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Power Cos call for end to spot sales of coal

18 May 2011 Evaluate

Coal India sets aside 11.5% of its production for spot sales every year. E-auction was started to meet the needs of small consumers and companies that do not have adequate linkages. Power producers evacuated only 304 million tonne of the allotted 335 million tonne in 2010-11 due to lack of proper transportation facilities. Last fiscal, the world's largest coal miner sold 40- 45 million tonne of thermal coal meant for power plants through online auctions at Rs. 1,800-2,000, against the average Rs. 1,340 per tonne in 2007-08.

One of the possible solutions to make more coal available for power generation may relate to channelizing Coal India’s production sold under the e-auction process to thermal power plants. Non-diversion would mean loss of production and erosion of investor confidence, besides default on power purchase agreements and term loans. The power ministry feels that Coal India should honor commitment to supply quantities agreed under letters of assurance for new units commissioned during 2009-12 before resorting to e-auction of thermal coal. Coal supply to the power sector increased 7% during the period 2007-08 to 2009-10, while the quantity of coal sold through e-auctions increased over 90% during the same period. The state miner has marked 347 million tonne for the power sector this year. The government will take up the issue of coal supplies to power plants, which private producers say is short and should be bridged by halting spot sales by state-run Coal India. Coal prices in the domestic spot market, or e-auction, have risen 50% over the past three years. Current spot market prices are about 80% higher than the notified price of Rs. 800 – 1,200 per tonne. Spot sales account for 9% of Coal India’s revenue.

Coal India Share Price

438.70 5.80 (1.34%)
17-Apr-2026 16:59 View Price Chart
Peers
Company Name CMP
Coal India 438.70
NMDC 89.78
GMDC 733.40
Sandur Manganese 218.35
MOIL 327.60
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