The new policy says power and fertiliser producers, which operate in a price regulatory regime, will get as much coal as they require, at pre-determined prices, under fuel supply agreements (FSAs), the coal ministry release said.

Large consumers from sectors other than power and fertilisers that have a coal requirement of more than 4,200 tonne per annum would get 75 per cent of their normative requirements of coal under FSAs.

The policy is beneficial for small and medium sector consumers. It raises the existing cap of 500 tonnes of coal a year to 4,200 tonnes per year. About eight million tonnes of coal per year will be made available to meet their requirements, which can be raised as required.

Prior to signing an FSA, project developers will get a ''letter of assurance'' (LoA) from coal companies. These LOAs will be converted into FSAs after the project promoters reach specific prescribed milestones within a period of two years in case of power plants, and one year in case of other consumers.

Consumers granted LoAs will have to furnish a bank guarantee that covers at least 5 per cent of their annual coal requirements. These can be encashed if the prescribed milestones are not achieved within the stipulated period.

The bank guarantee system is intended to encourage genuine consumers and prevent cornering of coal supply assurances without developing end-use projects in time, the coal ministry says.

LoAs in the case of power projects - including power utilities, independent power producers (IPPs) and captive power plants - steel (including sponge and pig iron) and cement will be granted by the Standing Linkage Committee (Long Term) functioning in the union coal ministry. LOAs for all other consumers will be issued by Coal India.

Coal India will now be at liberty to import coal to meet its supply commitments, and if necessary, price adjustments will be made by the coal companies. Under the new policy, e-auction sale of coal will be re-introduced with certain modified features to encourage the development of a proper coal market in the country.

State governments will now have a larger role to play by identifying the consumers and arranging a supply of coal for them through their designated agencies.

Salient features of the new coal policy:
" 100 per cent of requirement assured to power and fertiliser units; 75 per cent for others
" An eight-fold increase in the consumption limit of small and medium sector units, from 500 tonnes per year to 4,200 tonnes per year
" E-auction of coal to be reintroduced
" State governments to play a larger role in coal allocation