Concerned with the low coal stock position, power plants in the country have shown renewed interest in procuring coal via special forward auctions earmarked especially for them.
Coal India Ltd (CIL), on its part, had offered bulk of 14.09 million tonnes (mn t) of coal for sale during the month of Aug’21, wherein all its subsidiaries except Bharat Coking Coal Ltd (BCCL) had conducted auctions during the month.
Indicating a robust demand, 45% of the material, accounting for 6.38 mn t coal, was booked which incidentally is the highest allocation seen in these auction for the past 10 months.
As a result of the supply crunch, these auctions also fetched higher bid premiums as aggressive bids were seen from the plants running low on inventory levels. Overall, sales garnered price realisations of INR 1126.68/t, which was 31% higher than the assessed notified price of INR 933.13/t.
Subsidiary-wise results
At the start of Aug’21, power plants were comfortably placed with an opening coal stock of 23.97 mn t, sufficient for 13 days of power generation.
However, mismatch in power supply-demand coupled with several other factors drastically increased coal consumption due to which coal inventories got depleted to 12.76 mn t at the end of the month.
With the sudden fall in inventory levels, buyer’s interest in these auctions had grown in tandem during the latter part of the month.
Quantity in Million Tonne | Prices in INR/t
Notably, 80% of the material was booked in the auction conducted by Northern Coalfields Ltd (NCL) on 20 Aug’21. Besides, the entire volume was lifted in the auction held by Eastern Coalfields (ECL) on 31 Aug’21.
However, selective preference was seen in the auction held by Mahanadi Coalfield (MCL), where the entire volume via rail-mode of sale was lifted. But, the road-mode of sale failed to garner same response as out of the total 6 mn t only 1.12 mn t coal got sold.
And, to some extent, auction held by Western Coalfields (WCL) was rather dull, where no bids were seen for coal having a notified price in excess of INR 2,000/t, resulting in sale of only 28% of the offered volume.
Latest development
While CIL is expected to enhance coal supply to the power plants, the government is also making efforts on its part to tide over the situation.
The power ministry has emphasised on the need for making certain that the entire established power generation capacity is utilised by regulating coal supplies to the independent power plants.
In this regard, it was proposed to conduct short-term coal linkage auctions under SHAKTI B for plants not having power purchase agreements (PPAs) in three separate windows of three months, six months and one year.
The matter will be implemented in consultation with the coal ministry. Besides that, the decision regarding extension of auctions for more than one year would also be taken.
Leave a Reply