Amid soft demand for coal, state- owned CIL will hold long-term special forward auction for power producers with flexible lifting period of up to 3 years.
“A long-term special forward e-auction for lifting period up to three years is being launched for power producers,” an official said.
Coal India Ltd (CIL) will soon notify the detailed offer, schedule dates for auction, he said.
Power utilities consume about 75-77 per cent of the total coal, as per estimates.
According to PwC’s Kameswara Rao it is easier to auction for 3-5 years, as states will not have to commit to a longer- term generation capacity.
This will serve existing power plants which do not have a linkage but will not attract new capacity addition, he added.
“The design of auction of coal linkage is made complex by the economic and market realities of how long term power itself is competitively procured. It’s understandable that it’s taking a longer time to finalise it,” he said.
He also added that the current demand for coal is soft but there are signs of some improvement.
“Electricity demand growth remains modest at 5-6 per cent over last year, and market prices remain modest even for peak periods,” he said.
But this could change in coming two quarters when higher imported coal prices start to reflect as contracts are re-priced.
Coal India, which accounts for over 80 per cent of the domestic coal production, is eyeing 1 billion tonne of output by 2020. The PSU is looking at 598 million tonne in 2016-17.