Post on 10-Aug-2020
Coal India Limited Auction of Coal Linkages in the Sub-sectors of CPP (Phase IV of Tranche II) and Others (Phase III of Tranche II)
Pre Bid Presentation
This presentation is for ease of understanding of the Scheme by the Bidders. In case of any discrepancies between this presentation and the Scheme Document, the provisions of the Scheme Document will prevail.
March 20, 2017
AGENDA Background
Key Auction Principles
Auction Methodology
Key Terms
Eligibility Criteria
Conditions to E-Auction
E-Auction Process
Payments
Key FSA Terms & Modifications to existing FSA
BACKGROUND
Policy Guidelines for Auction
3
Proportion of coal allocation between power and non-power sector at 75% and 25% respectively as per CCEA decision
Sub-sectors could be Cement, Sponge Iron/Steel, Aluminium and Others [excl. Fertiliser (Urea)] including their CPPs etc.
Existing FSAs of non-regulated sector
No premature termination
No renewal except FSAs of CPSEs and Fertiliser (Urea)
In case CPSE’s want additional linkages they will have to participate in the auction for such additional quantity.
To start with, in the first Tranche, quantity shall be aggregate of FSAs of non-regulated sector maturing in FY2016 onwards & 25% of incremental CIL/SCCL production during FY2016 over FY2015.
Separate quantities to be earmarked for sub-sectors
CIL will allocate coal from area or mine within a subsidiary, as deemed fit
FSA tenure may be as decided by MoC, subject to a maximum tenure of 15 years
Policy Guidelines for Auction ...2
4
Bid parameter shall be Premium over Notified Price of coal
Auction methodology shall be Non Discriminatory Ascending Clock Auction
Auctioneer increments the Premium on electronic platform till demand supply equilibrium is established
Premium shall remain constant over contract period; Notified price to be paid shall be suitably indexed on semi annual basis
Bidders can bid up to normative annual coal requirement of the end use plant (EUP)
Provision for third party sampling for coal supplied
CIL/SCCL shall chalk out annual or 6-monthly auction calendar
5
Benefits to consumers over existing NCDP/ FSA provisions
Earlier Now
• Linkage quantity was 75% of normative quantity
• Consumers did not have freedom to choose source of supply as per their requirement
• Transportation cost varied as per allocation of sources
• Third Party Sampling provision was available only to consumers with ACQ of 4 LT and above
• Linkage quantity will be 100% of normative quantity
• Consumers have freedom to choose source of supply as per their requirement
• Transportation cost can be controlled as sources will be known beforehand
• Third Party Sampling provision is available to all consumers
KEY AUCTION PRINCIPLES
Sub-sectors for Auction
7
It has been decided to conduct the current auction of coal linkages under non-regulated
sector (Tranche II) under the following sub-sectors:
a) Sponge Iron (excluding its CPPs)
b) Cement (excluding its CPPs)
c) Others [excluding Fertilizer (urea) sector]
d) All Captive Power Plants (CPPs)
e) Coking Coal
All EUPs that do not fall under (a), (b), (d), and (e) above are included in “Others” sub-
sector
Under Tranche II, auction for ‘Sponge Iron’ and ‘Cement’ sub-sector was conducted
during Jan 17-25, 2017 (“Phase I”) and Feb 28 – Mar 07, 2017 (“Phase II”) respectively
Sub-sectors for Auction …2
8
Now auctions to be conducted for
o “Others” Sub-sector (“Phase III”). Quantity allocated to the “Others ” sub-sector is
~1.53 MT
o “CPP” Sub-sector (“Phase IV”). Quantity allocated to the “CPP” sub-sector to be
intimated
Cut-off date of Auction
9
For linkages which have expired / are due to expire by March 31, 2017, the following guidelines will apply:
o For bidder who participated in the auction and won back part / full of such quantity, the quantity won back shall be supplied till the execution of new FSA
o For bidder who has either not participated or not won back part / full of such quantity, the supply for quantity not won back shall be stopped after the last day of month in which the auction for the particular phase (i.e. sub sector) is concluded or after the expiry of such FSA whichever is later.
Bidders will not be allowed to bid for any linkage quantity against which they have a valid FSA which is expiring post March 31, 2017
For linkages which are due to expire post March 31, 2017, the extant coal supply arrangements from such linkages may continue till the next linkage auction’s Cut-off date (will be specified later)
Bidders with tapering linkages are allowed to participate in the linkage auction
Bidding Parameter
10
The auction will commence at the Reserve Price (Floor Price) and the bidders shall
bid for premium above the Reserve Price and for a particular Quantity.
Reserve Price
Reserve Price shall be the notified price published for a particular grade of coal
11
Timeline for Auction - CPP
Event Date
Publication of Notice Inviting Application Saturday, March 18, 2017
Upload of Scheme Document Saturday, March 18, 2017
Launch of Electronic Platform and Start of
Registration Process
Saturday, March 18, 2017
Period for submission of information,
documents and payments pertaining to
Conditions to Auction
Saturday, March 18, 2017 to at least one business day prior (till 17:00 hrs IST) to the date of auction of the
lot in which the bidder intends to participate
Pre-Bid Conference Monday, March 20, 2017
Mock Auction To be notified by MSTC
Scheduled Start of e-auction To be notified
12
Timeline for Auction - Others
Event Date
Publication of Notice Inviting Application Thursday, March 16, 2017
Upload of Scheme Document Thursday, March 16, 2017
Launch of Electronic Platform and Start of
Registration Process
Thursday, March 16, 2017
Period for submission of information,
documents and payments pertaining to
Conditions to Auction
Thursday, March 16, 2017 to at least one business day prior (till 17:00 hrs IST) to the date of auction of the
lot in which the bidder intends to participate
Pre-Bid Conference Monday, March 20, 2017
Mock Auction To be notified by MSTC
Scheduled Start of e-auction Friday, March 24, 2017
AUCTION METHODOLOGY: CPP Sub-sector
CPP
Auction Process
Online Electronic Auction Platform
Registration on Auction Platform; No physical bids
Conditions to Auction
Auction Platform to display Normative Coal Requirement across various grades.
