The Cabinet Committee on Economic Affairs (CCEA) has approved a new coal linkage policy to ensure adequate supply of the fuel to power plants through reverse auction. The new policy will help in ensuring fuel supplies to the power plants in an organised manner.
Though, the government’s initiatives and prevailing market conditions to a large extent has helped to bring down the prices of the dry fuel and boosted the domestic production, a proper mechanism for providing coal linkages to power plants at competitive rates was lacking. The new policy will address this issue and will ensure proper sourcing of the dry fuel by the power plants as per their schedules.
Coal linkage policy
Coal linkage policy is a policy designated by the union government for the allocation of coal among thermal power plants. Inadequate availability of domestic coal coupled with high price for imported coal requires the government to allocate the available coal rationally among the power plants. This is especially necessary as the coal producing firms are public sector companies. Also, the pricing of coal is an another important issue. In this context, the government designates coal linkage policies to allocate coal among different thermal power plants.