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State-run miner Coal India has opened its e-auctions to foreign buyers from neighbouring countries such as Bangladesh, Bhutan, and Nepal, responding to weaker domestic demand for coal used in power generation. Coal-based power output in India has declined in several recent months as renewable energy use increases, leading to lower coal offtake. The move follows government approval to export surplus coal and aims to support volumes and margins. Coal India shares rose over 6% after the announcement. Neighbouring countries already source Indian coal through traders, and direct auction access is expected to streamline purchases, even as cost and logistics challenges remain compared to other suppliers.
State-run miner Coal India COAL.NS on Friday opened up its e-auctions to foreign buyers from neighbours Bangladesh, Bhutan and Nepal amid a decline in local demand for power generation. Advertisement
Shares of Coal India extended gains to trade more than 6% higher at 426 rupees, their highest in more than a year. They were up 4.5% before the announcement.
India's coal-based power generation has dropped in seven of the past 12 months as renewable energy penetration has picked up. Coal India's supplies to consumers declined 2.2% on-year in the April to December period.
New Delhi approved exports of surplus coal from power plants in December.
India's neighbouring countries were buying coal via traders. In the year through November, India exported about 1.54 million tonnes of coal, mainly to Bangladesh, Nepal and Bhutan, as per data from coal trading firm I-Energy Natural Resources.
"Tepid domestic coal demand this year has hit coal e-auction premiums for Coal India, so this move to level the playing field for foreign buyers will also help the company boost margins and reverse the trend of posting lower offtake volumes," said Rupesh Sankhe, a research analyst with Elara Securities.
The countries have been buying Coal India supply through traders, said Vasudev Pamnani, director at I-Energy Natural Resources. Participating in auctions would replace that demand and not add new volume, he said.
Inland logistics and port costs make India less competitive than Indonesia, which supplies Bangladesh with better infrastructure and lower costs, Pamnani added.
Source: Reuters
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