Cabinet Approves CoalSETU Policy for Transparent Coal Linkage Auction and Export Flexibility

On 12 December, the Cabinet Committee on Economic Affairs (CCEA) approved the Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation (CoalSETU). A new window—“CoalSETU window”—will be added to the Non-Regulated Sector (NRS) Linkage Policy, 2016.

• It will enable coal allocation through long-term auction for any industrial use and for export, strengthening coal sector reforms.

New CoalSETU Window

• Open to any domestic buyer requiring coal for industrial use (except fertiliser).
• Allows procurement of coal through auction for:
  • Own consumption
  • Export
  • Coal washing
  • Other industrial purposes
• Resale of coal within the country is prohibited.

Coking Coal Excluded

• Coking coal will not be offered under the CoalSETU window.

Flexibility for Companies

• Linkage holders may flexibly use coal among their group companies as per operational needs.
• Coal linkage holders permitted to export up to 50% of their allocated coal quantity.

Existing NRS Linkage Policy Will Continue

• The 2016 policy covers fresh coal linkages to sectors:
  • Cement
  • Steel (Coking)
  • Sponge Iron
  • Aluminium
  • Others (excluding Urea Fertiliser)
  • Captive Power Plants (CPPs)
• These specified end-user sub-sectors will continue under the existing auction system.
• The same specified sectors may also participate in the new CoalSETU window.

Benefits and Rationale

Promotes Transparency & Efficiency

• Introduces market-based, transparent, and flexible allocation of coal.
• Ensures ease of access for industries with diverse coal needs.

Boost to Coal Washing

• Linkages to Washery operators will increase production of washed coal, which has:
  • Higher calorific value
  • Lower ash content
  • Better environmental performance
• Expected to reduce coal imports due to increased domestic supply.

Supports Exports

• Washed coal is likely to find markets overseas, boosting coal export potential.
• Helps India leverage its coal resources more efficiently in global markets.

Part of Coal Sector Reforms

• CoalSETU complements a series of reforms such as:
  • Commercial coal mining
  • Liberalised coal sale and transportation
  • Enhanced private-sector participation
• Aims to strengthen:
  • Energy security
  • Industrial competitiveness
  • Efficient coal resource utilisation

Source: PIB