Coal news and updates

The record coal production last fiscal allowed public-sector behemoth Coal India to augment sales via the lucrative electronic auction route to firms with captive power plants and power generators. The rise in e-auction sales  boosted the company’s annual sales by Rs 2,500 crore.

In FY16, CIL sold 58 million tonnes (mt) of coal under spot e-auction. While this was 11% higher compared to FY15, the company discovered 33% higher prices compared to the notified rate. The lower grade of coal, for example, is priced at Rs 800-1,000/tonne by the state-run miner for supplies to power developers with fuel supply agreement (FSA).

However, the same grade of coal gets sold at Rs 1,040-1,300 per tonne under the e-auction route.

Additionally, Coal India also started special forward e-auction mechanism for power generators last year. The company sold 13.8 mt of fuel under this scheme, pocketing 36% more revenue than notified price. While the auction route provides opportunities to procure coal for companies that do not have firm FSAs with the miner, some power developers with FSAs have argued that Coal India should first fulfill its coal supply commitment in entirety before diverting the fuel to the e-auction platform.

Domestic coal supply to power companies grew by 7% to 448 mt in FY16.

The country’s coal production grew 4.8% to 639 mt last fiscal. The major contributors were Coal India (537 mt) and Singareni Collieries (60 mt). However, due to delay in clearances for newly auctioned captive mines, the coal production from such mines declined 32% to 43 mt during the last fiscal.

The production surge has had a positive impact on net coal imports in the country: imports declined by 7% to 221 mt, led by 13% fall in import of non-coking coal and 1% decline in import of coking coal.

The start of the new fiscal, however, saw CIL reducing production primarily due to subdued power demand that had led to thermal station running at 60% plant load factor. Total coal production in April 2016 was 47.7 MT, a decline of 2.7%. This decline came on the back of muted performance in March, when overall coal production grew just 1.7%.

Source:Financial Express