Coal news and updates

CIL likely to auction 55 MT coal this fiscal

The coal ministry has given the go-ahead to Coal India to auction about 10 million tonne more fuel to small power producers and non-commercial buyers in the financial year 2015-16.

Coal India Limited (CIL), which used has auctioned 10-12 per cent of its output during the past two fiscals had been restrained by the coal ministry in September last year to earmark only 7 per cent of its output for auctions, a move which the PSU had contended would hit its margins.

The reason it was restricted to auction more fuel was because the ministry had reasoned that when the country’s thermal power producers were combating coal shortage, it made no sense for it to auction more coal.
Upset on the ministry’s earlier directive, the PSU  is learnt to have registered its protest to the ministry earlier this year. However, on April 1 the ministry in a letter told CIL that beginning this month it reverts “back to the old system in vogue,” implying that it can sell more fuel to these categories of buyers. “This means that CIL can now electronically auction 10 per cent of its production,” coal secretary Anil Swarup told The Indian Express on Tuesday.

In the existing dispensation, the company sold 45 MT fuel under e-auction in 2014-15, but upping the cap by 3 per cent more would enable it bid out about 55 MT fuel considering that the firm produces 515 MT coal as targeted in this fiscal, a coal ministry official said. The key objective of doing this is to enhance CIL’s profitability as auctioned fuel usually fetches more money because prices are about 50 per cent higher than the notified prices. E-auction proceeds contribute substantially to CIL’s kitty and is a key strength to its balance sheet. The other possible objective is to lessen the coal stocks around the pitheads, which was around 52 MT in the last fiscal. The firm has been attributing  this rise in accumulated stocks to lack of railway wagons and other evacuation constraints.

source: http://indianexpress.com