Wednesday, 10 February 2016

MSTC Plans e-Auction for Coal Supply Contracts

The Economic Times, Kolkata, Wednesday, 10 February, 2016

The government has asked public sector entity MSTC to create an e-auction platform for fuel supply agreements that would be given out to non-power sector.The platform, to begin with, will conduct e-auction for 24 million tonne of coal for companies that do not have any supply contract from Coal India.
“We are readying the platform that would be used to auction fuel supplies to non-power sector,“ said S K Tripathi, chairman MSTC.
Eventually government will also auction coal supply contracts for the power sector its main client, however, it is not likely to happen before April this year.
Last week, the government declared that long term coal supply contract for sectors like steel, ce ment, and aluminium, will be granted only through e-auctions.At present existing coal supply contracts will continue but they would be auctioned once these expires “The auction route will be followed for all future contracts, once the existing fuel supply agreements lapse. Hence to start with it would be about 24 million tonnes which would gradually increase as and when supply agreements lapse,“ said Tripathi.
According to reports the govern ment has drawn out the schedule for the e-auction the exercise for which is likely to start in the next 710 days. The government is targeting to hold the first set of auctions by April end and has asked MSTC to prepare the portal for the e-auctions. Coal India has achieved a 9.8% growth in coal production till January this financial and all power companies are flushed with coal.This leaves Coal India with the option of making sure it manages to sell all the coal it produces or it may be forced to revise its production targets downwards. E-auction is likely to help the company achieve its sales targets for the year which is pegged at 550 million tonnes.

Coal India has been allowed to sell 25% of its incremental coal production through e-auction which would help it liquidate stocks and bring down inventory which has touched 40 million tonnes.

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