Coal buyers resent EMD hike

Coal consumers across the country sourcing coal from Coal India Limited through the e-auction mode are sore over the recent rise in earnest money deposit for procurement of coal and also the bulk transport of e-auction coal through the road route which has pushed up the cost of the raw material.

"The EMD for coal procurement through the e-auction mode has been recently hiked by CIL from Rs 200 to Rs 500 per tonne of coal and this price hike would deter many consumers to buy coal through the e-auction mode.

"Moreover, the majority of e-auction coal is now being transported by the subsidiaries of CIL through the road route which has pushed up the cost of coal for the consumers", an official of Coal Consumers' Association of India told Business Standard.

"CCAI has already taken up the issues pertaining to procurement and transport of e-auction coal with CIL and the coal PSU has stated that the EMD has been raised to differentiate the coal comsumers from the traders. Further, the coal PSU has attributed the bulk transport of e-auction coal through the road route to the non-availability of sufficient railway rakes", the official added.

The official further pointed out that the post of the director (marketing) of CIL had remained vacant for about six months as a result of which the issues of the consumers relating to coal procurement through e-auction could not be resolved.

Adding to the woes of the e-auction coal consumers is CIL's latest move according to which the consumers would be required to pay the 0.9 per cent service charge to MSTC Limited or mjunction.com, the two platforms for sale of e-auction coal by CIL. It may be noted that earlier this service charge was paid by CIL. The coal consumers procuring coal from CIL through the e-auction mode include those in sectors like sponge iron, chemicals and paper.

The floor price of coal sold through the e-auction mode has been fixed at five per cent higher than the notified price of coal and coal was made available to the highest bidder in the tendering process.

Ever since the introduction of coal e-auction in the New Coal Distribution Policy of 2007, CIL has offered around 76 million tonnes of coal through the e-auction mode out of which the sale of only 38 million tonnes has materialised.