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Home News Power Sector News Power cos call for end to spot sales of coal

Power cos call for end to spot sales of coal

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CoalThe Central government will take up on 18-05-2011 the issue of coal supplies to power plants, which private producers say is short and should be bridged by halting spot sales by state-run Coal India. Coal prices in the domestic spot market, or e-auction, have risen 50% over the past three years. Coal India chairman NC Jha said current spot market prices are about 80% higher than the notified price of 800 - 1,200 per tonne. Spot sales account for 9% of Coal India's revenue.

Jha, however, said there was no dearth of coal for the power sector and that producers were not utilising the entire quantity earmarked for them.

Coal India sets aside 11.5% of its production for spot sales every year. Jha said e-auction was started to meet the needs of small consumers and companies that do not have adequate linkages.

He said power producers evacuated only 304 million tonne of the allotted 335 million tonne in 2010-11 due to lack of proper transportation facilities.

Last fiscal, the world's largest coal miner sold 40- 45 million tonne of thermal coal meant for power plants through online auctions at 1,800- 2,000, against the average 1,340 per tonne in 2007-08.

A lobby group of private power developers said it might not be possible to raise coal production immediately to meet requirements of the current fiscal.

The group has written to the power ministry and the Planning Commission , which is coordinating a meeting of the ministries of coal, power and environment with the prime minister on the issue.

"One of the possible solutions to make more coal available for power generation may relate to channelising Coal India's production sold under the e-auction process to thermal power plants," Ashok Kumar Khurana, director-general of Association of Power Producers, said. Non-diversion would mean loss of production and erosion of investor confidence, besides default on power purchase agreements and term loans, he added.

A senior power ministry official said, "The power ministry feels that Coal India should honour commitment to supply quantities agreed under letters of assurance for new units commissioned during 2009-12 before resorting to e-auction of thermal coal." Coal supply to the power sector increased 7% during the period 2007-08 to 2009-10, while the quantity of coal sold through e-auctions increased over 90% during the same period, he added.

The state miner has marked 347 million tonne for the power sector this year. "There have been instances where power companies have transported mined coal to plants just 5 km away. About 80% of e-auction coal is transported through roads," he said. Khurana called for immediate steps to transport 50 MT stock lying at mine pitheads.

Source- Times of India


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