The exchange is being thought on the lines of the commodity exchange, the power bastion.
India has decided to set up a coal trading platform, making a move towards throwing the region completely to market forces as the country prepares for commercial coal mining auctions, leading to an increase in the numbers of coal sellers.
According to the proposal, the entire coal produced in the country will be traded on the 'Coal Exchange', an online platform where pricing is done in a transparent manner through demand and supply. The exchange is being thought of on the lines of commodity exchange, power borrowers, or proposed gas exchange. This could mean the end of Coal India NSE's new Fuel Supply Agreements (FSA) regime of 1.10% where state-run miners contract with consumers to supply coal. A senior government official said that Coal India Limited is expected to remain a major player in the sector, with a production target of one billion tonnes by 2024.
Coal consumers and traders welcomed the move but said that the exchange should be started only when there are many buyers and sellers. The Ministry of Coal is likely to begin auctioning about 50 coal blocks for commercial coal mining on Thursday.
The government official said that discussions have started in the ministry and a coal exchange is certain to be set up after the government resolves all related concerns.
“We are moving forward with commercial coal mining. So, very soon, we will have more vendors in the market besides Coal India and Singareni Collieries, ”the official said. “Coal blocks have also been allocated to the state PSUs for the sale of coal. On the other hand, we will also have many buyers. We are thinking of a platform for the sale of coal like we have a commodity exchange where other commodities are traded. We have started discussing it. "
The official said that the proposed coal exchange could be the only trading platform for the organized sale of coal. "We will discuss all the time such as the size and shape of the platform, powers, regulations, current FSA issues," he said.
Jindal Steel and Power Limited head-corporate strategy Kapil Mantri said that a coal trading platform is a very positive step for the country. Logistics cost terms.
Ashok Khurana, director-general of the Association of Power Producers, said, "Coal exchanges should happen when we talk about real-time power market and it is the right step for the development of the coal market. However, the exchange needs many sellers and buyers to stop gaming. With commercial coal auctions due to begin, we may have many buyers in the next 4-5 years. Before the exchange can begin with minimal operations and can substitute for the spot auction platform. The offer of coal on the exchange, linkage contracts should only take place after they are fully completed - it should not be at their cost. If yes, it will raise electricity prices. "
A top executive with a coal trading firm said that countries around the world already have coal exchanges and this is a test model. However, the government should allow the market to mature with a large number of players to ensure the right price of coal in the proposed market.
.JPG)
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