Non-Discriminatory Ascending Clock Auction Process
Increase in Premium till Demand Supply equilibrium is established
Method of Bidding – Non-Discriminatory Ascending Clock Auction Process
CPP
15
Auction Process …2
Bidder should visit the website of MSTC website for registration www.mstcecommerce.com/auctionhome/coallinkage/index.jsp
Bidder registration on the Auction Platform is proposed to be linked to an End Use Plant (EUP)
Any Bidder as defined in the Scheme Document having one or more CPP Units i.e. Captive Power Plant units (in a single location within the same boundary) located in India shall be allowed to participate. CPPs associated with any type of manufacturing units are eligible to participate in the auction of the CPP sub-sectors.
Bidder will have to register each EUP on the MSTC system. Existing registered EUPs do not need to register again.
— Combination of units located within the same plant boundary is allowed to be registered as one EUP. However, once the units are combined and registered as single EUP, they cannot be split subsequently.
— It may be noted that bidders already registered for the coal linkage auctions under Previous tranches conducted by Coal India Limited or SCCL must necessarily use the same registration for the same End Use Plant.
CPP
16
Auction Process …3
Bidder registering under the auction portal for the first time, shall provide the following as part of the registration process:
– Company Name
– Name of EUP (auction portal will generate a unique registration number for each EUP)
– Sub-sector in which each EUP is applying
– Self-attested copy of Income Tax PAN Card
– Self-attested copy of VAT/ CST Registration certificate
CPP
Auction Process ...4
17
Auction process shall consist of: Conditions to Auction and Non-Discriminatory Ascending
Clock Auction Process
As a part of Conditions to Auction, Bidders shall provide the following details:
EUPs registering for the first time
— Technical data of EUP
— Details of any existing coal linkages (expiring post March 31, 2017) for the above EUP
— Details of any coal mine allocated under CMSP and/or MMDR Acts
EUPs already registered on the auction platform
— Details of coal linkages that has expired or going to expire between the cut-off date for
Tranche I and March 31, 2017
CPP
Auction Process ...5
18
Based on the information provided by the Bidder, the system will calculate the Normative
Coal Requirement of the EUP:
— Following this the Bidder shall deposit the necessary Bid Security and the Process Fee
— Bidders shall also submit certain other documents (both hard copy and soft copy format)
such as Notarized Power of Attorney and Affidavit, Board Resolution (if required) etc.
— Post submission of the requisite information/payments, e-auction process will commence
wherein the bidders are required to bid for quantity against a certain price
CPP
Auction Process ...6
19
After completion of the auction of each Lot, Successful Bidder(s) for that lot will be
announced.
Such Successful Bidder(s) shall be issued a Letter of Intent (“LOI”) within 15 days of
completion of the Phase IV Auction which will include the cumulative Allocated Quantity
of such Bidder from the relevant CIL subsidiary, pursuant to the Phase III Auction.
The Successful Bidder shall, within 45 (forty five) days of issuance of the LOI to it, submit
the Performance Security to the relevant Subsidiary.
The Agreement (FSA) shall be executed between the Successful Bidder and the relevant
Subsidiary in respect of the Allocated Quantity within 30 (thirty) days of:
— receipt of the Performance Security; and
— submission of the documents specified in Scheme Document.
Bidders will have to execute separate FSAs for each Lot where they emerge as Successful
Bidders.
CPP
AUCTION METHODOLOGY: Others Sub-sector
Others
Auction Process
Online Electronic Auction Platform
Registration on Auction Platform; No physical bids
Conditions to Auction
Bidder to submit his self assessed Coal Requirement.
Auction Platform to display Normative Coal Requirement across various grades.
Non-Discriminatory Ascending Clock Auction Process
Increase in Premium till Demand Supply equilibrium is established
Method of Bidding – Non-Discriminatory Ascending Clock Auction Process
Others
22
Auction Process …2
Bidder should visit the website of MSTC website for registration www.mstcecommerce.com/auctionhome/coallinkage/index.jsp
Bidder registration on the Auction Platform is proposed to be linked to an End Use Plant (EUP)
Participation
“Others” sub-sector shall cover Specified End Use Plants that belong to sectors other than Cement, Sponge Iron, Fertilizers (urea) and Captive Power Plants. Co-generation plants that have not participated / participating in Tranche I and Tranche II of the auction of coal-linkages in the captive power sub-sector shall however, be included within the term “Others”.
“Specified End Use Plant” shall mean one or more industrial units belonging to the Others operating in the non-regulated sector and belonging to the same industry (in a single location within the same boundary) located in India and owned by the Bidder, the particulars of which are submitted in accordance with the provisions of the Scheme Document.
Others
23
Auction Process …3
Bidder will have to register each EUP on the MSTC system. Existing registered EUPs do not need to register again.
— Combination of units located within the same plant boundary is allowed to be registered as one EUP. However, once the units are combined and registered as single EUP, they cannot be split subsequently.
— It may be noted that bidders already registered for the coal linkage auctions under Previous tranches conducted by Coal India Limited or SCCL must necessarily use the same registration for the same End Use Plant.
Bidder registering under the auction portal for the first time, shall provide the following as part of the registration process:
– Company Name
– Name of EUP (auction portal will generate a unique registration number for each EUP)
– Sub-sector in which each EUP is applying
– Self-attested copy of Income Tax PAN Card
– Self-attested copy of VAT/ CST Registration certificate
Others
Auction Process ...4
24
Auction process shall consist of: Conditions to Auction and Non-Discriminatory Ascending
Clock Auction Process
As a part of Conditions to Auction, Bidders shall provide the following details:
EUPs registering for the first time
— Coal Requirement (in TPA) of the EUP in G10 Grade at 85% capacity utilization, calculated
either:
• On the basis of the norms specified in CIMFR Report titled “Setting up of modalities for
normative coal requirement of different industries” dated May 2015 if applicable; (available on
https://www.mstcecommerce.com/auctionhome/Layouts/notice-coal-linkage.html); or
• On the basis of Bidder’s own norms/ formula in case the consumption norms of the EUPs are
not specified in the above mentioned CIMFR Report, provided that such calculation is
reasonable, genuine, justified and logical.
