Circular of the General Office of the National Development and Reform Commission on doing a good job in the signing and implementation of medium-and long-term contracts for coal in 2021

The Development and Reform Commission of all provinces, autonomous regions and municipalities directly under the Central Government, the Department of Industry and Information Technology (Economic and Information Department, Economic and Information Commission), the Energy Bureau, the Beijing Municipal Urban Administration Commission, the relevant central enterprises, the National Coal Trading Center, and relevant trade associations: Ensuring the safe and stable supply of coal is of great significance to do a solid job of "six stability", fully implement the task of "six guarantees", and build a new development pattern with domestic and international cycles as the main body and domestic and international cycles promote each other. In order to further improve the medium-and long-term contract system of coal and promote the signing and implementation of medium-and long-term contracts in 2021, the relevant matters are hereby notified as follows:

I. fully understand the significance of doing well the medium-and long-term contract work of coal

(1) the medium-and long-term contracts of coal have played the role of "ballast stone". During the 13th five-year Plan period, the medium-and long-term contract system of coal has been continuously improved, the price mechanism of "benchmark price + floating price" has been widely recognized, the contract performance rate has increased steadily, production and transportation needs to be effectively linked up by all parties, and the credit supervision system has been initially formed. Practice shows that medium-and long-term coal contracts play an important role in promoting the sustained and healthy development of upstream and downstream industries, promoting the balance between supply and demand in the coal market, and ensuring stable and reliable coal supply and energy security throughout the country.

(2) continue to adhere to the medium-and long-term contract system for coal. The Fifth Plenary session of the 19th CPC Central Committee proposed to improve the energy production, supply, storage and marketing system to ensure energy security. The medium-and long-term coal contract system is an important part of the coal production, supply, storage and marketing system. During the 14th five-year Plan period, it is necessary to deeply sum up the practical experience in recent years, continue to adhere to and constantly improve the medium-and long-term coal contract system, and gradually form a coal market trading system with a more effective market mechanism, a more powerful supervision mechanism, and a close link between production, supply, storage and marketing, so as to provide a more solid energy guarantee for unblocking the domestic circulation and promoting the healthy and stable operation of the national economy.

II. Continuously improve the medium-and long-term contract system for coal

(3) to further clarify the scope of medium-and long-term contracts for coal. The medium-and long-term coal contract refers to the coal purchase and sale contract signed by both suppliers and demanders with an execution period of one year or more and with a clear quantity and price mechanism. The quantity of power coal contract is not less than 200000 tons, and the coal contract for metallurgy, building materials, chemical industry and other industries is not less than 100000 tons. If the transport capacity is confirmed by railway connection and the commitment of good faith performance is signed, it shall be included in the scope of key supervision.

(4) to promote a better combination of effective markets and promising governments. We should give full play to the decisive role of the market in the allocation of resources, respect the law of value and the relationship between supply and demand, and support both sides of coal supply and demand to independently link up and sign contracts and independently negotiate prices. We should give better play to the role of the government, strengthen institutional construction, improve transaction rules, strengthen credit supervision, guide all parties concerned to raise awareness of the overall situation, assume social responsibility, standardize the behavior of signing and implementing contracts, and ensure the smooth operation of the coal market.

(5) to implement the price mechanism of "benchmark price + floating price". If the supply and demand sides can reach an agreement on the medium-and long-term contract price, it shall be carried out in accordance with the agreement of both parties. If no agreement can be reached, it shall be determined in accordance with the principle of "benchmark price + floating price". In terms of the benchmark price, the benchmark price of the launching coal contract is first determined by both parties through consultation, and if the consultation is inconsistent, the benchmark price of the railway direct coal contract shall be determined by the average price at the mouth of the pit after deducting the transportation and miscellaneous charges and the monthly average transaction price of both supply and demand in 2020, which shall be determined comprehensively according to the weight of 50% each. In terms of floating price, the floating prices of launching coal contracts and railway direct coal contracts can be comprehensively determined by combining the Bohai Rim Coal Price Index, CCTD Qinhuangdao Port Coal Price Index and China Coastal Thermal Coal Purchasing Price Index. The contract price in the region shall be determined with reference to the previous year's price negotiation, and both supply and demand parties are encouraged to negotiate and determine the specific price with reference to the relevant price index.

Sign early, sign more, sign solid, and sign long-term and medium-term coal contracts

(6) to complete the signing of the annual contract as soon as possible. In line with the principle of long-term cooperation and mutual benefit, both supply and demand should communicate actively, strengthen docking, and strive to basically complete the signing of the contract between the two sides by the end of December 2020. Railway transport enterprises should make a plan for the allocation of transport capacity in advance to ensure that the tripartite contract signing work for production and transportation should be completed by the end of January 2021. If the contract signing has not been completed within the above-mentioned time limit, the transport capacity will no longer be retained in principle. During the period of contract negotiations, both suppliers and demanders shall ensure that the supply of coal in the coal market is stable and orderly, and shall not affect the normal heating of power generation and the demand for coal for daily use of residents.

