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Centre relaxes norms after coal e-auction flops

The Union coal ministry has tweaked its 'special coal e-auction' programme following a poor response from the private sector power producers and state-owned generation companies. The special e-auction of up to 10 million tonne (mt) for power plants which were in short supply of coal despite having fuel supply agreements has now been converted into a forward e-auction with relaxed participation rules on the basis of Coal India Ltd's (CIL) feedback on the first phase of auction, coal ministry said in a letter to CIL's chairman.

"Coal India has furnished the outcome and feedback along with suggestions for further improvement of the scheme of special e-auction. Taking into account the said inputs of CIL, the balance quantity of approximately 8.5 mt may be offered under the traditional forward e-auction for power producers up to March 2016 with modifications," the letter said. There were several conditions in the existing scheme which have now been diluted: The participants need not have crucial Power Purchase Agreements (PPAs) while captive power plants which were being treated so far as part of non-power sector has now been able to bid along with power utilities. "There shall be no requirement of any type of PPAs to be eligible for bidding for this e-auction. Captive power plants may also be allowed to bid in this forward auction for power sector, as one-time exception," the ministry letter of Coal India said.

he floor price, however, has been kept unchanged at 20% despite the poor response to the first phase of the auction, a power sector official said. Response was lukewarm in the first phase of the auction earlier this month, with only 2.4 million tonne (mt), or less than half of the targeted 5 mt, could be sold to buyers like Adani Power, NTPC and West Bengal Power Development Corp among a few others, dna had reported earlier. The difficulty in getting response to the auction was mainly due to the fact that the floor price was fixed at a premium of 20% over the notified price for those having long-term or medium-term PPAs. This implies that another proposed e-auction programme, meant for non-power companies like steel or cement at a higher price of 40% premium, would meet the same fate, coal sector insiders said.

Consumers represented by Coal Consumers' Association India (CCAI) and power producers' body met CIL officials last week where pricing among other issues was highlighted. "To cater to the demand of the utilities, floor price should be at par with the CIL notified price. The premium of 20% and 40% for the power and non-power sectors are way beyond any comparable prices of imported coal. We made this suggestion during today's meeting," Subhasri Chaudhuri, secretary general of CCAI, said.
 

source: http://www.dnaindia.com