The New Coal Distribution Policy, 2007 (NCDP, 2007), provided for distribution of coal to those units or consumers in small and medium sector across the country whose requirement was less than 4,200 tonnes per annum and were otherwise not having any access to purchase coal or concluded Fuel Supply Agreement (FSA) for coal supply with coal companies.

The earmarked coal quantity would be distributed through State Nominated Agencies (SNAs) notified by the State Governments. This provision of the NCDP, 2007 has been amended on 27 September, 2016 by which the annual cap of 4,200 tonnes per annum for sale through SNAs has been increased to 10,000 tonnes per annum and the phrase of small and medium sector as mentioned in NCDP, 2007 has been amended as small, medium and others.

Accordingly, Coal India Limited (CIL) allocates coal to SNAs for distribution to small, medium and other consumers, whose annual requirement is less than 10,000 tonnes, based on the recommendation received from the concerned department of State Governments or Utilities.

The quantity earmarked for distribution to SNAs is 8 Million Tonnes (MT) annually. The SNA so notified by the State Government is required to enter into FSA with the coal company. The SNAs would be free to devise their own distribution mechanism which inspires public confidence and results in coal distribution in a transparent manner.