The Hindu Business Line : Coal linkages may go for users except power sector — Sourcing likely through Coal India e-auction

THE Government plans to delink all core sector consumers of coal, except the power sector, from the existing coal linkages. Instead, they will be asked to buy from Coal India Ltd (CIL) through an electronic auction process.

The core sectors that stand to lose their linkages are iron and steel, cement, aluminium and paper.

Officials in the Ministry of Coal told Business Line that the linkages for the power sector will be maintained because there is a price regulator in this sector, while producers in the other four sectors are open to market driven prices and there is no mechanism to regulate prices.

Currently, e-auction has been initiated by two subsidiaries of CIL, - Bharat Coking Coal Ltd and North Eastern Coalfields Ltd - on an experimental basis. This e-auction is limited to the non-core sector consumers and, once the operations stabilise, the other coal companies would adopt the system.

"Trial runs are on and the final decision would be taken based on these trial runs. But, before bringing in the core sector consumers under the e-auction regime, we would have to be very cautious so that there is no artificial hiking of prices and cartelisation," officials said.

They also said that there had been several obstacles and "the proposal has made substantial progresses only during the past few weeks."

Apart from vested interest groups, another worry for the Ministry is the possibility of a few big players cornering excess stock by bidding at unusually high prices during the auction. This excess stock could be offloaded subsequently at even higher prices.

"This could be done if a few big players bid at higher prices by cartelising, and could lead to monopoly. If that happens, it would be a sort of authorisation of the coal mafias," sources said.

To overcome this, the Coal Ministry is planning a process by which only existing linked customers in the core sector can participate in the auction.

"Traders and non-linked consumers would not be allowed to participate, so that there is no hoarding or market manipulation. But auctioning in the non-core sector would remain open for all," officials said. Coal India officials told Business Line that price realisation through experimental e-auction has been higher. "We have sold coal through electronic bidding at prices higher by Rs 700-800 a tonne than what we had been selling otherwise. With more volumes routed through this system, the overall price realisation could be substantially higher," CIL officials said.

Article E-Mail :: Comment :: Syndication :: Printer Friendly Page

Stories in this Section
PM assures more funds for farm research

Five traditional items propel export growth

Coal linkages may go for users except power sector — Sourcing likely through Coal India e-auction

VAT on course from April 1; more sops for traders on cards

Education outsourcing wave set to hit India

Fidelity bullish on mid and small-cap stocks

Sensex tests 6,900 level intra-day

Reliance Info pays penalty to DoT

Now, online investments for postal schemes

Women's corporate network to be launched today