Coal news and updates

Factor in 50% discount to arrive at reserve price: CMA

January 19: The Cement Manufacturers Association (CMA) has urged the Inter-Ministerial Committee (IMC) -- set up to advise the nominated authority on the forthcoming coal e-auctions -- that the regulated coal prices as applicable to the power sector need to be taken into account to derive the floor price/intrinsic value of coal.

In the suggestions, made available to ICMW, the CMA has said a discount of 50% needs to be factored in for arriving at the reserve price of a coal block to make investments viable.

It further said, in relation to the payment terms, that only 10% of the bid price should be payable upfront and the balance should be annuitised, equivalent to the mining lease period.

It has urged that excess production should be diverted to sister end-use-plant of the same company or handed over to the Coal Controller for allocation at the notified price of CIL or for sale through its e-auction route. “This would infuse investment in coal mining to achieve higher economies of scale, reducing mining costs,” the CMA has observed.

Furthermore, it said flexibility should be provided for use of coal in any of the end-use plant to minimise distance for transportation of coal and also for optimum utilisation of coal linkages of existing end-use plants of the successful bidder under the same registered company (both present and proposed end-use plant).