First quarter e-auction premiums for Coal India up 66 per cent

Coal India has managed to raise premiums ranging between 33 per cent and 66 per cent in its reported price for different categories of auction sale during the quarter ended June 2019. E-auction offerings are presently being regulated to stock power plants with adequate fuel, which cording to analysts may increase spot e-auction prices soon.

The rise in e-auction price leads to increase in profitability for the fuel producers’ as the most rewarding avenue for sale vis-a-vis regular supplies to power and non-power sector where prices are fixed. During last quarter of FY19, 10 per cent of raw coal sold through e-auctions fetched 18 per cent of its net sales.

In FY20, Coal India has decided to sell 33 million tonnes of coal each in the spot and forward auction market. Though, the Centre has recently asked the company to guarantee that there is higher dispatch to power plants urging it to reduce auction offering to push additional coal to pit head power generators.

According to company officials, Coal India’s production has become flat in this year even after growing at a healthy 7 per cent YoY during FY19. The growth by 0.1 per cent is seen only YoY in the first quarter of the current fiscal.

Coal-based power generation in the country grew 4.8 per cent YoY. As A Result, coal stocks at power plants declined to around 26 million tonnes on July 15, 2019 end, against 31 million tonnes in March 2019 end. This was despite liquidation of 19 million tonnes of pit head stocks which now stands around 36 million tonnes.

Presently, none of Coal India subsidiaries have lined up any auction and the auction platform of MSTC has no information on upcoming auctions.

In e-auction for power, Coal India proposed 6.65 million tonnes in the quarter. This is less than half, last year’s quantity. Though, average premium for the quarter was 33 per cent more than its notified price. In regards of e-auctions for non-power, Coal India offered almost 35 per cent less coal at 2.2 million tonnes during the first quarter of the current fiscal. It fetched average premium of 33 per cent over notified price.

Disclaimer: This information has been collected through secondary research and IBEF is not responsible for any errors in the same.