Coal e-auction fetches 111 per cent more

Coal India Limited (CIL) has received a 111 per cent higher bid price over the notified price of coal in its first month of e-auction operations since the recent announcement of the new coal sales policy.

Between November 20 and December 1, 2007, CIL offered 2.19 million tonnes of coal through the e-auction mechanism at a notified price of Rs 174 crore.

Of the amount, 2 million tonne was booked at a bid price of Rs 368 crore, which is around 111 per cent more than the price offered by the coal behemoth.

The bid price, however, has left the CIL officials gasping as they are yet to make a reasonable assessment as to whether they were selling coal at underrates.

Says a CIL official, "We are yet to reason whether we have been selling coal at prices lower than market rates when bid prices have jumped huge margins over notified prices."

CIL, however, is a little jerky as to how to cope with the situation as consumers under present circumstances could now be prompted in selling the coal they have purchased at rates much higher than market prices.

A mechanism to this effect is yet to be evolved to stop such a practice. Said a CIL official, "How can you stop a sponge iron unit from selling the coal purchased under e-auction at a higher price instead of consuming it. The unit would be handsomely benefited in selling the coal in the grey market".

As per the new coal sales policy, an estimated 10 per cent of the annual production of CIL would have to be offered through e-auction and quantity reviewed from time to time by the ministry of coal (MoC).

For assured supply at the beginning of the financial year, CIL will have to declare a total programme on the sale of coal through e-auction indicating the quality and quantity of the material that would be made available in all four quarters from different coal companies and coalfields.

CIL officers are currently on the job for working out an annual coal sales plan through e-auction. Says an official, "It will soon be ready".

Even in 2006-07 e-auction sales for CIL were commendable clocking a figure of 24.08 million tonne as against the 15.05 million tonne in 2005-06.

New coal sales policy ensures entitlement of all buyers to procurre coal through e-auction. E-auction also provides for creating spot and future market trading of coal under the new sales policy. The only exception kept in the policy points out that there shall not be any floor price in e-auction.