The state-run miner, Coal India Limited (CIL), has today begun auctioning coal linkages to the non-regulated sector; the first of its kind in the history. The auction has drawn in very poor participation, as heard from participants.
The auction has actuated almost four months after the cabinet approving the proposal for auctioning coal linkages for the non-regulated sectors, comprising of: sponge iron/steel, cement, aluminum, among others. The objective of conducting the auction is to supply coal to the sectors in a fair and transparent manner, and at the same time ensuring adequate availability.
In the first tranche of the auction, to be conducted during 10 Jun’16 to 16 Jun’16, only sponge iron producers will be able to participate. These consumers will be able to bid for 3.78 MnT of coal linkages in the auction.
According to inputs received from some participants in the auction, the auction received a very poor response on the first day as Northern Coalfields Limited (NCL) and South Eastern Coalfields Limited (SECL) received no bids. The yearly coal linkage quantity offered for these CIL subsidiaries is 60,000 MT and 150,000 MT respectively. However, a participant booked 300,000 MT out of the offered quantity of 540,000 MT from Mahanadi Coalfields Limited (MCL) at the reserve price of INR 910/MT.
Sponge Iron producers cited varied reasons for such a poor response in the auction, and in particular for NCL and SECL such as – due to low offer quantity buyers were confused to bid, calculation of Normalcy Quantity is inaccurate, participants are hesistant in bidding as they do not wish to pay high prices like it is offered to the Power sector. For NCL and SECL the window is closed after the very first round of bidding, as it received no bids.
The auction was originally scheduled on 31 May’16, but the date had to be extended to facilitate almost all the consumers with enough time to participate in the bidding.
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