Others
Auction Process ...5
25
— Technical data of EUP
— Details of any existing coal linkages (expiring post March 31, 2017) for the above EUP
— Details of any coal mine allocated under CMSP and/or MMDR Acts
EUPs already registered on the auction platform
— Details of coal linkages that have expired or going to expire between the cut-off date for
Tranche I and March 31, 2017
Others
Auction Process ...6
26
Based on the information provided by the Bidder, the system will calculate the Normative
Coal Requirement of the EUP:
— Following this the Bidder shall deposit the necessary Bid Security and the Process Fee
— Bidders shall submit documents evidencing the basis of computation of the Coal
Requirement in pdf format, with size not exceeding 4 MB and not more than 10 pages.
— Bidders shall also submit certain other documents (both hard copy and soft copy format)
such as Notarized Power of Attorney and Affidavit, Board Resolution (if required) etc.
— Post submission of the requisite information/payments, e-auction process will commence
wherein the bidders are required to bid for quantity against a certain price
Others
Auction Process ...7
27
After completion of the auction of each Lot, Successful Bidder(s) for that lot will be announced.
The quantity allocated to Successful Bidders will be called “Provisional Allocated Quantity”.
Successful Bidder(s) shall be issued a Letter of Intent (“Provisional LOI”) within 15 (fifteen) days of completion of the Phase III Auction.
Within 60 days of completion of the Phase III Auction (Verification Period), Successful Bidders shall get their Coal Requirement verified from Verification Agencies.
If the verified Coal Requirement is less than the Coal Requirement specified by the Successful Bidder,
The Provisional Allocated Quantities will be decreased by the percentage (Deficit Percentage) wherein
𝑫𝒆𝒇𝒊𝒄𝒊𝒕 𝑷𝒆𝒓𝒄𝒆𝒏𝒕𝒂𝒈𝒆 = 𝑪𝒐𝒂𝒍 𝑹𝒆𝒒𝒖𝒊𝒓𝒆𝒎𝒆𝒏𝒕 − 𝑽𝒆𝒓𝒊𝒇𝒊𝒆𝒅 𝑪𝒐𝒂𝒍 𝑹𝒆𝒒𝒖𝒊𝒓𝒆𝒎𝒆𝒏𝒕
𝑵𝒐𝒓𝒎𝒂𝒕𝒊𝒗𝒆 𝑪𝒐𝒂𝒍 𝑹𝒆𝒒𝒖𝒊𝒓𝒆𝒎𝒆𝒏𝒕 𝒃𝒆𝒇𝒐𝒓𝒆 𝒗𝒆𝒓𝒊𝒇𝒊𝒄𝒂𝒕𝒊𝒐𝒏 × 100
Such reduced quantities will be rounded down to the nearest integer multiple of the Transport Factor and will be declared as the Allocated Quantity.
If the verified Coal Requirement is more than the Coal Requirement specified by the Successful Bidder, then the Provisional Allocated Quantity will be rounded down to the nearest integer multiple of the Transport Factor and will be declared as the Allocated Quantity.
If the verified Coal Requirement comes out to be less than 4,200 TPA, such Successful Bidders will no more be considered to be Successful Bidders.
Others
Example– Allocated Quantity post Verification
28
An example of determination of Allocated Quantity post verification of the Coal Requirement for a Successful Bidder is provided below:
Lot
Provisional Allocated Quantity
(TPA) (B)
Reduction based on Deficit Percentage (TPA)
(C = B x A)
Entitled Quantity (TPA)
(D = B – C)
Allocated Quantity (TPA)
post Adjustment for Transport Factor
1 30,000 5,400 24,600 24,600
2 48,000 8,640 39,360 39,300
3 20,300 3,654 16,646 16,600
Description Values before
verification of Coal Requirement
Values after verification of Coal
Requirement
Coal Requirement of EUP 150,000 132,000 Existing Linkage Quantity (deemed to be of G10 Grade) 20,000 20,000
Quantity of Coal allocated Mine in G10 Grade Equivalent 30,000 30,000 Normative Coal Requirement (in TPA) 100,000 82,000
Deficit (difference between the Normative Coal Requirements before and after verification) (in TPA)
18,000
Deficit Percentage (A = Deficit / Normative Coal Requirement before verification)*100
18.00%
Others
Auction Process ...8
29
In case the Successful Bidders fails to get the coal requirement verified within Verification Period, the Provisional Allocated Quantity to which the relevant Bidder had become entitled to shall automatically be cancelled at the end of the Verification Period
Successful Bidder(s) shall be issued a Letter of Intent (“LOI”) after completion of the Verification Period, which will include the cumulative Allocated Quantity of such Bidder from the relevant CIL subsidiary pursuant to Phase IV auction.
The Successful Bidder shall, within 45 (forty five) days of issuance of the LOI to it, submit the Performance Security to the relevant Subsidiary.
The Agreement (FSA) shall be executed between the Successful Bidder and the relevant Subsidiary in respect of the Allocated Quantity within 30 (thirty) days of:
— receipt of the Performance Security; and
— submission of the documents specified in Scheme Document.
Bidders will have to execute separate FSAs for each Lot where they emerge as Successful Bidders.
Others
Auction Process ...9
30
CIL/ the relevant Subsidiary reserves the right to get the Coal Requirement of the Successful Bidder verified by Central Institute of Mining & Fuel Research (“CIMFR”) or any other agency that may be nominated by CIL (“Final Verification Agency”), within 180 (one hundred eighty) days of execution of the relevant Agreement.
