Coal prices soar as CIL reduces e-auction offers

19-November-2018

Reduced e-auction offerings by Coal India have contributed to an increase of one-and-a-half times in coal prices in the past year. This is twice as much as the increase in international rates.

Analysts said the other factors were increased demand for coal from power plants and non-availability from regular channels for non-power companies, including captive power plants.

Between April and September this year, Coal India offered 37 million tonnes of coal through its e-auction platform, 19% less than that in the year-ago period. This increased its average realisation 50% to Rs 2,491 per tonne during the period.

Despite offering less coal, the company saw a near 21% increase in its income from e-auction to Rs 9,240 crore during the period from Rs 7,652 crore in the year-ago period, as prices shot up owing to lower availability.

“Rising import dependence, increased seaborne thermal coal prices, a sharp rupee depreciation and rising spot e auction coal prices are estimated to have led to a 20-34% rise in coal costs between April and October for a player, depending entirely on mix of e-auction and imported coal,” said Jayanta Roy, senior vice president at ICRA.

For the quarter ended September, Coal India’s average realisation from each tonne of coal sold through e-auctions increased 52.47% to Rs 2,682 per tonne. Its income from the platform increased almost 39% to Rs 4,583 crore as it offered nearly 9% less coal at 17.09 million tonnes.

Ashok Khurana, director general of Association of Power Producers said: “With increased power demand quantum of coal under e-auction should have been increased. However, it is surprising to note that the quantum shows a decline, leading to 50% increase in prices and thus impacting price of power for consumers.”

Rajiv Agrawal, secretary of Indian Captive Power Producers Association said: “Such a phenomenal increase in auction premiums is the result of coal shortage created due to various government actions, including stoppage of imports for blending by public sector generators and diversion of rakes from private sector coal consumers to government generators.”

Source: THE ECONOMIC TIMES