Mahanadi Coalfields Ltd (MCL), a subsidiary of Coal India Ltd (CIL) operating out of Odisha, has revised its reserve coal prices in the upcoming exclusive auction by increasing the upper cap on the notified price by up to 25%.
However, it may be noted that the upper cap of 25% is applied only for the coal offered via rail-mode of sale. On the other hand, coal via road mode has been offered at a discounted rate of 20%.
The latest round of sales scheduled on 24 Aug’21 is the second phase of the exclusive auctions for FY’22 which are earmarked specially for the non-power sector. In the previous round, the company had affixed the upper cap at 10% over the notified coal price.
It is important to note that CIL has a fixed price across non-coking coal grades termed as the ‘notified price’ upon which individual subsidiaries apply an upper cap. Depending upon market conditions, they affix the reserve price in the auctions.
Grade-wise coal offered
MCL has offered a bulk of 9.1 million tonnes of coal in the latest sale to the non-power sector valid against six-months of dispatch starting from Sep’21 to Feb’22 period. Notably, this is highest volume being put on sale for a particular auction scheme since Apr’21.
Coal in the auction comprises G12-G14 grades whose reserve prices are set as per the latest revision, but coal from selective collieries, viz, Spur VII, Balaram and Hingula are being offered at lower reserve prices as compared to the rest.
Bids expected to improve
The previous round of exclusive auctions had received robust interest in terms of allocation where 72% of the total offered coal was sold. However, these lacked the same appetite in terms of bid premium as the booked volume fetched a minimal gain of 9% over the assessed notified price.
The upcoming auction is likely to fetch higher price realisation due to the upward revision in reserve prices.
Besides, improved participation from customers whose fuel supply agreement (FSAs) are expiring under linkage auctions, are also expected to bolster the sales as they will seek avenues to meet the short-fall in supply.
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