CIL to start second phase of coal linkages auction

The Dollar Business Bureau

Coal India Limited (CIL) comes bearing good news for the non-regulated sector (sponge iron, cement, steel etc) as it announces its decision to start the second phase of auction of coal linkages in January 2017. About 14.5 million tonnes is the estimated quantity of fuel that's on offer, of which, 5 million tonnes is exclusively for the sponge iron sector.

Coal being a major source of power in India, its shortage is no surprise. All power-generating entities rely on the state-owned coal mines for their share of fuel, making its supply far more scanty for the non-power sectors such as steel, cement and aluminium.

Earlier, Standing Linkage Committee was the deciding authority on coal allocation. Coal is now made available to the non-regulated sector only via the auction route to ensure fair distribution of the scarce fuel, following approval by the Cabinet Committee on Economic Affairs last year.

The news lends favourably to CIL's stock price, which is up by 3.45 points or 1.13% since its previous closing. It also comes as a relief after a series of unfortunate events including CIL falling short of its target production for the year end and a mining mishap in Jharkhand at one of its sites, which reportedly killed 18 people.