CIL may offer 30 million tonnes of thermal and coking coal for non-power sector

KOLKATA: Coal India plans to offer a mix of 30 million tonnes of thermal and coking coal at its recently announced fourth tranche of long-term supply contract for the non-power sector.

In the auction, the offer price for the coal would be the notified price for the non-power sector. Notified price for non-power is almost 20% higher than price fixed for the power sector.

“Auctions would be held in phases where each phase would be meant for a specific industry and the first one would be for sponge iron sector where around 7 million tonnes of coal is on offer by seven Coal India subsidiaries” said a senior Coal India executive.

This would be followed by offers for other sectors like cement, steel and captive power plants. According to a senior Coal India executive, 25 million tonnes of thermal coal would be on offer under the auction while the rest at 5 million tonnes would be coking coal for metallurgical uses.

According to a preliminary plan, South Eastern Coalfields will offer 9 million tonnes of coal; Central Coalfields, 6.11 million tonnes and Northern Coalfields 6.3 million tonnes. Mahanadi Coalfields plans to offer 5.2 million tonnes while Western Coalfields would be offering 3.5 million tonnes. Bharat Coking Coal and Eastern Coalfields would be offering 0.5 million tonnes and 0.55 million tonnes respectively.

This 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 e-auctions. The government will not renew existing agreements although they will not be prematurely terminated.

“If a fuel supply agreement expires before announcement of long-term supply contract auction, Coal India will not renew it but will continue to supply coal till a fresh round of auction is announced. They would be eligible for bidding for the exact amount of coal they have been receiving through their recently expired fuel supply agreement. They would have to participate in the auctions meant for the non-power sector in which they belong,” a senior Coal India executive said.

This auction is likely to be followed by an auction for the power sector. This would be power companies that do not have coal supply agreement and power purchase agreement. The auction would be on the basis of highest bid like in the case of non-power sectors.