THE SINGARENI COLLIERIES COMPANY LIMITED WELCOME

AUCTION OF LINKAGES OF NON-REGULATED SECTOR 04-09-2018, SINGARENI BHAVAN, HYDERABAD

NEW COAL ALLOTMENT POLICY Ministry of coal Govt NEW COAL ALLOTMENT POLICY Ministry of coal Govt. of India has announced a new coal allotment policy called “AUCTION OF LINKAGES OF NON-REGULATED SECTOR” vide no. NO.23011/51/2015-CPD(Pt1), dt:15-02-2016.

PREVIOUS COAL ALLOTMENT SYSTEM MINISTRY OF COAL (SLC –LT) POWER CEMENTS CAPTIVE POWER SPONGE IRON FERTILIZER DEFENCE RAILWAYS STATE GOVT RECOMMENDATIONS COMMISIONER OF INDUSTRIES OF TELANGANA & OTHER STATES . (AGRO,TOBACCO,PAPER,CERAMIC DAIRY,PHARMACUTICALS,OIL, STEEL ROLLING etc.) NREDC TS/AP/ FOR BIOMASS BASED POWER PLANTS ACQ below 10000 tonnes/year will be considered for allotment against the recommendation of Industries department/NREDC.

POLICY GUIDELINES OF “AUCTION OF LINKAGES OF NON-REGULATED SECTOR” (New Policy)

1. Policy guide lines of AOL The proposal of competitive bidding for auction of coal linkages/LoAs to non-regulated sector has been approved by Cabinet Committee on Economic Affairs (CCEA)/GOI & certain policy guidelines for auction of linkages of Non-Regulated Sector have been decided.

Policy guidelines contd…. Proportion of coal allocation between power and non-power sectors may be continued at the same level as average production of the last five years i.e. 75% Power and 25% Non-power. The Ministry of Coal may review the proportion as and when required. All allocations of linkages/LoAs for non-regulated sector viz. Cement, Steel/Sponge Iron, Aluminum and others excluding Fertilizer (Urea sector), including their CPPs, shall henceforth be auction based. The tenure of new Fuel Supply Agreements (FSAs) is fixed as 5 years and it is extendable by another 5 years on mutual acceptance.

Policy guidelines contd… The existing FSAs with CPSEs may continue to be renewed on expiry. However, in case CPSEs require linkages over and above the existing linkages, they may participate in auction of linkage.

Policy guidelines contd…. For auction of linkages, separate quantities shall be earmarked for sub-sectors of Non-Regulated sector. The sub-sectors shall compete within themselves. The sub-sectors could be Cement, Sponge Iron/Steel, CPP and others.

2. Methodology of auction SCCL will allocate/earmark coal from mines/CHPs. The methodology for auction of linkages shall be Non-Discriminatory Ascending Clock Auction, where the Auctioneer increments the price (premium) on the electronic platform till demand-supply equilibrium is established. In this methodology, prices shall be directed by the supplier coal company through algorithmic iteration.

2. Methodology of auction contd… The initial floor price shall be set at the relevant SCCL basic notified non-power price and bidders shall bid for premium above this price for the relevant grade and for a particular ‘link quantity’. If bids are received for quantity greater than ‘link quantity’ offered, then the premium is increased in steps. Auction stops when bids are received for exact quantity i.e. ‘link quantity’ offered. Each successful bidder pays the same price.

The auction method is illustrated below: Link quantity offered 1 MT Bidding Round 1 Premium over SCCL Notified price Rs.0/Tonne Bides received for 3 MT Bidding Round 2 Premium over SCCL Notified price Rs.25/Tonne Bids received for 2.5 MT Bidding Round 3 Premium over SCCL Notifiedprice Rs.50/Tonne Bids Received for 1.5 MT Bidding Round 4 Rs.100/Tonne RESULT: 1 MT quantity awarded @ Rs.100/Tonne over SCCL Notified Price

Other Important points The Notified price to be paid shall be suitably indexed by SCCL for subsequent years. Maximum bid quantity by a particular bidder shall not exceed the normative requirement of the End Use Plant. For auction of linkages, SCCL shall chalk out annual or 6-monthly auction calendar. There shall be provision for Third Party Sampling of coal supplied.  

