Coal India plans to ease e-auction norms to encourage better participation

In a bid to encourage better participation from coal consumers, state-run miner Coal India (CIL) is planning to ease the norms in e-auctions like ramping up the quantities offered under the auction hammer and lowering the earnest money deposit (EMD) for bidders.

CIL, the world’s largest coal producer, has circulated a concept note to e-auction bidders to seek their feedback as the miner has conceptualised new modalities for single window mode agnostic e-auction, according to a stock exchange filing by the company on Friday.

For the coal behemoth, sale of coal is broadly categorised as sale through fuel supply agreements (FSAs) and e-auctions. Of its annual coal production, presently the miner can offer up to 20 per cent under e-auction in a year after meeting the FSA commitment.

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CIL said it has asked all its subsidiary companies, except Northern Coalfields, to spike up their offer quantity under e-auction to 40 per cent of their respective total production for the second and third quarters of the current financial year.

Revamping its auction methodology under its electronic window, Coal India has lowered the earnest money deposit (EMD) to ₹150 per tonne from ₹500 per tonne of coal in order to ease the e-auction norms.

The company feels this move would encourage increased participation from e-auction bidders as blocked capital of consumers will be eased. “With more cash availability at their disposal, consumers could switch over to more auctions with the same capital,” CIL said.

Other changes

Some of the other changes contemplated are a three-hour auction window replacing the earlier long drawn process, allowing the consumers to change their mode of transport from rail to road post bidding without additional premium and allowing a single bidder to place a maximum of four bids against each basket which earlier was restricted to one bid.

CIL circulated the concept note to e-auction bidders on Thursday. It has asked all the bidders to go through the draft modalities and provide their suggestions and feedback within 15 days.

Generally, coal is supplied to consumers at notified prices. Reserve price in e-auction means the price that is arrived at, after adding on a certain percentage to notified price of coal. Now, subsidiaries have been given flexibility to fix their reserve prices taking into account different factors like local demand-supply scenario from different sources, optimize various modes of loading particularly road mode available with the coal company, coal stock at mine and level of booking in earlier-e-auction.

During the fourth quarter last fiscal, total supply of coal through the e-auction route was 22.57 million tonnes and the average realisation per tonne stood at ₹2,545.01. During the period, total supply of coal through the fuel supply agreement (FSA) was 175.94 million tonnes and the average realisation per tonne from the FSA sales was ₹1,535.54.

Significantly, average realisations per tonne from both FSA and e-auction were lower in the fourth quarter last fiscal compared with corresponding period previous fiscal. During Q4FY23, average realisations per tonne from FSA and e-auction stood at ₹1,549.74 and ₹4,525.69, respectively.

In the last financial year, the coal behemoth produced 773.6 million tonnes, and of that around 13 per cent or 102.6 million tonnes was offered under e-auction. Total quantity sold under e-auction route stood at 70.24 million tonnes in FY24.