Coal India close to achieving e-auction target for FY17

16 January 2017

Coal India has almost achieved its e-auction target for the current fiscal, and is looking at offering additional supplies.

At the start of the year, it targeted eauction sales of 120 million tonnes of which it has already achieved 113 million tonnes by December, officials said.

On offer is an additional 5 million tonnes which company officials think would be lapped up as its prices would be far lower than the international prices and it would offer a long- term assured contract which could be extended to 25 years. This would make it 118 million tonnes against a target of 120 million tonnes “We are now looking at offering additional volumes depending on the demand and stock positions at various coalfields,“ a senior Coal India official said.

“However, we expect demand for long-term auction to be high since international coal prices are on the rise and expected to rise further. Coal India would offer coal at a discount on international prices and supplies would be assured for the entire period of the contract which could be as long as 25 years.”

Coal India’s average realisation from e auction stood at Rs 1,463 per tonne in the second quarter against Rs 1,994 per tonne in the previous corresponding period -a 25% fall. A lower price would help bidders grab coal supply contracts at reasonable prices.

Coal India sells coal in two ways -through direct supply contract with power companies and non-power companies and through e-auctions.

While Coal India is comfortable on the e-auction target front, during the first three quarters of current financial, it managed to achieve only 90% of its targeted sales. The company sold 392 million tonnes of coal during the period against a total target of 434 million tonnes during the same period. Growth during the period was a small 0.6%.

On the production front, it managed a growth of 1.1% and achieved 90% of its production targets at 378 million tonnes against a target of 417 million tons.

According to Coal India officials, production is not an issue since it is ready to jack up production as soon as sales takes off. However, less-than-anticipated demand growth of power, its main consumer, has taken a toll.

There is at least 13,000 mw of power capacity that needs coal, but has not been able to manage assured supply line from the company.

Source – ET