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Prime Minister Narendra Modi-led Cabinet Committee on Economic Affairs today approved the offering of coal by coal companies via a common e-auction window instead of the sector-specific auctions. Clubbing of the e-auction windows will not involve any additional cost to the coal companies.
The Cabinet has approved the offering of all the non-linkage coal by coal companies via one e-auction window of CIL (CIL)/Singareni Collieries Company Limited (SCCL). This e-auction will cater to all the sectors – power sector and non-regulated sector (NRS) including traders.
“The above will be subject to CIL/SCCL meeting the coal linkage requirements against existing linkages and do not impact the current linkages to power and non-power consumers at contracted prices," the Cabinet Committee on Economic Affairs said in a statement.
Also read: Why green investors are buying dirty coal
Coal offered via the single e-auction window will be transport mode agnostic with the default option being through rail mode. However, coal may be lifted by the consumers through the road mode/other modes depending upon their choice and suitability without paying any additional charges or the discount to the coal companies, the statement added.
It said long term allotment of coal by CIL/SCCL, without affecting the supplies against existing coal linkages to their own gasification plants, will be allowed at prices decided by the coal company. However, the taxes, duties, royalty, etc will be paid by the coal companies on the notified prices of coal for the power sector.
Need for common e-auction window
As per the government, the coal market is segmented and regulated and consequently there are many different market-discovered rates for the same grade of coal in each segment of the market. Segmentation with rate differentiation results in coal market distortions.
With these reforms, the coal of any particular grade may be sold in the market at one rate (one grade, one rate), with the default mode of transport being railways, through a transparent and objective e-auction mechanism.
A single e-auction window would enable the coal companies to sell coal through the market discovered price mechanism to all the consumers. “Besides the above, the need of the hour is to move away from the conventional coal use to clean coal technologies," the Cabinet Committee on Economic Affairs said.
It said the coal companies are planning to diversify business via the coal gasification route. “In coal block allocation mechanism, coal gasification is being encouraged through incentives like rebate in the revenue share. Similar incentivisation is necessary to help the early establishment of this new use of coal and related technologies. The coal companies would have the flexibility to supply coal to their coal gasification projects," the statement said.
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