In case the Coal Requirement verified by the Final Verification Agency is lower than (i) Coal Requirement verified and certified by the Verification Agency and (ii) Coal Requirement specified by the Successful Bidder,
then the Allocated Quantity will be subject to further downward adjustment based on principles similar to those followed during the verification conducted by the Verification Agency (i.e. If the verified Coal Requirement is less than the Coal Requirement specified by the Successful Bidder) subject to necessary changes.
The excess supply already made, if any, due to aforesaid further downward revision shall be adjusted during the residual period of the initial 2 (two) years from the execution of the relevant Agreement.
For the balance term of the Agreement, the revised Allocated Quantity will be supplied.
Others
Auction Process ...10
31
In case the Coal Requirement verified by the Final Verification Agency is more than: (A) the Coal Requirement specified by the Successful Bidder; or (B) the Coal Required verified by the Verification Agency, then the Allocated Quantity will not be subject to revision / adjustment.
In the event the Normative Coal Requirement calculated based the Coal Requirement verified by the Final Verification Agency is less than 4,200 TPA, the Successful Bidder shall not be entitled to receive any coal pursuant to the Scheme and the Agreement(s) entered into by the Successful Bidders with the relevant Subsidiary(ies) shall stand terminated.
Others
Auction Process ...11
32
Illustration: Verification of Coal Requirement and adjustment of Provisional Allocated Quantity
Description Formula Quantity (in TPA)
Coal Requirement (as per Bidder’s self-assessment) A 1,50,000 Existing Linkage Quantity (deemed as G10 Grade) B 20,000 Quantity of coal allocated from the Mine (computed as G10 Grade equivalent)
C 30,000
Normative Coal Requirement (based on Bidder’s self-assessed Coal Requirement)
D = A - B – C 100,000
Provisional Allocated Quantity Lot 1 (after adjustment for Transport Factor) E 25,000 Lot 2 (after adjustment for Transport Factor) F 22,000 Lot 3 (after adjustment for Transport Factor) G 18,000 Coal Requirement (as per the Verification Agency) H 1,32,000 Normative Coal Requirement (based on Coal Requirement as per the Verification Agency)
I = H - B - C 82,000
Deficit (in case H is lower than A) J = A – H 18,000 Deficit % K = J/D × 100 18.00% Allocated Quantities post verification by Verification Agency Lot 1 (after adjustment for Transport Factor) L = E × (1-K) 20,500 Lot 2 (after adjustment for Transport Factor) M = F × (1-K) 18,000 Lot 3 (after adjustment for Transport Factor) N= G × (1-K) 14,700 Coal Requirement (as per the Final Verification Agency) O 1,18,000 Normative Coal Requirement (based on Coal Requirement as per the Final Verification Agency)
P = O - B – C 68,000
Deficit (in case O is lower than both A and H) Q = A - O 32,000 Deficit % R = Q/D × 100 32.00%
Allocated Quantities post verification by Final Verification Agency Lot 1 (after adjustment for Transport Factor) S = E × (1-R) 17,000 Lot 2 (after adjustment for Transport Factor) T = F × (1-R) 14,900 Lot 3 (after adjustment for Transport Factor) U = G × (1-R) 12,200
Others
Auction Process ...12
33
Illustration: Adjustment of Allocated Quantity post verification by the Final Verification Agency
Description Formula Value
Allocated Quantity for a particular Lot A 20,500 TPA
Time taken by the Final Verification Agency to verify the Coal Requirement B 4 months
Say, total quantity supplied prior to the verification by the Final Verification Agency C 8,500 Tonnes
Allocated Quantity post verification by the Final Verification Agency D 17,065 TPA
Allocated Quantity post verification by the Final Verification Agency (post adjustment for the Transport Factor)
E 17,000 TPA
Excess supply before the verification by Final Verification Agency is available F= C – (E ×
B/12) 2,833 Tonnes
Residual Period G = 24 - B 20 months
Required Monthly Adjustment H = F /G 142 Tonnes
Quantity to be supplied monthly during the Residual Period I = (E/12) - H 1,275 Tonnes
The figures have been rounded off for the purpose of this illustration.
Others
KEY TERMS
Normative Coal Requirement
35
As per Para 2(g) of the Policy, maximum bid quantity by a particular bidder shall not exceed the Normative Coal Requirement of the End Use Plant (EUP).
Normative Coal Requirement for each EUP in the “CPP” sub-sector will be calculated by the auction platform based on the norms as worked out by CEA and communicated by Ministry of Power via its Office Memorandum No. FU-35/2014 – IPC dated January 15, 2015.
Normative Coal Requirement for each EUP in the “Others” Sub-Sector will be calculated by the auction platform based on the self assessed Coal Requirement and other inputs provided by the Bidders on the auction platform.
Normative Coal Requirement…2
36
Normative Coal Requirement (MTPA)
𝑁𝑜𝑟𝑚𝑎𝑡𝑖𝑣𝑒 𝐸𝑛𝑒𝑟𝑔𝑦 𝑅𝑒𝑞𝑢𝑖𝑟𝑒𝑚𝑒𝑛𝑡 (𝑘𝑐𝑎𝑙 𝑝𝑒𝑟 𝑎𝑛𝑛𝑢𝑚)
109 × 𝐺𝑟𝑜𝑠𝑠 𝐶𝑎𝑙𝑜𝑟𝑖𝑓𝑖𝑐 𝑉𝑎𝑙𝑢𝑒 𝑜𝑓 𝑎 𝑝𝑎𝑟𝑡𝑖𝑐𝑢𝑙𝑎𝑟 𝐺𝑟𝑎𝑑𝑒 𝑜𝑓 𝐶𝑜𝑎𝑙
Normative Energy Requirement (kcal per annum)
Annual coal requirement of the Specified End Use Plant (calculated in kcal on the basis of the CIMFR Norms)
minus Coal requirement of the Specified End Use Plant (in kcal)@ met through any other existing coal linkage(s)
minus Coal requirement of the Specified End Use Plant (in kcal) met through any captive coal mine(s)
minus Coal requirement of the Specified End Use Plant (in kcal) met through any allocation of coal linkage(s) pursuant to auction process of any lot conducted by CIL and/ or by SCCL *Coal requirement of the Specified End Use Plant (in kcal) met through any other existing coal linkage(s) shall be estimated on the basis of Annual Contracted Quantity under the existing linkage(s) wherein such Annual Contacted Quantity shall be deemed to be of G10 grade of coal. Any valid FSA held by the Bidder, which is expiring after March 31, 2017 will be considered as an existing linkage.
