Coal block winners can sell excess output to CIL at 15% discount

Successful bidders in the current round of coal block auction will be allowed to sell their production beyond 100% of their planned capacity to Coal India at a 15% discount on the state-owned company’s notified price for the power sector.

According to the bid document published last week, a successful bidder has to use 75% of its actual production for captive consumption. The next 25% can be sold in the open market. If the block operator produces more than 100% of planned production, it needs to be sold to Coal India. However, the excess production cannot be more than 50% of the planned production.

“The government has left the process of fixing prices for coal to be sold in open market on block operators and did not stipulate any price discovery mechanism,” said a senior coal sector executive familiar with the development. “They are open to auctioning or selling it at a pre-determined price. It will not require paying any extra to the government,” the person told ET.