Coal India to Conduct Auction for Power Producers This Month

New Delhi: State-owned Coal India Ltd (CIL) will this month conduct a special auction to offer the dry fuel to distressed power producers as the government gears up to provide round-the-clock electricity to all.

"In view of availability of coal at certain places, it has been decided to further offer coal under 'Special Forward E-auction for power producers-Phase III' for the balance period of the this fiscal(February-March, 2016)," Coal India said in a notice.

CIL, which accounts for over 80 per cent of domestic coal production, will put on offer three million tonnes in the third round for those distressed power plants which have neither linkages nor power purchase agreements, a company official said.

The official further said that the PSU had already put on offer seven million tonnes of coal under the two phases of special auction held so far this fiscal year.

The two auctions were conducted on September 30 and October 1 last year.

"Subsequently, the scheme was modified....to launch the second phase of special E-auction for power producers which was conducted" in November, CIL said.

The third phase will be held from February 16 to February 18 ,it said.

According to KPMG's Niladri Bhattacharjee, in the previous rounds of special e-auctions, the reserve price was quite high and as a result offtake was muted. Also, most of the quantity offered was cleared at floor price.

"Receivables from state utilities are already at a record high and fuel cost being a pass-through, it is difficult to understand from where the states will bear additional burden of e-auction premium. In the current economic scenario, a rationale reserve price for coal will help the ultimate objective of the Government in this sector," he said.

The government has set a target to provide 24x7 affordable power to all by 2019.

CIL, a major supplier of coal to the power sector, is also eyeing one billion tonnes of production target by 2020. It aims to achieve 550 million tonnes of output target in the current fiscal year.