CIL’s coal auction premium to decline further with more coal availability: Source

New Delhi: As the production of coal from sources other than Coal India Limited (CIL) — commercial and captive coal mines — increases, the premium realised by CIL through e-auction will continue to decline, said a source in the Ministry of Coal. During FY 2022-23, the average premium realised by CIL through e-auction was 252 percent. During FY 2023-24, the average premium realised by CIL was 72 percent. “This trend is continuing and is likely to see a further decline during FY 2024-25. This would mean cheaper availability of coal for the non-regulated sector. This will help in reduction in the cost of production and accordingly will contribute to checking inflation,” said the source.

Captive, commercial coal mines to contribute over 16% to coal production in FY25

The government opened up the coal sector for commercial coal mining in 2020. “The policy of opening up the coal sector without end-user restriction has resulted in faster operationalisation of new coal mines. There are many mines auctioned for commercial purposes, that have got required clearances, faster than stipulated. Accordingly, the share of coal being produced by captive/commercial mines is increasing year on year,” the source said. During FY 2023-24, 153 MT coal has been produced by captive/commercial mines which is 15.34 percent of the total production, whereas in FY 2022-23, these mines produced 122 MT coal which was 13.67 percent of the total production. During FY 2024-25, captive/commercial mines are likely to contribute over 16 percent.

“This is helping in higher availability of coal in the open market. Enhanced production from captive/commercial mines is adding to the self-sufficiency of some of the larger FSA (Fuel Supply Agreement) holders. Therefore, dependency on CIL is reducing. This is helping in the reduction of the auction price of coal,” said the source.

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