Plan panel may force CIL to end e-auction of coal

24 Aug 2010

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Exceptionally high prices being realised at an ongoing e-auction of coal due to an increasing shortfall in supply have forced the Planning Commission, the union government's apex advisory body, to push for a rethink on the e-auctioning, according to a report.

The mechanism of allocating coal through e-auction was introduced by the government over four years back with a view to ensure adequate coal supply to the non-core sector and traders at ''market-determined prices''.

Asked whether the scheme is serving its stated objective of price discovery of the 'black diamond', a Planning Commission official said told Business Standard, ''Price discovery will come later. The need at this juncture is to step up domestic production.''

He said the context in which e-auction was launched has changed completely. ''We will have to rethink this (the scheme),'' he said without disclosing details.

The original plan, envisaged by the Planning Commission in its integrated energy policy (IEP), was to bring about a gradual increase in the amount of coal sold through e-auction from 10 per cent of the overall production to 20 per cent. The plan has, however, not materialised.

The total allocation of coal through the electronic exchange by state-run Coal India Ltd CIL, which supplies the bulk of the 'dry fuel' for the auction, has never exceeded 12 per cent of the production since the launch of the scheme owing to the perennial shortage of coal availability in the country.

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