CPP
37
Example – Normative Coal Requirement Calculation
Particulars Unit
Annual Capacity of Specified End Use Plant MW (A) 200
Unit Heat Rate kcal/kwh (B) 2500 Capacity Utilisation (C) 85% Existing Linkage Quantity TPA (D) 4,200 Deemed Grade of Coal Allocated through Linkage
G10
Quantity of Coal allocated for the Specified End Use Plant from the Mine
TPA (E) 66,667
Grade of Coal from Mine G10 GCV of G10 grade of coal kcal/kg (F) 4,300 Consumption Norm based on G10 grade Tonne/MW per annum (G) 4,329
Annual Coal Requirement of the Specified End Use Plant (based on G10 grade)
TPA (H = A*G) 8,65,800
Annual energy requirement of the Specified End Use Plant
Kcal (I = H*F*1000) 3.722 x 10^12
Annual energy requirement of the Specified End Use Plant met through existing coal linkage
Kcal (J = D*F*1000) 1.806 x 10^10
Annual energy requirement of the Specified End Use Plant met through captive coal mine
Kcal (K = E*F*1000) 2.866 x 10^11
Normative Energy Requirement Kcal (L = I-J-K) 3.418 x 10^12 GCV of G8 grade of coal kcal/kg (M) 4,900 Normative Coal Requirement (based on G8 grade)
TPA (N=L/(M*1000)) 6,97,594
CPP
38
Further in addition to the foregoing illustration, if the bidder is successful in the Lot of G8 grade of coal for a quantity of 20,000 TPA (or 0.02 MTPA), the Normative Coal Requirement for say Lot with G9 grade coal would be as under::
Particulars Unit Normative Coal Requirement (based on G8 grade)
TPA (A) 6,97,594
Allocated Quantity in Lot with G8 grade
TPA (B) 20,000
Available Normative Coal Requirement (based on G8 grade)
TPA (C=A-B) 6,77,594
GCV of G8 grade of coal (D) 4,900 GCV of G9 grade of coal (E) 4,600 Normative Coal Requirement (based on G9 grade)
TPA (F=C*D/E) 7,21,785
Example – Normative Coal Requirement Calculation (contd)
CPP
Normative Coal Requirement…3
39
Normative Coal Requirement (TPA)
Coal Requirement (in TPA)
minus
Annual coal requirement of the EUP met through any existing coal linkage(s) under NCDP, which shall be calculated on the basis of the annual contracted quantity wherein such annual contracted quantity shall be deemed to be of G10 grade of coal, irrespective of actual contracted grade
minus
Annual coal requirement of the EUP met through any captive coal mine(s), which shall be computed on the basis of G10 grade of coal
minus
Annual coal requirement of the EUP met through any allocation of coal linkage(s) pursuant to auction process of any lot conducted by CIL or SCCL, which shall be computed on the basis of G10 grade of coal.
Others
40
Example – Normative Coal Requirement Calculation
Others
• The Coal Requirement submitted by the Bidder on the Electronic Platform is 42,697 of G10 equivalent grade of coal with an existing linkage of 2,000 TPA.
• Also, a mine X with peak rated capacity of 48,000 TPA of G9 grade of coal has been allocated for captive consumption to the Unit A and Unit B whose annual coal requirement is in the ratio of 1:5.
• For the purpose of assessment of Normative Coal Requirement of Unit A, it would be considered that the requirement of Unit A and Unit B has been met to the extent of 8,000 TPA and 40,000 TPA respectively i.e. 48,000 TPA allocated in the ratio of 1:5.
• The Normative Coal Requirement of the Specified End Use Plant for G8 grade of coal shall be assessed as follows:
41
Example – Normative Coal Requirement Calculation (contd)
Others
Particulars Unit
Coal Requirement of Specified End Use Plant TPA (A) 42,697
Existing Linkage Quantity TPA (B) 2,000 Deemed Grade of Coal Allocated through Linkage G10
Quantity of Coal allocated for the Specified End Use Plant from the Mine
TPA (C) 8,000
Grade of Coal from Mine G9 Average GCV of G9 grade of coal kcal/kg (D) 4,750 Average GCV of G10 grade of coal kcal/kg (E) 4,450
Quantity of Coal allocated for the Specified End Use Plant from the Mine in G10 grade of coal
TPA (F = C x D/E) 8,539
Normative Coal Requirement of Specified End Use Plant not being met pursuant to an existing linkage or mine or allocation of coal linkage pursuant to an auction process under this Scheme and/ or by SCCL
TPA (G = A – B – F) 32,158
Average GCV of G8 grade of coal kcal/kg (H) 5,050 Normative Coal Requirement (based on G8 grade) TPA (I = G x E/ H) 28,337
42
Further in addition to the illustration provided above, if the above Bidder is successful in the Lot of G8 grade of coal for a quantity of 12,000 TPA, the Normative Coal Requirement for a subsequent Lot with G9 grade coal would be assessed as under:
Particulars Unit Normative Coal Requirement (based on G8 grade) TPA (A) 28,337 Allocated Quantity in Lot with G8 grade TPA (B) 12,000 Available Normative Coal Requirement (based on G8 grade)
TPA (C=A-B) 16,337
Average GCV of G8 grade of coal kcal/kg (D) 5,050 Average GCV of G9 grade of coal kcal/kg (E) 4,750 Normative Coal Requirement (based on G9 grade) TPA (F=C × D/E) 17,369
Others Example – Normative Coal Requirement Calculation (contd)
Lots
43
‘Lot’ shall mean a specified quantity of coal belonging to a particular grade which is to be
offered for sale and which may be dispatched by road or by rail.
