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Pratim Ranjan Bose

Kolkata, May 11 Poor consumer response seems to have come in the way of Coal India Ltd’s (CIL) plan to launch forward e-auction of coal.

Having planned the launch as early as on March 28, the company has so far been repeatedly rescheduling it due to lack of participants.

Compared to over 6,000 registered participants in the spot e-auction, a mere 12 consumers so far have registered themselves for due participation in the forward auction process.

While there is no clear policy on the minimum number of participants, sources said that CIL might look forward to register at least 100 odd clients to ensure success of the proposed venture.

The coal major planned to offer up to 15 million tonnes of coal through forward auction in 2008-09.

Approximately 80 per cent of the scheduled offerings were from underground mines which even if sold at the reserve price would have left a positive impact of nearly Rs 500 crore on the bottom line, in terms of reduction of losses in underground mining operations.

Elaborating on the reasons behind the lack of response, sources said that clauses apparently designed to ensure the buyer’s participation in the new platform only for own use of coal, had made forward auction unattractive to a wide section of prospective clients.

The contract papers for registration in forward e-auction provide CIL access into the accounts of the participating company to ensure that his auction purchases are in tune with his financial and operational status.

While resale of the coal purchased from auction is strictly prohibited, even non-adherence to statutory requirements like pollution control measures may lead to breach of contract, resulting in forfeiting of security deposit and cancellation of bids.

While admitting that the entry clauses are reasonably strict, CIL sources are stressing on holding more roadshows to counter apprehensions of prospective clients.

“There has been sufficient interest among industry in the forward auction. We are hopeful that we will get adequate participants shortly,” a CIL source told Business Line.

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