Coal India Limited?s (CIL) plan to re-launch e-auction of coal may hit a roadblock. The Prime Minister?s Office has given a green signal to new coal distribution policy with few changes, whereby the public sector company will continue to provide the entire coal requirement of the power sector.
The draft coal distribution policy envisaged bringing down coal supply to power sector to 90% from the present 100%.
?Based on the draft policy, CIL hoped to corner additional coal, which it planned to use for revival of e-auction of coal. But with the PMO rejecting the proposal to cut linkages to power sector, re-launch coal e-auction is likely to face delay if not meeting a dead end,? a senior government official told FE.
The coal ministry through the draft coal distribution policy planned not only to re-start coal e-auction but also planned to increase the level of coal sold through e-auction from 30-million tonne to 50-million tonne.
However, the coal ministry along with CIL is considering other mechanism to re-start coal auction, government source added. E-auction is an electronic bidding mechanism through which coal was being sold to the highest bidder.
This resulted in substantial price realisation to CIL over its notified prices.
E-auction of coal was discontinued after Supreme Court in December 2006 ordered discontinuation of e-auction of coal, as it viewed the scheme as a misuse of CIL?s monopoly status to seek the highest price rather than fulfilling its constitutional goals.
The total coal sold annually by CIL has been pegged at 360-370-million tonne. Of this, CIL roughly sell 80% directly to power plants.
If the PMO had not objected the draft distribution policy, power companies would have needed to buy 35-million tonne through other sources. This was also the major opposition by the power ministry against the draft policy.