Coal India Wants 10% Cap On E-Auction Removed.

Coal India wants to lift the 10% cap on e-auction and intends to offer the entire production of coking coal through this platform as well.

It also wants abolition of temporary coal supplies to captive coal block owners and to take coal imports outside the purview of the national coal distribution policy. The coal behemoth expressed its intentions at a review meeting of the national coal distribution policy held recently.

It was attended by representatives of coal and power ministry as well as various industry bodies from steel and fertiliser sector. At present, CIL supplies close to 10% of its total production through e-auction which provides alarge chunk of its revenue.

If CIL has its way and the cap is removed, then its profits are expected to rise substantially. During 2010-11, CIL earned an excess of about 81% on notified prices through e-auction against 63% in the previous fiscal. Total income from e-auction during the year was Rs 8,891 crore which contributed to about Rs 4,025 crore to its net profit.

CIL representatives said in the meeting that against an estimated coal production of 452 million tonnes (MT) during 2011-12, after accounting for the existing commitments and quantity to be offered under e-auction, there will be an 11 MT shortfall for new consumers.

Chairman N C Jha said that if all the letters of assurances issued fructify, there will be a shortfall that will range between 157 MT and 254 MT during 2020-21, that too if no new letters of assurances are issued. Jha also said that power utilities are not ready to accept the fuel supply agreement that offers to supply 50% of coal through indigenous sources and 50% through imports if feasible.

At present coal supplies are being made through memorandum of understandings based on allocations by the Central Electricity Authority as an interim arrangement. On imports, Jha had said in the meeting that back-to-back tie-up with consumers will be a prerequisite for Coal India to take initiatives on importing coal through long term off-take contracts.

In view of these, Coal India suggested that the scope of the standing linkage committee should be restricted only to supply of available domestic coal and it should be de-linked from imports. This committee gives the final green signal for supplying coal to consumers at a notified price.

Additionally consumers governed by Coal Governance and Regulatory Authority should get coal through fuel supply agreement under notified price. Distribution to other consumers should preferably be made through state governments. However, if the state governments do not accept this responsibility, supplies should be through e-auction. Coal Governance and Regulatory Authority is being proposed to regulate the coal sector.

CIL also wants the onus of verification of erstwhile non-core sector consumers be removed from its shoulders. Verification of non-CGRA group be made the responsibility of the state governments.

Source : economictimes.indiatimes.com