Improvement in domestic coal availability has adversely affected the sales of CIL, as the company has posted significant decline in coal allocation under various schemes of e-auction.
Amid the domestic coal shortage that had arisen in Aug’17, Coal India Ltd (CIL) had responded well by stepping up its monthly coal production. In order to revive the available coal stock at the power plants which had fallen to 8 MnT levels during Sep’17, CIL had augmented the coal supplies to the power stations thereby regulating the coal supplies to the Non-power sector.
Non-power sector in the period of domestic coal crunch were buying aggressively in the Coal E-auctions, consequently monthly coal allocation under the various coal auction scheme were rising during Oct’17-Dec’17 period.
Based on strategic decision taken by CIL, the available coal stock at power plants had now reached 15 MnT as on Feb’18. Simultaneously, the company has raised the coal supplies to the Non-power sector.
With the domestic coal availability becoming normal again; coal users have reduced their buying from E-auctions which is also the expensive method of coal procurement than the contracted coal (via FSA route).
As per the data provided by Coal Ministry, CIL had allocated 9.1 MnT coal under the spot e-auction in Dec’17, thus gaining a profit of 74% over the notified price. However, during the month of Jan’18, the company had witnessed a fall of 50% in monthly coal allocation in the spot auctions, which had yielded a profit of 58% over the notified price.
CIL had allocated 4.59 MnT coal in Jan’18 spot coal auctions, which was also 7% lower on the year compared with 4.93 MnT in Jan’17.
In the special forward coal e-auction for power producers, only 0.81 MnT coal had been allocated in Jan’18, which had yielded a profit of 11% over the notified price. No allotment was done in the month of Dec’17. While in Nov’17, coal quantity of 3.17 MnT was allocated to the power producers.
Moreover, no coal allotment was seen in the Exclusive E-auction for Non-power sector for the past two months.
CIL has been backed to generate higher revenue in the Mar’18 quarter, supported by the recent coal price revision and the imposition of INR 50/MT on account of evacuation charge.
In order to gain higher, the coal company had also asked its subsidiaries to fix the reserve price for coal in e-auctions thereby removing the upper cap of 10%/20%; however, the major coal producing subsidiaries- SECL and MCL had kept the previous norms intact for fixing the coal prices.
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