Special e-Auction scheme for power producers by Coal India failed to entice positive response from the participants

Last week, Coal India offered 10 MT of coal under the special e-auction scheme for power producers. However, the e-auction attracted criticism from many of the power producers, which complained about the categorization of coal under the different heads of power plants; the ones with PPAs and without PPAs.

 

Under the special e-auction scheme, state-owned miner offered 10 MT of coal for e-auction through its subsidiary companies, and the allocation of quantities were segregated under two categories.

• First category was for the power plants having either long or medium term PPAs, and was allocated 5 MT of coal from NCL (Northern Coalfields Ltd.), MCL (Mahanadi Coalfields Ltd.) and CCL (Central Coalfields Ltd.)

• Second category was also allocated 5 MT of coal from ECL (Eastern Coalfields Ltd.), BCCL (Bharat Coking Coal Ltd.), SECL (South Eastern Coalfields Ltd.), WCL (Western Coalfield Ltd.) and NEC (North Eastern Coalfields), was earmarked for the power plants having either short term or no PPAs.

Meanwhile, the reserve prices for category 1 and 2 were fixed at premium of 20 percent and 40 percent, respectively, over the notified Coal India prices.

Major Concerns

• Subsidiary wise allocation in different categories, restricts the participation of power plants in the proximity for the offered coal by the nearest colliery.

•  Transporting coal over the longer distances will add to the carbon footprints, which country is trying very hard to reduce.

• For some of the power plants in central India, buying coal in the special e-auction was not be economically viable, considering high logistics cost.

Furthermore, these kind of categorized e-auctions will hardly benefit the industry, as the power plants are already stressed due to want of fuel.

(Source – Editorial Team, Virginia Research and Media)