Coal India Ltd. (CIL) has initiated the 11th tranche of coal auctions under the B(viii-a) policy of the Shakti scheme for private power producers who do not have power purchase agreements (PPAs).
The provision enables power producers to procure coal linkage supply for a period of minimum three months up to a maximum of one year, provided that the power generated through the linkage is sold on power exchanges or, in the short term, through a transparent bidding process.
Coal sales against this provision is carried out via a price-based bidding process on a quarterly basis. For the latest round, the miner has offered a total of 6.02 million tonnes (mnt) of coal for sales for October-December 2022 which will take place at an 11-day-long auction process starting 28 November.
CIL subsidiary Mahanadi Coalfields (MCL) has chipped in with the highest offering of 4.13 mnt, while the remaining volume comes from the mines of NCL, CCL, SECL and WCL.
Additional support for power consumers
Boosted by the unprecedented rise in power demand, higher coal supplies were maintained to the thermal plants this year.
On one hand, plants having PPAs were assured of uninterrupted supplies via fuel supply agreements (FSA), whereas coal sales via the SHAKTI auctions have emerged as a boon for plants without PPAs.
Notably, buyers had booked entire volumes being offered in the recent auctions conducted under this provision which also provides cost benefit in terms of price at which the coal is procured.
It is important to note that the reserve price of coal in SHAKTI auctions is set at the notified price as specified by CIL. On the other hand, in case of regular auctions, the reserve price is set a percentage higher than the notified price.
In addition, these provisions are also helping towards increasing the inventory position at power plants.
Evidently, coal stocks have improved to 30.51 mnt as on 24 November against 19-20 mnt levels seen in the year-ago period. The government is keen to build up stock levels to 45 mnt by the end of March 2023 as a sign of preparedness for the peak summer season.
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