On Saturday, the government allowed the supply of coal from companies such as Coal India Limited (CIL) through a common electronic auction window rather than sectoral auctions.
The proposal was approved by the Cabinet Committee on Economic Affairs (CCEA), which held its meeting earlier in the day.
In a statement, the coal ministry said the AECB had approved the tender of all unbound coal by the coal companies through an electronic auction window from CIL and Singareni Collieries Company Limited (SCCL).
Thus, market distortions would be removed and a single price for all consumers would evolve in the electronic auction market. This will increase operational efficiency and lead to an increase in domestic coal demand, he added.
Apart from this, the discretion currently given to coal companies to allocate coal to different end-use sectors will be eliminated. In addition, coal companies will be able to establish coal gasification plants using coal from their own mines.
This will help develop clean coal technology in the country, he added.
This electronic auction will be aimed at all sectors, namely the electricity sector and the non-regulated sector (NRS), including traders. The coal would be offered through this auction instead of the current system of sectoral auctions.
“The above will be subject to CIL or SCCL meeting coal bonding requirements over existing bonds and will not impact existing bonding to electricity and non-electric consumers at contract prices,” a he declared.
“Coal offered through the single electronic auction window must be independent of transport mode, with the default option being rail mode,” he added.
However, the coal can be removed by the consumers through the road mode or other modes according to their choice and convenience without paying any additional charge or rebate to the coal companies.
Long-term allocation of coal by CIL and SCCL, without affecting supplies to existing coal links, to their own gasification plants will be permitted at prices to be decided by the coal company.
However, taxes, duties, fees, etc. are paid by the coal companies on the notified coal prices for the electricity sector.