Coal India Introduces CoalSETU Window for Transparent Coal Linkage Auctions

Kolkata, February 16, 2026: Coal India Limited (CIL), the Maharatna PSU under the Government of India, has unveiled the draft operative modalities for its new “CoalSETU” auction window. This initiative, aligned with the Ministry of Coal’s directive dated December 19, 2025, aims to provide seamless, efficient, and transparent utilization of coal for domestic industrial consumers.

What is CoalSETU?

The CoalSETU (Seamless, Efficient & Transparent Utilisation) window is part of CIL’s Non-Regulated Sector (NRS) Linkage Auction Policy. It allows eligible domestic buyers to bid for coal linkages for their own consumption, coal washing, or export, while traders are explicitly excluded.

Key highlights:

Eligibility: All domestic industrial users, including cement, sponge iron, steel, and independent washery operators.
Usage Flexibility: Coal can be used for internal consumption, coal washing, or exported — up to 50% of the total allocated quantity.
Prohibition: Resale of raw coal in the domestic market is prohibited; however, processed products such as washed coal and washery by-products can be sold.
Tenure: Fuel Supply Agreements (FSAs) under CoalSETU will have a 10-year term, ensuring long-term supply security.

Bidding and Auction Mechanism

CoalSETU will use a First-Price Sealed-Bid electronic auction platform. Prospective buyers must register their plants or units, provide normative coal requirements, and submit process fees and bid security.

The auction process is structured in three phases:

Preparation & Announcement: CIL publishes coal quantity, source, representative grade, reserve/floor price, and bidding deadlines.
Bidding: Buyers submit confidential sealed bids online for price and quantity. Bids below the reserve price are rejected. In case of identical bids, allocation priority is determined by bid quantity and submission time.
Post-Auction Allocation: Successful bidders receive a Letter of Intent (LoI), and FSAs are executed electronically. Allocated quantities are subject to verification by government or certified agencies.

Pricing Formula

CoalSETU uses a floor price plus winning premium model with an escalable component based on previous auction performance.

Example:

If the modulated notified price is ₹2,000/ton and the winning premium is 40%, with a 5% escalable component, the as-delivered price will be:
₹2,000 × (1 + 0.40 + 0.05) = ₹2,900/ton

This mechanism ensures transparent and market-linked pricing for all participants.

Washery Operators

Non-coking coal washeries with approved flowsheets and environmental clearances can participate. Washed coal can be sold domestically or exported, but raw coal resale is restricted. Coal washery rejects with GCV < 2200 kcal/kg must be disposed of following Ministry of Coal policy guidelines.

Feedback and Consultation

CIL invites prospective bidders to submit comments or suggestions on the draft modalities within 20 days of the notification. Feedback can be emailed to eauction.cil@coalindia.in.

Significance

The launch of CoalSETU reflects India’s push toward efficient, transparent, and environmentally responsible coal utilization. It empowers industrial users with greater flexibility, aligns coal allocation with actual consumption, and strengthens domestic supply planning.