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India opens up for coal export as CIL allows overseas trade for auctioned coal

While spot e-auction was meant for all categories of Indian coal buyers including traders, special spot e-auction is also meant for the same category of buyers with a provision to lift the booked quantity of coal in an extended period of time.

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The Shakti scheme is seen as one of the major initiatives by the government which is hand-holding some power plants to come out of stress.

India for the first time would export coal. Though Coal India (CIL) would not directly involve in exports, it would allow procurers, under the two auction windows, to export. The move is likely to be catalytic to CIL’s sales.

“ However, in case of export, the onus of complying with any law/government rules/ regulations/ statutory guidelines regarding export of coal shall lie solely with the buyer/ exporter,” the amended clause for spot e-auction says.

The clause, made effective from June 8, will allow coal purchasers including traders to export coal procured under two categories of e-auction schemes — spot e-auction scheme and special spot e auction scheme.

The CIL board for the first time has brought about the change in spot e-auction, introduced in 2007 and special spot e-auction introduced in 2016.

While spot e-auction was meant for all categories of Indian coal buyers including traders, special spot e-auction is also meant for the same category of buyers with a provision to lift the booked quantity of coal in an extended period of time.

The earlier clause said, “the coal procured under e-auction is for use within the country and not for export.”

Allocation of the dry fuel under spot e-auction and special spot e-auction together accounted for 46 million tonne (MTs) in FY21, which was 37% of the total allocated quantity of 124 MTs during the last fiscal. Spot e-auction at 42.5 MTs was the highest allocated quantity under all the five auction windows, in FY21, fetching 25% add on over the notified price, the highest in e auction sales. Special spot e-auction netted a premium of 13% over the notified price.

“We feel upbeat about this development and hopefully witness an upsurge in auction bookings under the two schemes,” a CIL executive said.

Sources involved in coal trading told FE, primarily this could be an opportunity for exporting coal to land-locked neighbouring nations and Bangladesh as well, since international coal prices are on the rise. The Indonesian ministry of energy and mineral resources had already set the average price for May at $89.74, though June prices are yet to come. Average global spot price across grades have been hovering at between $109 and $ 116 per tonne, which is posing difficulty for small consumers like Nepal and Bhutan.

Both the countries’ coal consumption ranges between 300-700 thousand ( short) tonne respectively with demand growing at an average CAGR of 7%, Bangladesh is however a higher consumer at around 2.5 MTS per annum but the demand is expected to grow nearly three foods with the number of coal fired plants lined up for installation.

Since Indian coal is available at a deep discount, it generally reaches the bordering nations via the informal route. But the new policy will enable formal exports of coal blocking informal business to a great extend, the source said, adding India’s export potential in the present legal framework will depend much on the quantity offered in both the spot and special spot e- auctions.

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