THEBUSINESSBYTES BUREAU

NEW DELHI, SEPTEMBER 24, 2026

Every unit of electricity has a journey behind it.

Long before a light comes on in a home, machinery begins operating in a factory, or a steel or cement plant starts production, an intricate chain of activity is already in motion. At the heart of this chain is the movement of coal—from the mine to the consumer — and the distribution system that keeps this vital flow moving.

Over the past decade, Coal India Limited (CIL) has transformed the way coal reaches consumers. A system once driven largely by traditional linkages allocated on a nomination basis has evolved into a broader framework built around long-term supply assurance, competitive auctions, digital platforms, greater consumer choice and more efficient logistics.

The result is a distribution ecosystem designed to respond more effectively to the diverse requirements of India’s growing economy.

A channel for every consumer

CIL today serves consumers through a diversified network of supply channels, each designed to address different requirements and time horizons.

For the power sector, Fuel Supply Agreements (FSAs) remain the foundation of long-term coal availability. The introduction of the SHAKTI policy in 2017, followed by its revision in 2025, has brought greater transparency and competitiveness to coal allocation for power producers.

For non-power consumers, linkage auctions introduced in 2016 created a competitive route for industries such as cement, steel, sponge iron, captive power and others to secure long-term coal supplies.

This more transparent and competitive allocation framework has supported the expansion of long-term linkages. Cumulative power-sector linkages now stand at around 643 MT, while non-power linkages are around 119 MT.

Long-term requirements are addressed through linkages and FSAs, while short-term requirements are met through e-auctions. These auction-based mechanisms provide a common platform for power producers, industrial consumers, traders and exporters, enabling them to participate in the market and secure coal according to their requirements.

At the smaller end of the consumer spectrum, MSME consumers requiring less than 10,000 tonnes annually have the option of being served through State-Nominated Agencies (SNAs).

Together, these channels have created a more responsive distribution framework, allowing coal supply to better reflect consumer requirements across sectors and time horizons.

Making coal procurement simpler

The transformation of coal distribution has not been limited to allocation mechanisms. It has also focused on making procurement simpler, more efficient and more consumer-friendly.

For power-sector FSAs, CIL has revised the contractual framework. For the first time in the country, the revised FSAs provide for delivery of a fixed amount of Gross Calorific Value (GCV) to consumers, compared with earlier arrangements that were primarily based on the tonnage of coal supplied.

CIL has also reduced the interest rate applicable to delayed payments from around 14.65% to about 8.25%, easing the financial burden and improving liquidity for the power sector.

Another significant intervention has been the rationalisation of coal linkages. Since 2014, CIL has rationalised around 105 MT of coal linkages, with potential annual savings of more than ₹7,500 crore for the power sector through lower transportation costs and more efficient utilisation of domestic coal.

For non-power consumers, a range of measures — including e-Bank Guarantee facilities, pre-auction coal-quality testing, registration of multiple end-use plants under a single bidder ID and greater choice of transportation modes — has further simplified the procurement process.

Much of this transformation has been enabled by digitalisation.

Online information systems, reconciliation facilities, integration of Third-Party Sampling Agency portals with buyers and sellers, grievance-redressal platforms, SAP integration, customer interfaces and integration with railway portals have fundamentally changed the way producers, consumers and logistics service providers interact.

The objective is clear: to reduce friction at every stage of the transaction.

Coal distribution is therefore no longer simply about moving coal from a mine to a consumer. It is increasingly about making access simpler, more transparent, predictable and easier to manage.

From mine to market: expanding evacuation capacity

Producing coal is only one part of the journey. Equally important is what happens after coal leaves the mine—and how efficiently it reaches the consumer.

Over the past decade, CIL has significantly strengthened its evacuation network.

Rail-mode dispatch increased from 272.9 MT in FY 2015–16 to 414.0 MT in FY 2025–26, representing growth of around 52%. Average rake loading increased from approximately 212.8 rakes per day to 338 rakes per day, a rise of nearly 59%.

Road-mode dispatch for consumers located in the vicinity of mines increased from 156.1 MT to 221.8 MT, while movement through Merry-Go-Round (MGR) systems increased from 92.3 MT to 97.1 MT over the same period.

The next phase of this transformation is centred on First Mile Connectivity (FMC), mechanised loading, silos and multimodal logistics.

CIL has undertaken 72 FMC projects with a planned capacity of 843 MT. Along with 20 existing Coal Handling Plant (CHP)-silos with a capacity of 151 MT, mechanised and rapid-loading capacity is expected to reach around 994 MT by FY 2028–29.

These investments are aimed at making evacuation faster, more reliable and better aligned with future production levels, while improving the efficiency of the mine-to-market chain.

A distribution system evolving with India

The transformation of coal distribution is ultimately about bringing different parts of the value chain together.

Production must remain aligned with demand. Allocation must respond to consumer requirements. Logistics must keep pace with output. Infrastructure must anticipate future scale. And information must move as efficiently as the coal itself.

Digital systems and modern logistics infrastructure are helping connect these elements into an increasingly integrated framework.

Coal distribution has consequently evolved beyond a system focused primarily on allocation. It is becoming a more integrated ecosystem connecting production, supply, access, logistics and consumer requirements.

As India’s energy and industrial requirements continue to grow, this evolving framework enables CIL to respond with greater agility and consistency across the coal value chain.

From the mine to the market, the transformation is not simply about how coal is allocated. It is about how efficiently, transparently and reliably it reaches those who depend on it.

With its expanding mine-to-market network, diversified supply channels, digital systems and investments in evacuation infrastructure, Coal India Limited continues to strengthen the reliability, efficiency and transparency of coal supply — supporting India’s expanding energy and economic needs.