Coal India Ltd (CIL) has asked its subsidiaries not to conduct auctions for the non-power sector keeping in mind the current low coal stock position at the power plants.
The companies, have been told to sell coal via the special forward auctions, which are earmarked only for power producers.
That apart, CIL has indicated that coal of poor or “undesirable” quality can also be considered for auction to both the power and non-power sectors, provided this does not affect coal dispatches to the former.
This comes against the backdrop of acute coal shortage being faced by power plants with CIL under pressure to augment supplies to the power sector.
It is important to note that the miner was offering bulk coal volumes via the auction route at the start of CY’21, but due to the prevailing production tightness, its offerings were reduced to 5.08 million tonnes (mn t) in Sept’21, which is the lowest volume seen since Aug’19.
Recently, CIL’s subsidiary in Maharashtra, Western Coalfields Ltd (WCL), cancelled the spot coal auction scheduled on 21 Oct’21. The remaining subsidiaries are also likely to follow suit till the situation stabilises.
Double whammy for non-power sector
Increasing coal supplies to the power sector has left the non-power sector struggling to procure its share of coal in the domestic market.
Data provided by the coal ministry indicates that CIL’s dispatches to the non-power sector decreased by 21% m-o-m to 8.04 mn t in Sept’21. On the other hand, dispatches to the power sector increased by 5% m-o-m to 40.38 mn t in Sept’21.
As a result, buyers were compelled to procure coal at higher prices from the domestic auctions. In fact, the two exclusive auctions meant for the non-power sector, conducted by Bharat Coking Coal Ltd (BCCL) and South Eastern Coalfields Ltd (SECL), had garnered bid premium in excess of 130% during Sept’21.
Adding to the plight of the customers, rising seaborne coal prices have made imports unviable. Simultaneously, with the curtailment in domestic supply in place, CIL’s coal supply to the non-power sector is expected to remain disrupted in the near term.
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