MSTC Coal Linkage Auction

MSTC Coal Linkage Auction

“Coal linkage” is one of the more technical terms in India’s coal allocation system, and it is distinct from the spot and forward e-auctions of coal stock described elsewhere on this site. A linkage is not a one-time purchase of a coal parcel — it is a long-term, standing entitlement to draw coal from a designated source, formalised through a Fuel Supply Agreement (FSA). Since coal linkages moved from administrative (nomination-based) allocation to a competitive, auction-based system, MSTC Limited has taken on a significant operational role in conducting these linkage auctions on behalf of Coal India Limited (CIL). This page explains what coal linkage auctions are, how they differ from spot e-auctions, and what is currently known about MSTC’s role.

What a Coal Linkage Actually Is

A coal linkage is a recognised, recurring entitlement for a specific consumer (a power plant or an industrial unit) to receive coal from a specific source or pool of sources over an extended period, under an FSA executed with CIL or a subsidiary coal company. Historically, linkages were allocated administratively by the government/Ministry of Coal. Over the past decade, India has progressively shifted to auction-based allocation of fresh linkages, so that the right to a long-term coal supply entitlement is now, in large part, competitively bid for rather than administratively assigned.

The Two Main Linkage Auction Tracks

Coal linkage auctions in India run along two broad, policy-defined tracks, each governed by its own scheme:

• SHAKTI Policy (power sector): the Scheme for Harnessing and Allocating Koyla Transparently in India (SHAKTI), introduced in 2017 and revised since, moved coal linkage allocation for thermal power generators from a nomination-based Letter of Assurance/FSA regime to an auction- and tariff-based system. Power producers — including independent power producers without power purchase agreements, under specific clauses of the policy — bid for coal linkages through e-auction. MSTC operates the SHAKTI e-auction portal used for these auctions.
• Non-Regulated Sector (NRS) Linkage Auction Policy, 2016: this policy governs the auction of fresh coal linkages to non-power industrial sectors — principally cement, steel (including sponge iron/DRI), aluminium, and other eligible industrial users, along with their captive power plants (CPPs), excluding urea fertiliser units. Under this policy, eligible industrial units bid competitively (typically at a premium over CIL’s notified price) for a long-term linkage to draw coal from designated sources.

In December 2025, the Union Cabinet approved a further expansion of the NRS Linkage Policy framework by creating a new auction window named CoalSETU (Policy for Auction of Coal Linkage for Seamless, Efficient & Transparent Utilisation). CoalSETU broadens eligibility beyond the originally listed sectors, allowing any domestic industrial buyer to bid for a long-term coal linkage for its own industrial use or for export (up to 50% of the linked quantity), irrespective of end-use sector — though coking coal is excluded from this window. This signals a continuing shift toward wider, more open access to auctioned coal linkages.

MSTC’s Role in Linkage Auctions

MSTC’s involvement in linkage auctions is well documented and has recently been reinforced through a formal contract award. In February 2026, MSTC was declared the lowest (L1) bidder on a Coal India tender to act as the External Service Provider for conducting Linkage Auctions for the Non-Regulated Sector, for a three-year term. Under this mandate, MSTC is responsible for managing the end-to-end NRS linkage auction process on its digital platform — from auction design and conduct through to execution of the resulting supply agreements — on behalf of CIL. MSTC also hosts and operates the dedicated SHAKTI e-auction portal used for power-sector linkage auctions, and a separate coal linkage e-auction section (for CIL and SCCL) on its e-commerce platform.

Because this is a live, evolving contractual and policy area — and because the newly approved CoalSETU window is very recent — the precise operational details of how each linkage auction round will be conducted, and which entity administers any given round, should always be confirmed against the current notice inviting e-auction published by CIL, the Ministry of Coal, and MSTC’s coal/linkage auction portals, rather than assumed from past practice.

How Linkage Auctions Differ From Spot/Forward E-Auctions

• What is being sold: a spot or forward e-auction sells a specific, one-time quantity of coal from current stock. A linkage auction allocates a long-term, recurring supply entitlement under an FSA, typically running for several years.
• Who can win: spot e-auctions are generally open to a broad base of registered buyers for each auction event. Linkage auctions are restricted to applicants meeting the eligibility criteria of the specific policy (SHAKTI for power sector; NRS Policy/CoalSETU for industrial/non-power sector), often including capacity, end-use, and documentation requirements specific to that scheme.
• Pricing mechanism: in a linkage auction, bidders typically compete on the premium they are willing to pay over CIL’s notified price for the linked coal, since the underlying commodity price benchmark is fixed; in a spot/forward e-auction, the bid itself sets the transaction price.
• Duration of the commercial relationship: winning a linkage auction creates a standing supply relationship (an FSA) lasting years; winning a spot or forward e-auction lot is a single transaction.

Who Is Eligible to Participate

Eligibility is scheme-specific and should be verified against the current policy document and auction notice, but as a general guide:

• Under SHAKTI, eligible bidders are power generating companies, including those without existing power purchase agreements under the relevant policy clause.
• Under the NRS Linkage Auction Policy, 2016, eligible bidders are units in the cement, steel/sponge iron, aluminium, and other specified industrial sectors (and their CPPs), typically required to meet capacity and end-use conditions set out in the policy and the specific auction’s notice inviting linkage.
• Under the new CoalSETU window, eligibility is intended to be broader — any domestic industrial buyer requiring coal, regardless of specific end-use sector, subject to the export cap and the exclusion of coking coal.

In every case, participants must also complete the applicable registration on the MSTC e-auction/linkage platform, hold a valid Digital Signature Certificate, and meet the EMD and documentation requirements notified for that specific linkage auction round.

An Honest Caveat

Coal linkage auctions sit at the intersection of a formal government policy framework (administered by the Ministry of Coal and implemented by CIL) and MSTC’s role as the appointed e-auction technology and process partner. Because the CoalSETU window is newly approved and MSTC’s NRS linkage auction service-provider contract was only recently awarded, some operational specifics — exact auction calendars, bid formats for individual rounds, and documentation checklists — were still being finalised and notified at the time of writing. Applicants should treat the description above as a policy-level explanation of how coal linkage auctions work and who administers them, and should confirm round-specific procedures directly on CIL’s, the Ministry of Coal’s, and MSTC’s official portals before applying.

How Leegal Helps

Coal linkage auctions involve materially more regulatory complexity than a standard spot e-auction — eligibility screening, policy compliance, FSA documentation, and long-term commercial commitment all come into play. Leegal advises industrial units in the cement, steel, sponge iron, and allied sectors on linkage-auction eligibility, MSTC/SHAKTI portal registration, and documentation preparation, helping you approach a linkage auction round with your compliance position ready. Contact Leegal to discuss your eligibility and readiness for an upcoming coal linkage auction.