India’s ministry of coal appoints CRISIL as consultant for setting up a coal exchange

The coal ministry has appointed CRISIL as consultant for floating the proposed coal exchange, a platform for coal miners for open market operations. “We have allotted a lot of coal blocks for commercial mining. When those blocks come to production, there has to be a place for selling coal,” AK Jain, coal secretary, said at the Indian Mining Exhibition (IME).

The exchange will come up on the lines of the Indian Energy Exchange or the Power Exchange, and there would be spot and future trading of coal.

While Crisil was engaged to work out the nitty-gritty of the exchange, the exchange “should come up by the end of the fiscal”, Jain said. The exchange would work under a regulator and the government would allow both domestic and international players to buy and sell coal from the exchange.

Coal India, mainly supplying coal on the basis of fuel supply agreement (FSA), can shift a chunk of its production for open market operations, Jain told reporters.  CIL, Jain said, at present sells around 20% of its production via the e-auction route at market-determined prices. Those open-market operations are done by auction platforms like mjunction or MSTC. Once the exchange is in place, market dynamics will determine how much of coal CIL would sell via the proposed exchange, Jain said.

In the first tranche of allocation, the ministry offered 38 coal blocks, of which 19 were successfully auctioned. In the second tranche, a total of 67 blocks were auctioned, of which 37 were fully explored and 30 partially explored. The government has put another 122 blocks on offer, with MSTC designated for auctioning. 

A total 42 coal mines have been auctioned successfully so far in three tranches, with peak rated capacity of 86,404 million tonne per annum. On spinning off and divesting Coal India subsidiaries, Jain said the proposal to list Bharat Coking Coal (BCCL) and CIL’s consultancy arm, Central Mine Planning and Design Institute (CMPDI) in the bourses was under consideration and there has been no final decision on it as yet.

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