State-run Coal India has begun the latest tranche of the linkage auction to the non-regulated sector (NRS), extending the tenure of fuel supply agreement (FSA) to 10 years from the earlier five years.

Beginning with the seventh tranche of the auction, CIL has proactively increased the tenure of FSA to ensure long term assurance of coal supply to the non-regulated sector (NRS) through linkage auction, the coal behemoth said in a stock exchange filing on Tuesday.

Tranche-VII of linkage auction commenced for sponge iron sub-sector customers in the last week of December 2023 to meet their coal demands, even though the conversion ratio of successful bids into FSAs was low, by this sector, in tranche-VI.

“CIL is committed to supply coal to the extent of the normative requirement of all industrial sectors including sponge iron. Regular linkage auctions, as per the government’s approved policy, are being conducted for long term coal linkages,” said a senior official of Coal India.

The response in tranche-VI of linkage auction for sponge iron sub-sector has been rousing with 99 per cent of the total offered quantity of 11.05 million tonnes (mt) being successfully booked. The booked quantity was 10.98 mt.

South Eastern Coalfields (SECL) and Mahanadi Coalfields (MCL), two CIL subsidiaries, accounted for 86 per cent of the total offered quantity at 9.5 mt. While SECL put 7.67 mt under the linkage auction hammer, MCL chipped in with 1.83 mt. Almost the entire quantity was booked.

Out of the total successful booking of 7.64 mt in SECL by the sponge iron units, only 3.88 mt or 51 per cent was converted into FSAs. In case of MCL, 1.44 mt got converted into FSAs out of total booked quantity of 1.83 mt.

CIL extended the timeline in order to facilitate the signing of FSAs, by 75 days over and above the norm of 90 days.

Apart from long term assurance of regular supply of coal provided through linkage auction, the company is also conducting a single window e-auction where any consumer can participate and get coal for meeting short term requirements.

Ending December of current financial year, 64 mt of coal was offered across CIL, of which 56.7 mt was successfully booked, including 17.4 mt from SECL and 15.3 mt through MCL.

“With increased availability of coal in the last quarter of the fiscal, offer of coal is likely to increase further under the e-auction window. CIL is aiming to put 20 per cent of the envisaged production of this fiscal’s fourth quarter under e- auction block,” the coal major has said.

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