Mahanadi Coalfields Ltd (MCL), a subsidiary of Coal India Ltd (CIL) operating out of Odisha, has made a swift return to the auctions fold in Jul ’21 after failing to offer any volume in the previous month.
In the process, the company has revised the reserve price of coal being offered in the upcoming auctions by increasing the upper cap on the notified price by up to 25%. In contrast, the upper cap on the notified coal price was set at 10% in the previous round of auctions.
However, it may be noted that the upper cap of 25% is applied only for the coal offered via rail-mode of sale. On the other hand, coal via road mode has been offered at a discounted rate of 20%.
In addition, selective sources have been excluded from the price revision and are being offered at a lower reserve price than the rest.
It is important to note that CIL has a fixed price across non-coking coal grades termed as the ‘notified price’ upon which individual subsidiaries apply an upper cap. Depending upon market conditions, they affix the reserve price in the auctions.
Upcoming auctions
MCL marks a return to auction sales with the spot scheme wherein a bulk of 1,828,700 tonne (t) of coal has been offered for sale on 12 Jul ’21. Notably, this is the highest amount being offered in a particular month for the spot auctions in FY ’22.
Following this, the second phase of the special forward auction will be held on 13 Jul ’21. The company has put 6,900,000 t on sale to the power producers against an extended lifting period valid for three months (Jul-Sep ’21).
MCL has allocated 12.36 mn t in the first quarter of FY ’22, which is the highest volume witnessed across the various subsidiaries. However, its record has not been that good in terms of fetching bid premium which has been assessed lowest at 9%.
The revision in the reserve price is expected to provide the company a better price realization for the booked coal volume in the auctions at a time demand for coal is improving gradually.
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