Coal India Limited to Host Coal Auction with Flexible Lifting Period

Coal India Limited (CIL) is a state-controlled Indian coal mining company. The company is established in Kolkata, West Bengal. This giant company holds the crown for being the world’s largest coal producer. It does not come as a shock that it contributes for 82% of coal produce in the country. It owns about 7 wholly-owned coal manufacturing subsidiaries. In India, coal still remains a high-in-demand resource.

In the midst of soft demand for coal, the state-possessed Coal India Limited (CIL) plans to host a special long-term forward auction. This auction is aimed towards power producers; it plans to introduce flexible lifting period of up to three years. An official said, “A long haul unique forward e-closeout for lifting period up to three years is being propelled for power makers.”

 

 

Coal India Ltd (CIL) is soon to inform the details of their plans, auction dates and other details. As per a report made during a survey, power utilities use about 75% to 77% of the total coal. According to Kameswara Rao, a partner in PwC, it is better for the state to auction for 3 to 5 years, as they won’t have to commit to an extended term generation capacity. This might take a better turn for the existing plants, which don’t have a linkage yet won’t draw in new capacity addition.

He continued explaining, “The design of auction of coal linkage is made complex by the economic and market realities of how long term power itself is competitively procured. It’s understandable that it’s taking a longer time to finalise it,”

Rao said that though the demand for coal in the current situations is soft, the future seems to be brighter and signs of improvement are seen already.

He said, “Electricity demand growth remains modest at 5-6 per cent over last year, and market prices remain modest even for peak periods.” However it won’t take long for these scenarios to take a complete U-turn as the Indian market will have to fight for imported coal during the upcoming two quarters. The contract during this period may be re-evaluated.

Coal India Ltd (CIL) is solely responsible for about 80% of domestic coal production in India. By 2020, the mining machine plans to achieve 1 billion tonne of output. By looking at its current growth and evolution, it is likely to achieve its goal by then. Also, the demand factor will contribute to it.

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