Coal news and updates

CMA seeks e-auction floor price at Rs 100 per ton

January 19: The Cement Manufacturers Association (CMA), recalling that the coal block auction to the steel, sponge iron and cement sectors in March 2014 yielded poor results because of the high valuation of the blocks and other stringent norms, has submitted to the nominated authority a set of suggestions with regard to the upcoming e-auction of coal blocks.

For instance, it said in the suggestions made available to ICMW, that the floor price should be kept nominal, say at Rs 100 per ton. “Competitive bidding through e-auction will ultimately help discovery of prices. Fixing very high floor price linked to international prices or multiples of domestic prices will defeat the very purpose of auction which itself is a price discovery mechanism,” the CMA said.

It said the floor price should be common for PSUs/IPPs/cement/others as dynamic auction is a price discovery mechanism

It also wants the intrinsic value of the coal block to be calculated by computing its net present value (NPV), based on the discounted cash flow approach (DCF).

The CMA has put forth a series of suggestions relating to the actual auction process and technology aspects as well.