CIL aims to supply 17.5 mt coal a year to captive power producers

State-run monopoly miner Coal India (CIL) plans to supply 17.5 million tonnes of coal annually to captive power producers for five years through an auction that started last week and is slated to conclude on October 10.

The average base price for the fuel on offer is around ₹1,343 per tonne while premiums offered by consumers for a variety of coal from South Eastern Coalfields have touched a high of ₹650 per tonne.

For the current round of auction for captive power producers Northern Coalfields has offered 5.18 million tonnes of coal, followed by Mahanadi Coalfields at 3.65 million tonnes and South Eastern Coalfields at 3.6 million tonnes. Central Coalfields is offering around 2.85 million tonnes, followed by Western Coalfields at 1.6 million tonnes. Bharat Coking Coal and Eastern Coalfields are offering 3.5 lakh tonnes and 2.7 lakh tonnes, respectively.

During the first three days Coal India offered 44.25 lakh tonnes of coal, of which 34 lakh tonnes was booked. The highest premium so far has been received by South Eastern Coalfields, which offered 4 lakh tonnes of coal from its Kushmunda open cast mines at ₹1,145 per tonne. It received a 57% premium and the entire volume was booked. About 5 lakh tonnes of G13 grade coal offered at ₹580 per tonne by Mahanadi Coalfields from its Kulda Opencast mine received a similar 57% premium.

This auction is part of the government’s plan to replace all existing fuel supply agreements allotted on nomination basis to the non-power sector, with supply contracts decided through eauctions. While the government has decided against premature termination of existing supply contracts allotted through nomination basis, it has also decided against renewing fuel supply agreements that are expiring. These would be done through auctions such as the one that was recently announced. Premiums decided at the auctions would be valid for five years, after which fresh rounds of auction would be held again.

Coal India has firmed up plans of offering a mix of 30 million tonnes of thermal and coking coal at its recently announced fourth tranche of long-term supply contract meant for the non-power sector.

According to plans, South Eastern Coalfields would be offering 9 million tonnes of coal, followed by Central Coalfields at 6.11 million tonnes and Northern Coalfields at 6.3 million tonnes.