India: CIL to consider spot scheme for auction sales under single window

Domestic miner Coal India Ltd (CIL) has asked its subsidiary companies to resort solely to the spot scheme for conducting coal auctions, thereby bringing the various e-auction schemes onto a single platform.

This comes on the back of the recent approval by the Cabinet Committee on Economic Affairs, directing the companies to offer coal through a single e-auction window, instead of the existing system of sector-specific auctions.

It is important to note that CIL has five different schemes for auction sales, namely-spot, special forward, exclusive, special spot and special spot for ‘coal importers’. These were defined according to the requirement of different set of coal consumers.

For instance, sale under the special forward auction was meant only for the power producers, whereas exclusive auction was only for the non-power sector. Moreover, the participation of traders was forbidden in these auctions.

Ultimately, the spot scheme, which was already in place catering to the gamut of coal consumers, including traders, became the preferred choice for sale under the single window.

Benefits

The new scheme would ensure the same rate for all consumers, thus making the gradual shift from the price discrepancy-based system that was earlier adopted for the auctions.

Besides, it would also eliminate the variation seen in allocating coal for sale to different sets of consumers.

Notably, in order to ease the coal crunch at the power plants, CIL has offered a bulk of 77 mnt coal for sale under the special forward auction, which is almost 48% of the total volume put on sale during the Apr’21-Feb’22 period.

Further, wider participation would help CIL fetch better premium depending on the market conditions.

Where auction sales for this fiscal are concerned, spot auctions have garnered a premium of 107% over the notified price, primarily in view of the supply tightness. However, the aggressive buying was missing in case of special forward auctions which only managed a premium of 35% as the power sector was supplied adequate coal both via the fuel supply agreements (FSAs) and auctions.

Taking swift action in adapting to the new changes, CIL has asked subsidiaries to start conducting spot auctions from March itself so that coal dispatches are continued without hindrance.