State-owned coal miner, Coal India Ltd. recently came up with the special e-auction scheme for power producers in FY-16, offering 10 MT of coal.
The move was supposed to bring cheers to the power producers; however, the allocation has become a major point of concern among them, especially the ones without PPAs (purchasing power agreements).
On 4th September, Coal India issued a notice suggesting a launch of ‘Special e-Auction Scheme’ for FY-16, wherein it offered 10 MT of coal for e-auction through its subsidiary companies, and the allocation of quantities were segregated under two categories.
Category 1 was allocated 5 MT of coal from the subsidiaries like ECL (Eastern Coalfields Ltd.), BCCL (Bharat Coking Coal Ltd.), SECL (South Eastern Coalfields Ltd.), WCL (Western Coalfield Ltd.) and NEC (North Eastern Coalfields), was ear-marked for the power plants having either long or medium term PPAs. The re-serve price was fixed at 20 percent premium over the notified Coal India prices.
Meanwhile, category 2 was also allocated 5 MT of coal from the subsidiaries like NCL (Northern Coalfields Ltd.), MCL (Mahanadi Coalfields Ltd.) and CCL (Central Coalfields Ltd.) was earmarked for the power plants having either short term or no PPAs. The reserve price was fixed at 40 percent premium over the notified Coal India prices.
Following another notification dated 9th September, the allocated quantities the above mentioned categories were reversed, i.e. category 1 was now allo-cated coal from NCL, MCL and CCL, while the reserve price same (20 percent premium over the notified Coal India prices). Moreover, category 2 was allo-cated from ECL, BCCL, SECL, WCL and NEC, with the reserve price being fixed at 40 percent premium over the notified Coal India prices.
A senior official from Coal India indicated that this measure has been taken pri-marily from the point of view of the grade of coal available from the different categories. It implies that the coal offered from NCL, MCL and CCL mines are of lower grades, while that from ECL, BCCL, SECL, WCL and NEC mines are of higher grades. Seemingly, it’s logical.
However, with this change, the power plants in the central and northern India, which don’t have long or medium term PPAs, have started showing their dis-comfort about the reversal, terming it arbitrary and more specifically, illogical.
An independent power producer based out of central state of Madhya Pradesh indicated that this will dis-suade power plants from either participating in the e-auctions from nearest colliery or may be forced to procure coal from the colliery located far away which may be economically unviable due to high logistics cost and other environmental issues.
For power producers, the major concern is the sub-sidiary wise allocation in the different categories, which restrict their participation for the coal offered by the nearest colliery, taking away the proximity advantage.
Concerns are seemingly valid, especially considering that Coal India selling coal via this special e-auction scheme, which if transported over the longer dis-tance will add to the carbon footprint on the already strained environment.
Also, this may not benefit industry despite of Ministry of Coal’s best efforts to help the power plants that are currently stressed due to want of fuel and on the verge of becoming NPAs.
(Source – Editorial Team, Virginia Research and Media)
The move was supposed to bring cheers to the power producers; however, the allocation has become a major point of concern among them, especially the ones without PPAs (purchasing power agreements).
On 4th September, Coal India issued a notice suggesting a launch of ‘Special e-Auction Scheme’ for FY-16, wherein it offered 10 MT of coal for e-auction through its subsidiary companies, and the allocation of quantities were segregated under two categories.
Category 1 was allocated 5 MT of coal from the subsidiaries like ECL (Eastern Coalfields Ltd.), BCCL (Bharat Coking Coal Ltd.), SECL (South Eastern Coalfields Ltd.), WCL (Western Coalfield Ltd.) and NEC (North Eastern Coalfields), was ear-marked for the power plants having either long or medium term PPAs. The re-serve price was fixed at 20 percent premium over the notified Coal India prices.
Meanwhile, category 2 was also allocated 5 MT of coal from the subsidiaries like NCL (Northern Coalfields Ltd.), MCL (Mahanadi Coalfields Ltd.) and CCL (Central Coalfields Ltd.) was earmarked for the power plants having either short term or no PPAs. The reserve price was fixed at 40 percent premium over the notified Coal India prices.
Following another notification dated 9th September, the allocated quantities the above mentioned categories were reversed, i.e. category 1 was now allo-cated coal from NCL, MCL and CCL, while the reserve price same (20 percent premium over the notified Coal India prices). Moreover, category 2 was allo-cated from ECL, BCCL, SECL, WCL and NEC, with the reserve price being fixed at 40 percent premium over the notified Coal India prices.
A senior official from Coal India indicated that this measure has been taken pri-marily from the point of view of the grade of coal available from the different categories. It implies that the coal offered from NCL, MCL and CCL mines are of lower grades, while that from ECL, BCCL, SECL, WCL and NEC mines are of higher grades. Seemingly, it’s logical.
However, with this change, the power plants in the central and northern India, which don’t have long or medium term PPAs, have started showing their dis-comfort about the reversal, terming it arbitrary and more specifically, illogical.
An independent power producer based out of central state of Madhya Pradesh indicated that this will dis-suade power plants from either participating in the e-auctions from nearest colliery or may be forced to procure coal from the colliery located far away which may be economically unviable due to high logistics cost and other environmental issues.
For power producers, the major concern is the sub-sidiary wise allocation in the different categories, which restrict their participation for the coal offered by the nearest colliery, taking away the proximity advantage.
Concerns are seemingly valid, especially considering that Coal India selling coal via this special e-auction scheme, which if transported over the longer dis-tance will add to the carbon footprint on the already strained environment.
Also, this may not benefit industry despite of Ministry of Coal’s best efforts to help the power plants that are currently stressed due to want of fuel and on the verge of becoming NPAs.
(Source – Editorial Team, Virginia Research and Media)
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