The Cabinet Committee on Economic Affairs (CCEA) on Saturday approved a proposal for single e-auction window for non-linkage coal by Coal India (CIL) and Singareni Collieries Company (SCCL) to cater to all the segments including power sector and non-regulated sector (NRS). The government said that clubbing of the e-auction windows would not involve any additional cost to the coal companies.

“This e-auction will cater to all the sectors namely power sector and NRS including traders. Coal would be offered through this auction in place of the present system of sector specific auctions,” Coal Ministry said in a statement.

The offering will be subject to CIL/SCCL meeting the coal linkage requirements against existing linkages. The decision will not impact the current linkages to power and non-power consumers at contracted prices, the statement added.

Transport mode agnostic

“Coal offered through the single e-auction window shall be transport mode agnostic with default option being through rail mode. However, coal may be lifted by the consumers through the road mode/other modes depending upon their choice and suitability without paying any additional charges or discount to the coal companies,” the ministry said.

The long-term allotment of coal by CIL/SCCLto their own gasification plants shall be allowed at prices as may be decided by the coal company.

However, the taxes, duties, royalty, etc. shall be paid by the coal companies on the notified prices of coal for the power sector.

Removes market distortions

On the rationale behind the move, the Coal Ministry explained: “Market distortions would be removed and single rate for all the consumers will evolve in the e-auction market. It shall increase operational efficiencies and lead to an increase in domestic coal demand by efficiency in the domestic coal market.” 

“The discretion presently vested in coal companies of allocating coal to different end use sectors will be eliminated. Further, the coal companies shall be able to establish coal gasification plants by availing coal from their own mines. It shall help in developing clean coal technology in the country,” the statement added.

Demand for domestic coal

“Removal of market distortions through the offer of coal under a single e-auction window at the same rate for all the consumers of the economy will attract more consumers towards domestic coal. Thus, the demand for domestic coal is expected to increase. CIL also has ambitious coal production plans for the future with an aim of producing 1 BT (billion tonne) coal by 2023-24,” the ministry said.

According to the Ministry, with better availability of domestic coal, price stability and predictability, the import of coal is expected to come down drastically.

This would reduce the dependence on imported coal and would help to make Atmanirbhar Bharat, the Ministry added.

Coal gasification technology

“This measure would ensure sustainability and development of the coal gasification technology. Use of clean coal technology like coal gasification would mitigate the adverse environmental impacts of coal usage,” said the statement.

The coal market is segmented and regulated and consequently there are many different market-discovered rates for the same grade of coal in each segment of market. Segmentation with rate differentiation results in coal market distortions. 

‘One Grade, One Rate’

“By these reforms in the coal market, coal of any particular grade may be sold in the market at one rate (one grade, one rate), with default mode of transport being Railways, through a transparent and objective e-auction mechanism,” said the Ministry.

A single e-auction window would enable the coal companies to sell coal through the market discovered price mechanism to all the consumers, it added.

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