Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Coal India has relaxed its norms for supplying fuel to non-regulated sectors such as steel, sponge, cement, and aluminium. The government entity will offer these sectors a 10-15-day credit period to alleviate their financial stresses. 


Buyers will now be given a ‘letter of credit’ so that they do not have to make 100pc advance payment as earlier enabling them to run their plants smoothly. This new mechanism allows the consumers from non-regulated sector must furnish a bank guarantee of the amount of purchase and it must be replenished from time to time for which Irrevocable Revolving Letter of Credit (IRLC) will be issued for coal supplies through rail mode and this can be used to avail credit.


In a separate initiative independent power producers (IPPs) are allowed inter plant transfer of coal. This means if an independent power generating entity owns two different plants and has two separate fuel supply agreements (FSA) in place, they can transfer coal from one plant to another, owned by it, to improve efficiency in generation and reduce the cost of the fuel, transportation and take the load off the railways during peak season. 


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