With the government clearing the way for the e-auctioning of coal in its distribution policy, Coal India Ltd plans to auction 38 million tonnes of coal every year.
Plans spot and futures contracts too
NEW DELHI: With the government clearing the way for the e-auctioning of coal in its distribution policy, Coal India Ltd (CIL) plans to auction 38 million tonnes (mt) of coal every year.
The company also plans to auction out coal for one-year supply contracts to genuine customers so that they are assured of fuel supply.
CIL plans to do both spot and futures sale contracts for coal when it restarts e-auctioning later this month. About 3.2 mt may be put up for auctioning every month.
Partha S Bhattacharya, chairman, CIL, told DNA Money, “We will start spot auctioning in November itself. The distribution policy allows for futures auctioning. We have set up an internal committee to work out the details of futures auctioning.”
For the current year, about 15 mt of coal will be put up for auctioning.
Bhattacharya said the company planned to end e-booking of coal and preferred e-auctioning. “In e-booking, quantities were booked on a first-come-first-serve basis. It, at times, lead to fake bookings.”
Under the e-booking scheme, buyers get their supply of coal at a fixed price to be notified in advance by coal companies. In case of e-auctioning, there is an undisclosed reserve price for coal, which is offered.
The auctioned price is higher than the reserve price.
Elaborating on futures trading, he said quantities could be booked in advance and price might vary depending upon the time. “For example, coal demand in October-April is high in non-core sector. During that period, price may be higher than in May-September when, due to rainy season, the demand is lower,” he said.
E-auctioning was introduced about two years back with the government allowing CIL to put about 10% of its production on auction. The process was suspended following a Supreme Court order.
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