Advantages of the Policy Transparent coal allotment system. It is a customer choice of selecting despatch point & Grade. 100% of normative requirement can be procured as against 75% earlier. Provision for Third party sampling for all customers Sector wise demarcation of auctioned quantity which result in continuous delivery of coal New units who are not having coal linkage or allotment at present are also eligible. Valid CFO is required. FSA will be signed for 5 years instead of present 3 years period. This will be extendable for another 5 years with mutual acceptance.

AOL STATUS IN SCCL SCCL conducted “Auction of linkages of non-regulated sector” in 4 phases (Tranche-1, Tranche-2 , Supp.Tranche and Tranche-3) for all 4 sectors (cement, CPP, Sponge and Others) from October 2016 to March 2018. A total quantity of 9.55 million tonnes was sold in the above auctions and 105 E-FSAs were signed with the successful bidders of cement, CPP, Sponge and others sectors. The coal supplies were commenced from 01-04-2017.

Performance of AUCTION OF LINKAGE –Tranche I , II , Supp Performance of AUCTION OF LINKAGE –Tranche I , II , Supp.Tranches and Tranche-III TRANCHES CEMENT CPP SPONGE IRON OTHERS TOTAL Offered Qty. in Lakh Tonnes Sold Qty. in Lakh Tonnes % SOLD Offered Qty. in Lakh Tonnes TRANCHE I 30.3 5.476 18.07 24.52 9.21 37.56 0.96 0.012 1.25 9.9 0.05 0.51 74.32 14.856 20.0 TRANCHE II 62.1 21.285 34.28 36.10 23.396 64.81 0.730 0.1806 24.74 29.065 8.599 29.59 134.565 55.086 40.9 SUPP. TRANCHE 6.661 1.65 24.96 0.40 0.392 98.00   10.58 6.135 57.99 17.59 8.177 46.5 TRANCHE-III 5.10 4.56 90 9.00 8.87 99 4.21 47 23.10 17.65 76 104.16 32.97 32 70.02 41.86 60 1.69 0.1926 11 58.4 18.99 249.5 95.7 38 4.5

OFFERED QUANTITES (SETOR WISE/MINE WISE/GRADE WISE) IN TRANCHE-III (PRESENT AUCTION OF LINKAGES)

AUCTION OF LINKAGES- Tranche III- SPONGE IRON SOURCE WISE OFFERED QTY FOR SPONGE IRON SUB SECTOR S.NO SOURCE(MINE IN CASE OF ROAD, CHP/ RLY SDG IN CASE OF RAIL) MODE GRADE & TYPE SIZE QTY IN TONNES RESERVE PRICE IN RS /T SECONDARY SOURCE/BACKUP MINE(TO BE USED IN CASE OF FORCE MAJEURE EVENT) GRADE & TYPE (SECONDARY SOUR CE) 1 RK-6 MINE (SRIRAMPUR AREA) ROAD G9-ROM - 75,000 2800 RK-5 G9-ROM/ ROAD 2 MNG OC II Extn.PH2 (OC IV) G7-CRR -250mm 100,000 3160 G9 CRR/ ROAD 3 RK-5 MINE (SRIRAMPUR AREA) RK-6 TOTAL   250,000 Willing Road customers can take Coal through Rail mode also NB : The Reserve price is as per Price Notified for Non-Power sector customers. CRR - Crushed SLK - Slack ROM - Run of Mine RND - Round

The scheme documents and model FSA are avilable in SCCL website: www The scheme documents and model FSA are avilable in SCCL website: www.scclmines.com/e-auction/auction of linkages and also on MSTC website (mstcecommecrce.com) Pl contact for any further clarification: NV Rajashekar Rao DGM/SCCL :9491144551 T.Srinivas DGM/SCCL : 9491144282 Sri Vikas Jaiswal MSTC: 09903042449

THANK YOU 20