Taking a step further to reduce the country’s dependence on coal, Coal India Ltd (CIL) has introduced special spot auction specifically for the importers with an aim to raise domestic coal availability.
Special spot auction along with regular auctions viz spot, exclusive and special forward are periodically conducted by various subsidiaries of CIL. However, the modalities under special spot scheme have been duly modified under the provision for import substitution, that allows longer lifting period against other auctions.
During the first quarter of FY21, CIL had allocated 1.48 mn t coal under special spot auctions, which has already surpassed the total volume of 1.04 mn t sold during FY20 (Apr’19-Mar’20).
The revision is carried out in terms of norms for participation, bidding criteria, and other modalities. Incidentally, the minimum bid quantity has been substantially increased. The salient features of the new reforms are listed below.
Eligibility Criteria:
The auction would be valid for any Indian buyer including traders who had imported coal at any point of time in the current year or any of the previous two financial years. The interested parties are required to get themselves registered with service providers (MSTC and Mjunction) upon submission of relevant document.
Minimum Bid Quantity:
The minimum quantity for bidding would be 25,000 t for a source offering coal under road-mode of dispatch, where as in case of rail-mode the minimum quantity is 50,000 t (or 12 rakes).
Earlier, the minimum quantity for bidding was fixed at 50 t, and for rail-mode, it was one rake (approx 4000 t).
Monthly Schedules Quantity (MSQ)
The quantity acquired in the auction would be divided in equal parts for determining the monthly allocation of supplies during the period. However, the same can be regulated on mutual consent by buyer and seller.
Payment Terms
The successful bidder will be required to deposit coal value against the monthly allocation in two installments, with the initial payment to be made within first 10 days of the month.
The bidders are given an option to make payment through Usance Letter of Credit in case of lifting through rail mode.
Lifting Period
(a) By Road: The validity period of coal lifting would be 45 days from the date of issue of the delivery order/sale order.
(b) By Rail: The validity period of a monthly program for rail movement would be 30 days from the last date stipulated for making payment against the MSQ of the concerned month.
CIL has specified that the coal procured under this provision is for use within the country and is not meant for exports. Source-wise offer under this scheme for the period starting from Aug’20 to Mar’21 would be notified soon.
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