Coal India Ltd (CIL) has deliberated the issue of upper cap under auction schemes in its board meeting wherein it was decided that reserve price would be kept at a maximum of 10% over the notified price for the auction held in Oct ’20.
Earlier, in order to provide much needed financial relief to its coal customers, the company had scraped the upper cap in auctions. Consequently, reserve price was fixed same as notified price for various auction schemes till Sep ’20.
However, with gradual improvement in demand, the company has reinstated the price mechanism for fixing the reserve price.
The CIL board also agreed upon the earlier practice of vesting power to subsidiary companies for affixing the reserve price as per market condition, which would be initiated from 1 Nov ’20. Besides, it had empowered WCL to fix price of coal offered from cost plus projects.
Dealing with high inventories and muted demand for coal, CIL’s sales in auction has been subdued which had fetched a premium of 9% over the notified price during the first five months of FY ’21 (Apr-Aug ’20). In contrast, the premium was recorded at 48% in Apr-Aug’ 19 period.
In a separate development, tenure of coal lifting offered under special forward auctions has been increased to 3 months.
CIL has asked the subsidiaries to plan their auctions in such a manner to ensure that the coal is made available before the closure of the lifting period of the previous auction and that offers are available for lifting in every month without break.
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