CIL Scraps Upper Cap on Coal Price for E-Auctions

Coal India Ltd has announced that it would remove the upper cap imposed on the coal prices for various e-auctions.

The decision was taken by the CIL board during its 402nd meeting held in Kolkata today, in view of the difficult market conditions arising out of COVID-19.

The reserve price of special forward e-auction for power sector would be kept same as the notified price for regulated sector. While the reserve price in spot, special spot and exclusive auction for non-power sector would be kept same as the notified price for non-regulated sector.

CIL has highlighted that the provision would be implemented for the first half year period (Apr-Sep'20), i.e. in the auctions conducted during the first and second quarter of FY21.

The relaxation would provide cheaper coal to the consumers via auction route.

Say in case of SECL, the reserve price of G8 grade of coal, having notified price of INR 1757/MT for non-regulated sector, becomes INR 2108/MT, when applied with an upper cap of 20% for spot auctions.

However, with the removal of upper cap the same grade of coal would now be offered at a reserve price of INR 1757/MT in the spot auctions.

It is pertaining to note that the percentage upper cap varies across the various subsidiaries for different auction schemes.

Extention of Usance LC facility:

Another important decision taken in the meeting was extending the Usance LC for the following:

(a) Power sector consumers drawing coal supplies under FSAs
(b) Non-regulated consumers drawing coal supplies under FSA executed under linkage auction route
(c) Special forward e-auction scheme
(d) Exclusive e-auction scheme

Notably, CIL had allowed the allowed the facility of Usance Letter of Credit for payment of coal instead of cash advance for the Fuel Supply Agreements (FSA), in order to provide relief to the coal consumers and increase liquidity in the system.