Each Lot will contain only one Grade.
Each Lot will also have a pre-identified Secondary Source.
Each Lot will have a specified mode of dispatch i.e. road or rail. Bidders will have to off-take coal
from Lots via the specified mode of dispatch only.
In case of a force majeure event or other operational constraints, CIL may supply coal from other
mine(s) (Road Sale Points)/ railway siding i.e. Secondary Source and make necessary steps to
revert to the primary source as soon as it is operationally possible.
Details of Lots have been provided in the Scheme Document
S. No.
Subsidiary Name
Mine/ Siding
Mode Grade/Size Quantity Notified Price
Secondary Source
Specified End Use Plant for CPP Sub-Sector
44
Company ‘A’ has an manufacturing Plant and a CPP unit Only the CPP unit will participate for auction of Lots under the CPP sub-sector Accordingly, Bidder to mention the plant capacity of CPP units strictly Bidders having multiple CPPs within the same plant boundary can combine such CPPs and register as one EUP.
Manufacturing Plant
CPP Unit
Specified End Use Plant” shall mean a CPP Unit (or a combination of CPP units within a single plant boundary) located in India and owned by the Bidder
CPP 1 CPP 2 CPP 3
EUP 1
Specified End Use Plant for Others Sub-Sector
45
Company ‘A’ has a manufacturing unit (under “Others), a CPP Unit and a Cogeneration unit Only the Manufacturing unit, or the Cogeneration unit (if not participating or previously participated under CPP) will participate for auction of Lots under the Others sub-sector Accordingly, Bidder to mention the Coal Requirement and related details of the manufacturing unit and Cogen unit only Bidders having multiple units within the same plant boundary and belonging to the same industry can combine such units and register as one EUP. Manufacturing units and Cogen units cannot be combined into a single EUP.
Manufacturing unit
CPP Unit
Specified End Use Plant” shall an industrial unit (or a combination thereof belonging to the same industry, within a single plant boundary) located in India and owned by the Bidder
Unit 1 Unit 2 Unit 3 EUP 1
Cogen Unit
Unit 1 Unit 2 Unit 3 EUP 2
Auction Sequence
46
Auction will be conducted sequentially and the sequence of Lots will be provided upfront to the Bidders.
3 (Three) Lots will be put up for auction each day as under
First round of auction will be of 15 mins followed by subsequent round(s) of 8 mins each. The process will continue till the Demand Supply Ratio is less than or equal to 100% for a particular round
This process will be repeated each day for auction of subsequent lots i.e. Lot 4 will be put up for auction on Day 2 at 11:00 hrs, Lot 5 at 14:00 hrs and so on
In case the auction of any Lot spills over to the time of the next Lot(s), then the auction of next Lot(s) will be deferred and will be conducted at the end of auction of the last Lot as per the auction sequence.
For Example: There are 15 Lots (numbered L1 to L15) for a sub-sector with a proposed auction sequence of 3 Lots per day at 11:00 HRS, 14:00 HRS and 17:00 HRS respectively. In case the auction of Lot L1 continues till 17:01 HRS on Day 1, auction of Lot L2 and Lot L3 will be deferred and will be conducted after the auction of Lot L15.
Lot No. Time of Day
1 11:00 hrs
2 14:00 hrs
3 17:00 hrs
ELIGIBILITY CRITERIA
Eligibility Criteria
48
• Any resident Indian Person including a Proprietorship/partnership firm registered in India
• Companies incorporated in India
Composition of the Bidder
• Bidder to own the EUP
• EUP to be located in India
• Coal to be used for own consumption
Ownership of End Use Plant (EUP)
• EUPs should have commenced commercial operations
Status of End Use Plant
• Calculated at 85% Plant Capacity Utilisation and bidders may bid up to 100% of their Normative Coal Requirement
• To be net of requirement being met from other linkages and / or captive coal mine
• Minimum Normative Coal Requirement should be 4,200 TPA
Normative Coal Requirement
Eligibility Criteria …2
49
• With respect to one specified EUP, Bidder is required to submit information/documents and payments as required under Conditions to e-Auction
• With respect to one EUP, the Bidder may submit financial bid for multiple Lots
No. of Bids by a Bidder
• Bidders with criminal conviction with respect to misutilisation of coal allocated through FSA will not be eligible.
• No transfer of linkage is allowed under the current linkage auction process. However change of control may be considered as specified in the Scheme Document.
Other Conditions
CONDITIONS TO E-AUCTION
EUP Details
51
As a part of Conditions to Auction, Bidders shall provide their EUP details for computation of
the Normative Coal Requirement of the plant.
Following Details are required for this purpose:
Bidders registering for the first time
Details of the EUP including capacity [CPP]
Details of Coal Requirement and plant capacity [Others]
Details of existing coal linkage(s) if any
Details of existing Captive Coal Mine, if any
Details of coal linkages that have expired or going to expire between the cut-off date
for Tranche I and March 31, 2017
The same are required in the format as provided on the electronic platform.
