Coal India to increase e-auction offerings to 15%

KOLKATA: State-run miner Coal India will increase spot e-auction offerings in the current quarter to 15% of the year�s production, a top company executive said.

In the three quarters till end-December 2019, the company had offered about 12% of its production for auctions. Spot auction offers accounted for almost 46% of the total quantity offered for auctions till December, while the rest was a mix of special forward e-auction for the power sector, exclusive e-auction for non-power and special e-auction.

Last year, the miner had produced 607 million tonnes of coal. Its production target for this financial year is 660 million tonnes.

Till December, the company had offered close to 46 million tonnes through auctions, of which the booked quantity was about 44 million tonnes.

In the previous quarters, as fuel stocks fell at power plants during summer and output fell because of heavy unseasonal rains, Coal India had to increase supplies to power consumers holding fuel supply agreements. It also focused on supplying pending quantities to its non-power consumers when production picked up after monsoon. This, the company executive said, subdued profits.

“Bulk of the auction offering during the current quarter would be for the spot market, fetching the company premiums of more than 40% over notified prices for long-term power consumers,” the Coal India executive said. “Coal for non-power companies are priced 20% higher than long-term power consumers. Almost all subsidiary coal producing companies offer coal in the spot auctions at a floor price of 20% over the notified price.”

Between April and December 2019, spot auctions fetched an average premium of 66% over the notified prices, while premiums for other forms of auctions hovered between 30% and 34% of the notified price.

“During the last quarter, the bulk of coal sold was under forward e-auction for the power sector, which fetched lower premiums than in the spot market. We now intend to offer bulk of the coal in the spot auction market during the current quarter. It is expected to fetch relatively higher premiums and may add to profit growth for the year,” the executive said.

FSA: Fuel Supply Agreement

MT: million tonnes

Source: Coal India