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Coal India has received higher e-auction realisations this month for coal sold on long-term contracts to the captive power plants. Captive power plants lapped up 80% of the coal offered on a five-year contract at the auction at an average premium of 25% over the notified price. At a similar auction held last year, Coal India had managed to receive a premium of 19% over the notified price.
At the auction held in June, consumers booked eight million tonnes of coal against a total offer of 11 million tonnes. At the auction in January, consumers had booked 18 million tonnes of the 19 million tonnes on offer. At both auctions, Coal India offered the coal for five-year contract at a reserve price that was 10% higher than the notified price.
Coal India is looking at auctioning at least 132 million tonnes of coal in the spot market, about 10% more than last years’ volumes in an effort to jack up its revenues. This would be over and above the long-term e-auctions for power and non-power segment to be conducted during the year.
For Coal India, selling in the e-auction market makes sense because coal sold through auctions fetches higher price than its prices paid by regular customers from the power or the non-power sector. In fact, Coal India may not have been able to meet its total sales target in 2016-17 but it managed to offload 120 million tonnes, its target for the spot e-auctions, indicating there is demand for coal. The company is also banking on auctions to be held for the power sector. Executives have calculated that sales could increase by at least 200 million tonnes if it could supply to all the new plants that do not have any contract with the monopoly.
“A 1,000 MW power plant requires around 4.5 million tonnes of coal a year. If we are able to supply coal to these plants that do not have any contracts, sales could rise by about 200 million tonnes,” a Coal India executive said.
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