Subsidiaries of Coal India (CIL) are seen rushing in to offer coal in the auctions after the introduction of the single window. This is because the single window is allowing them to get higher premiums in a competitive market.
Almost entire subsidiaries have lined up coal auctions in the coming days, reflecting a sharp contrast from the previous month where the count of auctions was limited.
In fact, these companies have offered a total of 6.89 mnt coal under auctions till 16 Mar’22, which has already surpassed the volume that was put up for sale in Feb’22. This includes sales from South Eastern Coalfields Ltd (SECL) and Northern Coalfields Ltd (NCL), which had not scheduled any auction in the previous month.
Auction Schedule
Quantity in Metric Tonne (t)
New auction regime gets rousing response
Upon the approval of the Cabinet Committee on Economic Affairs (CCEA), CIL was directed to conduct coal sales under the single window, by merging various sector-specific auctions on to a common platform.
As a result, the spot scheme, which was already in place catering to the gamut of coal consumers, including traders, became the preferred choice.
Two of its subsidiaries, Eastern Coalfields Ltd (ECL) and Northern Coalfields Ltd (NCL), were the first to offer coal under the revised scheme on 3 Mar’22. Both received overwhelming response as the entire volume was booked fetching premium in excess of 300% over the notified price.
The trend is expected to continue due to the prevailing supply tightness as buyers will look to aggressively procure coal in the forthcoming auctions at a time global prices are seen at unprecedented levels.
On its part, CIL would like to increase offering in auctions sales to further boost revenues, as bulk of the supplies was diverted to power plants via fuel supply agreements (FSAs).
Notably, coal offered in the auction sales was down 65% y-o-y to 160.6 mnt in the 11 months period of FY’22 (Apr’21-Feb’22) compared to the bulk of 452.3 mnt recorded in the corresponding period of FY’21.
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