Coal India's e-auction benefits only big traders: Panel

It has asked the Coal Ministry and CIL to check the 'monopoly' of big traders to ensure that small traders and end-users are not put in a disadvantageous position

A high-level panel has described e-auctions conducted by Coal India (CIL) as a "tool for manipulation" that benefits only "big traders" and questioned the need for this method of sales when the country is reeling under a shortage of the fuel.

The Standing Committee on Coal and Steel said in its latest report that it was "surprised to note what exactly prompts CIL to go for e-auction despite the coal shortage in the country...The process of e-auction, which though generates good revenue for CIL, is also a big tool for manipulation."

The panel chaired by Kalyan Banerjee recommended in the report submitted to Parliament recently that the method should be "checked soon" and a more transparent regulatory and monitoring mechanism be put in place.

State-owned CIL, the world's largest producer of coal, sells 10% of its output through e-auctions. The miner produces more than 80% of the country's coal.

The e-auction allows buyers from anywhere in the country to buy coal in a transparent manner, according to CIL's website. The remainder of the miner's production is sold through fuel supply agreements.

"E-auction by CIL does not give a fair chance of participation to the end-users and benefits only the big traders and influential parties. The big traders may purchase through e-auction at comparatively cheaper rates by forming cartel and make small-scale industries to purchase coal from them at higher rate," the committee said.

The panel asked the Coal Ministry and CIL to check the "monopoly" of big traders to ensure that small traders and end-users are not put in a disadvantageous position.

It asked them to review the present policy so as to safeguard the interests of small traders and to keep the quantity of coal to a bare minimum to meet domestic demand.

Coal demand in the country during the previous financial year was estimated at 773 million tonnes (MT) as against domestic production of 574 MT.

The committee observed that CIL has indulged in the practice of e-auction when it failed "time and again to meet the domestic demand" while small-scale industries as well as power companies are heavily dependent on coal supply.

The government has asked the PSU to achieve its target in order to meet increasing demand.

The Coal Ministry set a production target of 482 MT and sales of 492 MT for CIL in 2013-14. The company's output in the previous financial year was 452.5 MT of coal, short of the target of 464 MT.