Coal India Ltd (CIL), India’s major coal miner, has permitted all its 8 subsidiaries to set their own floor prices for the coal e-auctions that could fetch additional revenue.
Earlier, the coal major had fixed the criteria for the floor prices of coal being offered in e-auctions. The floor price was 20% higher of the actual coal price for non-power consumers and 10% higher for power consumers. CIL has also entitled its subsidiaries to set the periodicity of the auctions as per the market forces.
The subsidiaries now can fix the floor price depending upon the demand and the cost of production that could fetch them higher realisation in the auctions. The cost of production from underground mines was particularly high compared to other mines.
In the recent held spot coal e-auction in Jan’18, SECL had fixed reserve price (floor price) of coal same as that of the actual price of G3 and G5 grades of coal. While the reserve prices of the remaining coal grades were set 20% higher than the actual coal price for Non-power customers.
The notice for the above spot e-auction was floated on 5 Jan’18, and the reserve prices were set according to the old coal prices. However, after CIL had revised the coal prices on 9 Jan’18, SECL had made corrections in the coal offers.
SECL Coal Prices for Jan’18 Spot E-Auction
| Source | Grade | Size | Reserve Price | Revised Price of Coal for Non-Power Sector | % Increase in Reserve Prices over Actual Price |
| Haldibari | G3 | ROM | 3144 | 3144 | 0% |
| Mahan | G5 | ROM | 2737 | 2737 | 0% |
| West JKD | G5 | ROM | 2737 | 2737 | 0% |
| Kumda 7 & 8 | G6 | ROM | 3029 | 2524 | 20% |
| Baherabandh | G6 | ROM | 3029 | 2524 | 20% |
| Amadand | G6 | ROM | 3029 | 2524 | 20% |
| Nawapara UG | G7 | ROM | 2774 | 2311 | 20% |
| Sharda | G7 | ROM | 2774 | 2311 | 20% |
| Baroud | G8 | ROM | 2109 | 1757 | 20% |
| Vindhya | G10 | ROM | 1474 | 1228 | 20% |
| Jampali | G10 | ROM | 1474 | 1228 | 20% |
| Gevra OC | G11 | ROM | 1374 | 1145 | 20% |
| Chhal | G12 | ROM | 1276 | 1063 | 20% |
| Jampali Stock | G12 | ROM | 1276 | 1063 | 20% |
| Balrampur UG | G13 | ROM | 1176 | 980 | 20% |
| Manikpur OC | G14 | ROM | 1077 | 897 | 20% |
| Umaria UG | G15 | ROM | 850 | 708 | 20% |
| Jampali | G15 | ROM | 850 | 708 | 20% |
| Gare Palema IV-2 & 3 | G16 | ROM | 725 | 604 | 20% |
| Gare Palema IV-1 | G17 | ROM | 644 | 536 | 20% |
Source: SECL, CoalMint Research
Prices in INR/MT
The freedom to set floor price for auction would improve realisation because coal supplied through e-auctions is generally preferred by various segments of buyers that do not hold proper supply contract with CIL. Moreover, it is also cheaper than imports of coal.
Recently, the shortage of coal in domestic and international market had fetched better margins from spot e-auctions. According to the data provided by Ministry of Coal, spot e-auctions had yield 66% increase over the notified price during Apr’17-Dec’17.
Research firm Macquarie has estimated coal E-auctions to fetch price realisation of INR 1721/MT in FY18, which was INR 1536/MT in the previous fiscal.
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