Coal India to be fined if e-auction supplies not met

livemint.com:

according to two people in the know of the development. State-run Coal India is the only firm allowed to sell coal through e-auctions. The provision of penalty would now be part of the e-auction contracts going ahead, they said.

So far, a penalty was imposed only on buyers who failed to lift the coal they had successfully bid for. “The latest move is expected to make the contract equitable and fair. So far, Coal India used to forfeit the security deposit of consumers, as a penalty, in case the latter failed to lift the quantity they had successfully bid for through e-auction route.

There was no penalty on Coal India in case it failed to supply the committed amount," said one of the two people mentioned above. “Now provision for penalty on Coal India has also been introduced. It will make the contract more balanced and fair." The earnest money deposit or security deposit paid by the consumers currently stands at ₹150 per tonne of coal.

Along with providing for equitable contract terms, the intention is also to ensure maximum possible supplies of coal from the company, at a time when there is abundant availability of coal. Production by commercial and captive coal mines has picked up, while demand has weakened of late. Coal India has announced concessions for buyers of late to try and revive demand for its coal.

In July, it proposed to relax the rules for e-auctions and asked its subsidiaries to increase their sales through such auctions in the next two quarters. Coal India directed all its subsidiaries, except Northern Coalfields Limited, to offer up to 40% of their production in e-auctions during the second and third quarters of the ongoing fiscal year. Usually about 20% of their production was sold through e-auctions.