Bidders already registered on the auction platform
Bid Security
52
Bidder shall furnish, a bid security in the form of an Earnest Money Deposit (EMD)
The Bid Security shall be Rs. 100 per tonne of the quantity the bidder intends to bid across various Lots
The payments made by Bidders towards the Bid Security shall be collected in a designated bank account as mentioned in the Scheme Document
The Bidder shall ensure that at any time during the auction process, its Bid Security is adequate vis-à-vis the intended Link Quantity
The Bidder has the flexibility to top up the Bid Security at least 1 business day prior to the scheduled auction of Coal Linkages pertaining to the Lot
Under no circumstances, the bidder shall be allowed to bid for a quantity for which the Bid Security has not been deposited
Refund of Bid Security [CPP Sub-sector]
The Bid Security pertaining to the Allocated Quantity of the Successful Bidder will be returned by the relevant Subsidiary to the Successful Bidder, without any interest, post submission of executed copies of FSA to the relevant Subsidiary
The balance Bid Security of the Successful Bidder, if any, and the entire Bid Security of unsuccessful Bidders shall be returned without any interest, post completion of the Phase IV Auction
Bid Security
53
Refund of Bid Security [Others Sub-sector]
Unless stated otherwise in this Scheme Document, Bid Security with respect to quantities not allocated to the Bidder/ Successful Bidder, as the case may be, will be returned by the Service Provider to the Successful Bidder or Bidder, without any interest, post completion of the Phase III Auction
The Bid Security pertaining to the difference between the Provisional Allocated Quantity and the Allocated Quantity of the Successful Bidder, if any, will be returned by the relevant Subsidiary to the Successful Bidder, without any interest, post the Verification Period; and
the Bid Security pertaining to the Allocated Quantity of the Successful Bidder will be returned by the relevant Subsidiary to the Successful Bidder, without any interest, post submission of executed copies of Agreement to the relevant Subsidiary; and
the Bid Security pertaining to the Provisional Allocated Quantity shall be returned by the relevant subsidiary without any interest, post completion of the Verification Period, in case the verification contemplated in Clause 3.5.2(j) of the Scheme Document is not completed within the Verification Period or in case the Coal Requirement verified by the Verification Agency is less than 4200 TPA.
Bid Security …2
54
Conditions for forfeiture of Bid Security
The information, documents and/ or payments with respect to the Conditions to Auction are determined to be non-responsive
Engagement in a Corrupt Practice, Fraudulent Practice, Coercive Practice, Undesirable Practice or Restrictive Practice
In case of a Successful Bidder, failure to submit within 45 days of issuance of the LOI, the following:
Performance Security
The documents specified in under the Annexure for “Documents to be submitted to the Relevant Subsidiary prior to execution of the Agreement” of the Scheme Document and other documents as may be requested by CIL or the relevant Subsidiary
Failure to execute the Agreement within the time period specified in the Scheme Document
In which case, the Bidder will also cease to be a Successful Bidder.
Process Fee
55
Along with Bid Security, the Bidders shall also be required to submit a process fee in the form of an earnest money deposit within the stipulated timeline which is Rs. 2.50 per tonne (inclusive of service tax) multiplied by the Link Quantity across various Lots
The Bidder shall ensure that the Process Fee shall, at any time during the auction process, correspond to its intended Link Quantity across various Lots
In case a Bidder decides to change the bidding strategy by opting to Bid for a different Link Quantity in a specific Lot, which requires additional Process Fee to be paid, the Bidder shall be required to top up the Process Fee no later than 1 business day prior to the scheduled auction of the Coal Linkages from the relevant Lot
The payments made by Bidders towards the Process Fee will be paid into a bank account as stipulated in the Scheme Document
The Process Fee pertaining to the Allocated Quantities of each Successful Bidder [CPP Sub-sector] / Provisional Allocated Quantities of each Successful Bidder [Others Sub-sector] will be debited towards transaction expenses for running the auction process and the balance shall be refunded, without interest
In the event that a Bidder does not qualify as a Successful Bidder, the entire amount of the Process Fee, without any interest, shall be refunded to such Bidder after completion of the given Phase of Auction
Other Documents
56
A power of attorney along with a certified true copy of the relevant authorizations in support
thereof e.g. letter of authority, resolution of the board of directors, resolution of the shareholders
etc.
An affidavit certifying inter alia that they meet all the Eligibility Conditions required for participation
in the auction process hereunder.
An Undertaking to perform activities required for submitting the bid in the manner prescribed in the
Scheme Document and certifying that they shall continue to satisfy all the Eligibility Conditions.
Documents evidencing the basis of computation of the Coal Requirement. The document should be
in PDF format and the document should not be more than 4MB and not more than 10 pages.
Formats for the Power of Attorney, the Affidavit and the Undertaking will be provided in the Scheme Document.
Proviso for Co-generation CPPs
57
A coal based co-generation CPP may formally declare itself as a CPP and participate in the linkage auction
of the CPP sub-sector on the basis of the coal consumption norms stipulated by Central Electricity
Authority on 15.01.2015.
Alternatively, a coal based co-generation CPP can choose not to classify itself as a CPP and participate in
the “Others” sub-sector.
A coal based co-generation CPP plant can only participate in one of the two sub-sectors, i.e. “CPP” or
“Others” and will not be entitled for any additional coal requirement beyond what will be assessed in the
sub-sector where it participates.
In case the Co-generation CPP chooses to participate in the CPP Sub-sector, the Bidder will have to submit
an amended affidavit (in place of the standard format of affidavit provided in Annexure IV of this Scheme
Document. The draft of the amended affidavit is provided at Annexure XI.
It may be noted that bidders already registered for the coal linkage auctions under Previous tranches
conducted by Coal India Limited or SCCL must necessarily use the same registration for the same End Use
Plant.
E-AUCTION PROCESS
Electronic Auction Process
59
Coal quantity will be allocated by Non-Discriminatory Ascending Clock Auction
For a particular sub-sector, Lots shall be auctioned sequentially
– However, two or more Lots for different sub-sectors may be auctioned simultaneously
For a particular Lot,
– The auction process shall be conducted in rounds
– The Auction Platform will calculate the premium for each auction round depending on the Demand – Supply Ratio of the immediately preceding round
𝐷𝑒𝑚𝑎𝑛𝑑 𝑆𝑢𝑝𝑝𝑙𝑦 𝑅𝑎𝑡𝑖𝑜 % = 𝑇𝑜𝑡𝑎𝑙 𝐵𝑖𝑑 𝑄𝑢𝑎𝑛𝑡𝑖𝑡𝑦 𝑜𝑓 𝑎𝑙𝑙 𝐵𝑖𝑑𝑑𝑒𝑟𝑠 𝑖𝑛 𝑎 𝐿𝑜𝑡 (𝑇𝑃𝐴)
𝐿𝑜𝑡 𝑆𝑖𝑧𝑒 (𝑇𝑃𝐴)
– Bidders are required to indicate quantity (“Link Quantity”) against premium quoted for each successive round of auction
– The Bidders cannot increase the quantity between the previous and subsequent round
– Not entering any quantity in a particular round will imply “Zero” quantity entered and therefore the bidder will not be able to bid for any quantity in the subsequent rounds.
