Coal ministry mulls easing evacuation mode before third tranche of linkage auction

17 July 2017

Following the second tranche of linkage auction in which Coal India (CIL) offered 15 million tonnes, the miner could not conclude the fuel supply agreements since there were supply constraints from Mahanadi Coalfields (MCL), South Eastern Coalfields (SECL) and Central Coalfields (CCL).

With the third tranche of linkage auction on the anvil, the coal ministry now wants to adopt a flexible mode of transportation using both the roadways and railways for easy evacuation of coal. Following the second tranche of linkage auction in which Coal India (CIL) offered 15 million tonnes, the miner could not conclude the fuel supply agreements since there were supply constraints from Mahanadi Coalfields (MCL), South Eastern Coalfields (SECL) and Central Coalfields (CCL).

There are backlogs of at least 4 million tonnes of supplies with at least 1,000 rakes pending. According to an official of the Director Railway Movement (DRM), the backlogs are not for low supplies of rakes. But the CIL subsidiaries like MCL, CCL and SECL has been unable to keep pace in production with the pace in amount of booking. Besides, CIL’s e-auction and linkage auction has not been in parity with its production and offtake infrastructure.

Since auction takes place before physical production, there remains a gap between demand and supply, a CIL official told.

SECL has recently notified that they would not take booking over trigger level for power utilities but power utilities, if required, could place orders above trigger level if they were ready to carry coal through road mode.

CIL has the obligation to supply 75% of the required coal to new power plants and 90% to old power plants, which is known as trigger level. Failing to supply this quantity CIL is liable to pay a penalty to its consumers. Non-power consumers also receive a certain percentage of their annual coal requirement. The railways have around 1.15 lakh BOXN wagons and around 15,400 BOBR wagons. The railways generally give preference to the coal sector in supplying these wagons because of priority supplies to the power plants.

Source-FE