Need to address Coal India's concern about e-auction cut, says PMO

PMO has asked coal secretary S K Srivastava for details of financial impact on the state-miner

Amid differences between the coal ministry and Coal India Ltd (CIL) over the former’s “suggestion” of a cut in e-auction sales by the state-owned miner, the Prime Minister’s Office (PMO) has asked the ministry to assess CIL’s concern on revenue loss before taking a decision on the matter.

“We understand the PMO has taken note of the revenue loss that the CIL board highlighted; it has written to the ministry. The PMO feels the matter has to be examined at the highest level,” said a source privy to the development.

The PMO has written to Coal Secretary S K Srivastava, seeking details of the financial impact of a cut in e-auctions on CIL.

Earlier, Coal and Power Minister Piyush Goyal had told the Rajya Sabha CIL was asked to cut its e-auctions from 58 million tonnes (mt) in 2013-14 to 25 mt this financial year to make more coal available for the fuel-starved power sector. “Large amounts of coal are being sold through e-auctions. This is not in public interest. Coal India’s primary duty is to supply to power plants,” Goyal had said.

On August 12, the CIL board expressed apprehension on such a move, fearing revenue loss. It decided to send a note to the ministry on the issue. Subsequently, Goyal clarified this wasn’t a “directive”, but a “suggestion”. There was no contradiction between the ministry and CIL on the issue, he said.

CIL sells about seven per cent of its output through e-auctions. Primarily, smaller power companies and non-power users buy coal through this route, as most electricity-generation companies don’t bid aggressively due to rate caps.

An official said, “A financial impact report has already been prepared by the ministry. Given the difference between the average e-auction price and CIL’s notified price, the revenue loss will be about Rs 2,800 crore a year if the e-auction is reduced to 25 mt.”

“There is a proposal from the ministry on revising the notified price to neutralise this revenue loss. But in that case, the power cost will rise and consumers will be affected. As the PMO has suggested, the matter needs to be examined at the highest level,” he added.