First Auction with One Year Contract on Coal without Specified End User Likely This Month

With no specified end usage, all industries like steel, cement, small and medium scale units can participate in this auction process, likely to be announced anytime soon and may happen as early as this month. The move is essentially aimed at utilising the surplus coal lying with CIL on the back of increased production.

First Auction with One Year Contract on Coal without Specified End User Likely This Month

Anupama Airy

The first of its kind auction by state-owned Coal India Ltd (CIL), where under a one year contract coal can be bought by any user, as this auction will not be linked to any specified end use requirement.

With no specified end usage, all industries like steel, cement, small and medium scale units can participate in this auction process, likely to be announced anytime soon and may happen as early as this month.

The move is essentially aimed at utilising the surplus coal lying with CIL on the back of increased production.

“Steel, cement and even small domestic factories can bid for coal under this auction. The coal requirement under the auction is essentially for industries other than power as power companies already have enough coal stocks lying at their plants, a situation that has led to excess availability of coal,” an official in the know said.

Union minister for power, coal, RE and mines, Piyush Goyal had earlier stated that coal under this first of its kind auction can be bought by any end user.

While the minister did not specify any timeline on this first of its kind auction and said it would take place within the current fiscal, officials said the timing of this auction could be as early as this month itself. CIL is working out the details of the coal quantity to be auctioned.

This will also be the government’s first step towards commercial availability of coal.

With coal prices being low in international markets, the government does not feel that it is time yet to bid out mines.

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“We will wait for the correct time to invite players for commercial mining,” said a senior government official.

Cutting down on India’s coal imports thereby savings billions of dollars of forex outgo every year, state-owned Coal India has sufficiently ramped up coal production and is currently sitting in a surplus state.

Most thermal power plants in India have atleast a 20-25 days of coal surplus from a situation of coal shortages or critical coal stocks at power plants.

“Looking at the present power low demand scenario and open market price around 2.25 per unit , it is not possible for power developers to compete with unregulated sectors like cement & steel….We have requested the ministry to have an exclusive auction for power developers for coal for medium term horizon, ” said Ashok Khurana DG, Association of Power Producers (APP).

Coal secretary Anil Swarup had in a recent interview told EnergyInfraPost that following a surge in the country’s coal production and its sufficient availability, India is all set to export coal for the first time (by around 2-3 million tonnes) to Bangladesh.

The government has set a target of 724.71 million tons for CIL in the current financial year. The coal ministry is now waiting for demand to pick up before it opens up the sector for private commercial mining, which will allow producers to trade in the fuel, in competition with state-controlled CIL.

Anupama Airy
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Anupama Airy

Founder and Editor at EnergyInfraPost
Independent Journalist and Energy Expert.​ (Worked with leading mainline financial and national daily for 23 years.​)​ Also, Guest Contributor with busines​sinsider.in
Currently, Writing a Book for Penguin India Titled Greased Pole:How Politics and Lobbying Stifled India’s Energy Dreams. The author can be reached on anupama.airy@gmail.com (9810661825)​
Anupama Airy
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