Coal India is in favour of a phase-wise introduction of the sale of coal through the coal exchange amid industry concerns that exposing long-term power assets to full market volatility could lead to electricity tariff fluctuations and uncertainty in energy
security.
The setting up of the coal exchanges is expected to create an independent marketplace to transact coal through a transparent, competitive and efficient price discovery mechanism.
“We are reform-aligned, not reform-resistant. We support modernisation, but reform must be calibrated, phased and aligned with national energy security,” said Coal India executive director (information and communication technology) V.S. Maharaj at the Indian Coal Markets Conference organised by mjunction. Coal India currently offers coal through its own e-auctions and fuel supply agreements with coal consumers.
Niladri Bhattacharjee, partner at Grant Thornton Bharat, said a coal exchange would work best in a supply-comfortable or surplus market environment.
“A surplus coal situation would be good for a coal exchange. It will keep prices in check despite market transaction charges and encourage the market to shift from its current direct-to-consumer character,” he said.
Meanwhile, mjunction services limited, a 50:50 joint venture between Tata Steel and SAIL, is looking to leverage its experience in coal auctions as it works on a plan to set up a coal exchange in India, a senior company official said.
“We have been in this space for the last 21 years. We understand the supply and demand scenario and the issues that need to be addressed in delivery and quality. We have been providing our suggestions and inputs to the coal ministry, and I am happy that most of our suggestions have been incorporated. We are in active discussions and are very keen to set up a coal exchange in the country,” said Vinaya Varma, MD and CEO of mjunction.
The coal ministry floated draft coal exchange rules in December for public consultation following amendments to the Mines and Minerals (Development and Regulation) Act.