Coal news and updates

Coal auction Spectrum sale method likely to be followed

The coal ministry is likely to follow the methodology adopted for auctioning of telecom spectrum for bidding out coal produced by state-run collieries. A panel appointed by the ministry suggested on Wednesday that this mechanism would be the suitable to auction the fuel.

The 15-member inter-ministerial committee headed by additional coal secretary A K Dubey and comprising officials from Niti Aayog, finance, railway, power, steel and industry ministries after examining various auction methodologies for the past two months has suggested that the “ascending market clearing approach (AMCA) adopted for telecom spectrum auctions is better suited” for bidding out the linkages offered by Coal India through fuel supply agreements (FSAs) to its buyers among the available options.

Similar to spectrum auctions, the coal ministry would set the price band for bidding out FSAs of Coal India Limited (CIL) and invite competitive bids from bidders having operational or ready-to-operate plants. This would solve their raw material problem as FSAs ensure assured supply along with the required grade of fuel. “The IMC has given its suggestion. We would examine them in due course of time and decide on our own,” coal secretary Anil Swarup told The Indian Express. He said the FSAs for 74,000 MW signed by CIL with its buyers are sacrosanct and any methodology for auctioning FSAs would be for fresh proposals. However, the FSAs would be auctioned only for the non-regulated sectors, he pointed out.

SBI CAPS, hired as consultant to assist the committee in zeroing on an auction mechanism has suggested that FSAs to be bid out should be valid for at least ten years against five years currently. The winning bidders should also be assured by CIL on allowing third party sampling of fuel for a proper billing against supply.

Source: The Financial Express