Coal India for more e-auctioneers

Coal India plans to engage more service providers to conduct its e-auctions, or sale of coal through a web-based platform.
State-owned MSTC Ltd and m-junction Ltd, a joint venture between Tata Steel and SAIL, have been carrying out the e-auctions for Coal India since the process was introduced in 2008.

The contract period of these two companies has expired and they are now providing services under extension. Both are learnt to have responded to the call.

Some smaller, unknown IT service providers have also shown interest.

Overall, however, the response to the request for proposal has been muted as Coal India has made major changes to the existing business model for the e-auction service providers, sources said.

“Apart from an earlier revenue share model, under which about 0.6% of the e-auction turnover was shared with the service providers, Coal India has now mooted a fixed fee-based structure,” said an official of one of the service providers.

“We are supposed to quote a fee for every auction that is conducted, irrespective of the amount of coal that gets sold there. Coal India is of the view that since coal is a scarce commodity, we can’t be credited with any market-making activity. If Coal India sticks to this norm, we fear significant fall in revenue generation from e-auction.”

Coal India has long been considering using the services of more companies in a bid to make the process more transparent, especially since the gap between notified and auction prices has become huge. However, it is only now that the process has gained some urgency, sources in the company said.

“The document for NIT (notice inviting tender) is now being finalised and we expected to float it soon,” said a Coal India spokesperson said.

The company’s move comes even as the power ministry and Planning Commission are reported to have sought a stop to the e-auctions on the ground that thermal power plants are fuel-starved.

Coal India sold nearly 40-45 mt thermal coal, or 10-12% of its total production, through e-auctions last fiscal at Rs 1,800-2,200 a tonne, as against the notified price of Rs 800-1,200. Understandably, it doesn’t want the e-auctions scrapped.