(7) to further increase the proportion of medium-and long-term contracts. The number of medium-and long-term contracts signed by coal enterprises above scale should reach more than 80% of their own resources, and the proportion of nuclear increase in coal mines for nuclear production should reach more than 90% since 2019. The number of medium-and long-term contracts signed by electric power enterprises above scale should reach 75% of the annual coal use, and for power plants that use imported coal, 80% of domestic coal use should be signed medium-and long-term contracts. The number of medium-and long-term contracts signed by coal and electric power enterprises above scale in 2021 should not be less than that of the previous year.

(8) medium-and long-term contracts should be true and effective in terms of quantity, price and price. The quantity, quality, price mechanism, liability for breach of contract, dispute resolution and other basic elements of coal medium-and long-term contracts should be standardized and complete. If the contract is to be true and effective, it is strictly forbidden to sign a false contract for the purpose of seizing railway transport capacity, which, once found, shall be recorded in the enterprise's credit record, and shall be restricted in the signing of medium-and long-term contracts in the next year. Encourage the use of model contract texts and support the signing of e-commerce contracts on the platform of the National Coal Trading Center.

(9) to encourage the signing of medium-and long-term contracts of three years or more. We will encourage both supply and demand to establish a long-term and stable strategic cooperative relationship, and sign medium-and long-term contracts with a clear price mechanism for 3-5 years. In principle, the number of contracts signed for enterprises above scale for three years and above shall not be less than 30% of the total annual medium-and long-term contracts. Medium-and long-term contracts that have not yet expired shall continue to be implemented.

IV. Strengthen the supervision over the performance of medium-and long-term coal contracts

(10) to establish and improve the credit supervision mechanism. Medium-and long-term contracts that are included in the scope of key supervision will all be supervised by the national integrity performance guarantee platform (http://ly.creditchina.gov.cn), and the performance of contracts will be subject to monthly statistics and quarterly assessment. The National Development and Reform Commission will timely collect the performance of the contract and the results of credit evaluation, include the credit records of both sides of the transaction in accordance with the rules and regulations, and conduct regular collection, summary and public notification as credit information; conduct interviews for those who still fail to meet the requirements for performance after reminding, and work with relevant departments to punish breach of trust in accordance with the rules and regulations.

(11) to further improve the level of implementation. According to the production plan and railway transport capacity, the three parties of production and transportation shall subdivide the annual medium-and long-term contracts into monthly contracts on the premise of consensus, with a monthly performance rate of not less than 80% and a quarterly and annual performance rate of no less than 90%. If the annual medium-and long-term contract for transport capacity confirmed by the railway department is indeed difficult to implement, the transaction may be carried out on the platform of the National Coal Trading Center with the consent of the three parties required for production and transportation.

V. perfecting the guarantee mechanism of medium-and long-term contracts for coal

(12) to summarize the performance information of the contract. The medium-and long-term coal contract enterprises shall promptly log in to the China Coal Market Network (www.cctd.com.cn) to enter the contracts for both supply and demand, and the China Coal Industry Association shall complete the contract collection work before January 15, 2021, and send it to the State Railway Group to link up the transport capacity in time. Contract suppliers with railway capacity under key supervision should log in to the National Coal Trading Center (www.ncexc.cn) to enter the contract before the end of January 2021, and both suppliers and suppliers should sign good faith performance commitments online, and those who do not sign performance commitments will not be confirmed. The National Coal Trading Center shall share the final confirmed key supervision contracts with the national integrity implementation guarantee platform in a timely manner. The cumulative contract performance of last month and the year shall be submitted online before the 15th of each month, the coal supply enterprises shall submit to the China Coal Industry Association, and the coal enterprises shall submit to the National Coal Trading Center, and the collection units shall promptly share the performance information with the national integrity implementation guarantee platform. A contract that fails to submit its performance on time shall be deemed not to have been performed if it has not been submitted after prompting it.

(13) to strengthen the guarantee of railway transport capacity. Railway transport enterprises should strengthen the overall planning of transport capacity, do a good job in the connection of transport capacity in a timely manner as required, strengthen contract examination, and give priority to the allocation of transport capacity for medium-and long-term contracts with a clear quantity and price mechanism. In the daily implementation process, priority is given to medium-and long-term contract transport capacity to provide stable and reliable logistics guarantee for contract implementation.

(14) to consolidate the responsibility of local work. The relevant departments of all provinces, autonomous regions, and municipalities should actively organize local enterprises to sign medium-and long-term coal contracts, establish an assessment and evaluation mechanism for signing performance in the light of reality, strengthen supervision over contract implementation, and coordinate and solve difficulties and problems in their work in a timely manner.

(15) strengthen the construction of self-discipline in the industry. All relevant trade associations should guide enterprises to strengthen self-discipline, properly implement the requirements of medium-and long-term contracts, and must not take advantage of the market supply and demand situation and the dominant position of the industry to sign unequal contracts. Large enterprises should play an exemplary role, consciously standardize the behavior of signing contracts, enhance their awareness of fulfilling their promises, take the initiative to assume the social responsibility of ensuring supply and stabilizing prices, and promote the smooth operation of the national coal market.

General Office of the National Development and Reform Commission

December 5, 2020