Coal news and updates

Coal India’s e-auction allotment up 27% in 2015-16

Riding on a substantial growth in coal offering for sale through e-auction by Coal India Ltd (CIL), allotment of the fuel showed a sharp increase of 26.98% in 2015-16, even as a significant volume of offering remained unsold due to lack of appetite in the market.

According to provisional data available with ICMW, total offering of coal increased by a whopping 76.55% to 88.58 million tons (mt) in 2015-16, compared to 50.17 mt offered in 2014-15.

Total allotment was up at 57.41 mt in FY16, compared to 45.21 a year ago, the data show.

The increasing trend was in sync with CIL’s earlier announcement of offering more coal through e-auction following a surge in production since late 2015.

However, the lower appetite from consuming segments resulted in a drop in average realisation above the notified price during the year under review. The premium earned in the auction over the notified price in 2015-16 was 33.74%, almost half of 64.46% recorded for the previous year.

Commenting on the trend, CIL sources said that the lower premium in 2015-16 resulted from both an increase in offering and a drop in demand.

In March 2016, total offering of coal increased by 24.5% month-on-month to 11.79 mt, compared to 9.47 mt in February 2016. Quantity allocated was also up 36.3% to 6.38 mt in March 2016, against 4.68 mt a month ago.

The premium earned over the notified price stood at 30.60% in March 2016, against

23.91% in February 2016, indicating improved demand for coal in the economy during the month.

Industry sources said that the high yearly growth in offering and allotment was partly due to the low base effect. The offering and allotment during the first six months of 2014-15 stood pretty low as the Ministry of Coal had directed the company to offer less coal through the e-auction route in order to supply higher quantities to power sector consumers. The low quantity offered, however, increased the premium earned over the notified price to as high as 116% in October and 91% in November 2014.

The increased offering and allotment resulted in lower realisation of premium, which might affect CIL’s profitability even as consumers who bought the coal through e-auction stand to benefit as they had to pay comparatively low premium as against the previous year, industry sources said.

Overall, the booking price of the total allocated quantity was Rs 10,230.77 crore in 2015-16, lower than Rs 11,133.51 crore in 2014-15.

The following table contains the quantity of coal (provisional data) allotted by CIL via the spot e-auction route in 2015-16, 2014-15, 2013-14 and 2012-13:

*Excluding 5 mt of offering for special e-auction to power sector