Coal India lifts embargo on exports in two spot auctions

Coal India Ltd (CIL) has lifted the embargo on coal exports in two spot auctions to shore up offtake and encourage more participation thereby booking higher volumes on its spot e-auction platforms.

In a major policy shift, CIL has allowed domestic purchasers including traders to export coal procured through spot e-auction and special spot e-auction outlets effective June 8.

To this effect the company has tweaked its e-auction coal sale policy after its board gave the nod. The existing clause ‘coal procured under e-auction is for use within the country and not for export’ has been amended thereby opening the door for export of the dry fuel in two auction categories.

This is a first-of-its-kind development since the introduction of spot e-auction in 2007, the company said in a press statement.

Allocation under spot e-auction

During the financial year 2020-21, allocation under spot e-auction and special spot e-auction together accounted for nearly 37 per cent of the total allocated quantity of around 124 million tonnes (mt) at close to 46 mt.

Spot e-auction at 42.5 mt was the highest allocated quantity under all the five auction windows, in FY21, fetching 25 per cent add-on over the notified price, which was again the highest. Special spot e-auction netted a premium of 13 per cent over the notified price.

“Though Coal India would not be directly exporting, allowing those who procure coal under the two auction windows to export may prove to be catalytic to our sales. If there is favourable response outside the country, we may witness more active participation as spot e-auctions book high volumes,” a senior official of the company said.

In case of export the requirement of complying with the government rules and all statutory guidelines, regulations and legal obligations would lie solely with the coal buyer and exporter, the company said.

Spot e-auction

Spot e-auction is meant for all categories of domestic buyers including traders. Special spot e-auction introduced in 2016 is similar in every way but the booked quantity of coal could be lifted over an extended time period.

“We feel upbeat about this development and hope to witness an upsurge in auction bookings under the two schemes,” the official said.

The move could assume significance given that CIL has an inventory of close to 74 million tonne (mt). The company had liquidated 25 mt of coal out of its inventory during April-May. The company which began FY22 with close to 100 mt stock at its pitheads reduced it to 74.3 mt at the end of May.

However, according to an industry insider, it is too premature to understand the impact of the move on boosting sales and it needs to be seen as to how much quantity would be available on the spot e-auction platform given the fact that there is a very high demand for coal from power sector.

“It is too nascent right now to comment we will get to know (the impact) in the next two-to-three months. There is a very high demand for coal from power sector and despite the second wave of pandemic and the anticipated slowdown in demand it has been quite robust. Moreover, there are other auctions going on so we need to see whether we can meet domestic demand and still have enough coal for exports. This apart, only a very small quantity of Indian coal is good quality with low ash content which can be exported,” the industry insider said on conditions of anonymity.

It is to be noted that CIL has registered close to 53 per cent growth in auction bookings during the first two months of the current fiscal. The company also posted better price realisation from e-auction sales backed by an improved demand.

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