December 26

Coal India gets 1.5 times premium at e-auction

New Delhi: Coal India has managed to command an average premium of one and half times the floor price for 5.99 million tonnes (mt) coal booked by consumers in the non-power sector at a recent e-auction for five-year supply term. 

Indian Captive Power Producers Association secretary Rajiv Agrawal said: “Such increase in auction premium is the result of coal shortage created due to various government actions, including stoppage of imports for blending by public sector generators and diversion of rakes from private sector coal consumers to government generators.” 

On offer was 6.2 mt coal from six Coal India subsidiaries meant for sectors other than power, cement, sponge iron and steel. Sectors that participated in the auction included small fertilisers, dyes, chemicals, paints and aluminium, among others. 

“As much as 96% of the coal on offer was booked at an average premium of 54% over the notified price of coal for the non-power sector. The actual premium managed by Coal India would be 20% more for coal grades between G6 and G17, since they are priced 20% higher than the power sector,” a senior Coal India executive told ET. 

“Rising import dependence, increased seaborne thermal coal prices, sharp rupee depreciation and rising spot e-auction coal prices are estimated to have led to a rise in coal costs for players depending on mix of e-auction and imported coal,” said Jayanta Roy, senior vice-president at ICRA. 

Highest average premium was managed by Coal India subsidiary South Eastern Coalfields at 85%. It saw around 6 lakh tonnes of coal booked by bidders. This was followed by Mahanadi Coalfields managing an average premium of 84%. Bidders booked 1.4 mt of coal from the subsidiary. Association of Power Producers director general Ashok Khurana said: “With increased demand, quantum of coal under spot e-auction should have been increased, however, it is surprising that the quantum shows a decline leading to 50% increase in prices.”

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