India conducts maiden coal licences auction: supply security or irrational bidding? Report

Insight 02 March 2015

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Report summary

Aggressive bidding in the first round of coal licence auction shows a serious lack of confidence on Coal India’s ability to increase production in the near-term. Power and non-power companies have agreed to pay up to US$58/t reserve capacity to ensure stable coal supplies and improve utilization levels of end-use plants. We expect domestic coal costs to increase in the future, supporting growth in imports.

Executive Summary
Background
Auction process and features
Auction results
- Negative bids submitted for power sector coal licenses
- Import parity bids submitted for non-power coal licenses
The winners and losers
Conclusion

Tables and charts

This report includes 6 images and tables including:

Summary of licences issued for captive use between 1993-2010 and the current status as of January 2015
Map of auctioned coal licences and the end-use plants
Coal licences for power sector - closing bids (US$/t)

Coal licences for non-power sector - closing bids US$/t
Growth in coal-fired capacity and trends in plant capacity factors
Cost comparison of domestic coal and imports for selected licenses/end-use plant