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Business EconomyPosted at: May 24 2022 6:10PM


CCAI seeks urgent relief from rising coal auction prices

Mumbai, May 24 (UNI) Amid spiralling coal auction prices and shortage of supply, Coal Consumers Association of India (CCAI) has sought government intervention in the matter and to provide a relief to the coal consumers.
In a letter to Coal Minister Pralhad Joshi, the Association highlighted that coal buyers in the country are being forced to secure coal supplies at appallingly high prices just to keep their plants running.
The CCAI highlighted that the average bid price of coal in a recently conducted spot e-auction by Mahanadi Coalfields rose as high as 800 per cent above the notified price.
"It is evident that some of MCL's valuable customers are compelled to procure coal as such abysmally high premiums only for sustenance of their respective plants while many industries had to take a decision to be out of league in this auction due to soaring bid prices," it said.
CCAI Secretary General Subhasri Chaudhuri said that the Association has sought urgent support in providing relief to beleaguered coal buyers in the country, many of whom have been compelled to idle their captive power plants in the absence of sufficient supplies
The Association noted that the soaring bid prices had prevented multiple industries from participating in the auction.
"Many of them have now resorted to drawing expensive power from the exchange while nearly idling their captive power plants, consequently increasing power demand and tariffs even further. This practice was resulting in heightened system inefficiencies across the country’s captive power plant nfrastructure," he added.
According to CCAI, at present, Coal India and its subsidiaries are allocating coal at a trigger level of 75 per cent of the monthly scheduled quantity. This in-turn is aggravating the coal crisis, and may lead to production cuts and imminent closures.
"Even as industries struggle to secure the minimum quantities assured to them under fuel supply agreements, CIL is conducting spot e-auctions where spot prices routinely spiralled up to unprecedented levels, putting it out of reach of many consumers who were then forced to purchase less than sufficient quantities," Chaudhuri added.
To rein in the spiralling prices at e-auctions, the CCAI has suggested placing a cap on coal premiums at least till the ongoing situation normalised, which would help avoid additional financial burdens on industries.
The Association has also suggested that inter plant transfer of coal stocks within the same group company be permitted to allow for optimal utilisation of existing supplies.
"For companies operating multiple units with separate coal linkages, this measure would help balance coal stocks in the short term," it said in its representation.
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