through this window among their Group companies, enhancing intra-company flexibility.
As the demand for washed coal is on the rise, the introduction of coal linkages for washery operators is expected to significantly boost the availability of washed coal domestically, potentially diminishing import needs. Furthermore, the availability of washed coal may open up export opportunities, contributing to the overall growth of the coal sector.
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