Coal India to increase spot auction offer in Q4 to 15%

Kolkata: State-run Coal India Limited will increase spot auction offer in the March quarter of the current financial year to 15 percent of the year ½s production, a top company executive said. In the April-December period of financial year 2019-20, Coal India had offered around 12 percent of its production for auction.
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Around 46 percent of the total quantity offered for auctions till December was for spot auction, while the rest was a mix of special forward e-auction for the power sector, exclusive e-auction for non-power and special e-auction.

'Bulk of auction offering for Q4 will be for spot auction'

"Bulk of the auction offering during the current quarter would be for the spot market, fetching the company premiums of more than 40 percent over notified prices for long-term power consumers," the Coal India executive said. "Coal for non-power companies are priced 20 percent higher than long-term power consumers. Almost all subsidiary coal producing companies offer coal in the spot auctions at a floor price of 20 percent over the notified price," the executive added.

By Dec, Coal India offered 46 MT through auctions

In the first three quarters of the current financial year, Coal India had offered around 46 million tonnes through auctions, of which the booked quantity was about 44 million tonnes. Last year, Coal India had produced 607 million tonnes of coal. Its production target for this financial year is 660 million tonnes.

In Q3 of FY2019-20, as coal stocks declined at power plants during summer and output fell because of heavy unseasonal rains, Coal India had to increase supplies to power consumers holding fuel supply agreements. It also focussed on supplying pending quantities to its non-power consumers when production picked up after monsoon. This brought down Coal India's profits in Q3 of FY2019-20, the source said.

Spot auction fetched premium of 66% between April-Dec

Between April and December 2019, spot auction yielded an average premium of 66 percent over the notified prices, while premiums for other forms of auctions hovered between 30 percent and 34 percent of the notified price.

"During the last quarter, the bulk of coal sold was under forward e-auction for the power sector, which fetched lower premiums than in the spot market. We now intend to offer bulk of the coal in the spot auction market during the current quarter. It is expected to fetch relatively higher premiums and may add to profit growth for the year," the source said.