– Auction stops when Demand Supply Ratio is less than or equal to 100% for a particular round
– The round at which the auction stops and penultimate round will be compared and the sale of coal from the round generating maximum revenue will be selected
60
The Bid Quantity (“Link Quantity”) will be the minimum of Normative Coal
Requirement or the quantity offered in a particular Lot.
The Link Quantity will be integer multiples of the 100 TPA, the “Transport Factor”
The minimum Link Quantity in any round for rail mode shall be 4,000 TPA
At the end of each round, bidders will be told the Demand Supply Ratio of that round
and the corresponding Premium of the next round and the bidder shall quote the Link
Quantity required under each Round subject to the following conditions:
— The Link Quantity is lower than or equal to the Link Quantity quoted in the previous Round
— The Link Quantity will be an integer multiple of 100 TPA
Electronic Auction Process…2
Round Premium
61
Premium for the first round will be Rs. Zero/ tonne
Round Premiums (other than the first Round) will depend on the Demand/Supply Ratio of the
immediately preceding round and will be determined by the Auction Platform as follows:
Premium would be cumulative i.e. Premium for a particular round would be the premium at
the preceding round plus the premium computed for the current round.
Demand/Supply Ratio in a particular round Incremental Round Premium (Rs. per tonne)
Greater than 100% and less than or equal to 125% 10
Greater than 125% and less than or equal to 200% 25
Greater than 200% and less than or equal to 300% 50
Greater than 300% 100
62
Example - Non-Discriminatory Ascending Clock Auction
30 MT @ INR 1200/tonne
20 MT @ INR 1300/tonne
Ascending Price with Demand Converging to 9 MT Quantity Offered
15 MT @ INR 1350/tonne
13 MT @ INR 1375/tonne
11 MT @ INR 1400/tonne
9 MT @ INR 1410/tonne
100/tonne as Demand/Supply 333%
50/tonne as Demand/Supply 222%
25/tonne as Demand/Supply 166%
25/tonne as Demand/Supply 144%
10/tonne as Demand/Supply 122%
Price Increment
Allocated Quantity
63
Each round will be considered a valid offer to purchase the Link Quantity at the stated price. Moving to the next round does not mean the previous offer is discarded or becomes invalid.
The auction will stop once the Demand Supply Ratio is lower than or equal to 100%.
In case in any of these rounds the Demand Supply Ratio is more than 100%, bidders will be allocated their pro-rata share (rounded down to the nearest multiple of the Transport Factor).
For example in case the pro-rata allocation of a bidder is 11,515 TPA for a Lot, the final allocation to be computed by the portal would be 11,500 TPA.
The revenue from the last and the penultimate rounds will be compared and the and the round generating maximum revenue for CIL will be selected.
For rounds where Demand Supply Ratio is more than 100%, the rounded down pro-rata quantity will be used for calculating the revenue to CIL.
CPP
Example – Allocated Quantity
64
Assuming a railway siding as the delivery point, If the round at which the auction stops has Demand Supply ratio of 98% with a notified price of Rs 1,700/tonne and total premium of Rs 360/tonne. The penultimate round has Demand Supply ratio of 102% with a notified price of Rs 1,700/tonne and total premium of Rs 350/tonne. In such a scenario, for comparing the two round, following methodology will be considered:
Since revenue at the penultimate round is more than the revenue in the round at which the auction stops, CIL may choose this round and allocate each Bidder their pro-rata share with a premium of Rs. 350 per tonne
Allocation and Revenue Calculations for Penultimate Round
Allocation and Revenue Calculations for Round at which the auction stops
Description Bidder 1 Bidder 2 Bidder 3 Bidder 1 Bidder 2 Bidder 3
Link Quantity (TPA) 52,900 47,100 1,04,000 48,000 44,000 104,000
Pro-rata Allocated Quantity (TPA) 51,863 46,176 101,961 NA NA NA
Final Allocated Quantity (TPA) 51,800 46,100 101,000 48,000 44,000 104,000
Total Quantity Available for Sale 1,99,800 TPA 1,96,000 TPA Notified Price Rs. 1,700 per tonne Rs. 1,700 per tonne Applicable Round Premium Rs. 350 per tonne Rs. 360 per tonne Total Applicable Price Rs. 2,050per tonne Rs. 2,060 per tonne Total Annual Revenue Rs. 40.96 Crore Rs. 40.38 Crore
CPP
Example – Allocated Quantity (contd)
65
Assuming a railway siding as the delivery point, if the penultimate round has Demand Supply ratio of 203% with a notified price of Rs 1,700/tonne and total premium of Rs 310/tonne and the round at which the auction stops has Demand Supply ratio of 98% with a notified price of Rs 1,700/tonne and total premium of Rs 360/tonne, following methodology will be considered:
Since revenue at the round at which the auction stops is more than penultimate Round, CIL may choose the last round and allocate each Bidder their pro-rata share with a premium of Rs. 360 per tonne.
Allocation and Revenue Calculations for Penultimate Round
Allocation and Revenue Calculations for Round at which the auction stops
Description Bidder 1 Bidder 2 Bidder 3 Bidder 1 Bidder 2 Bidder 3
Link Quantity (TPA) 91,200 1,05,000 2,10,000 48,700 45,300 1,02,000
Pro-rata Allocated Quantity (TPA) 44,904 51,699 1,03,397 NA NA NA
Final Allocated Quantity (TPA) 44,900 51,600 1,03,300 48,700 45,300 1,02,000
Total Quantity Available for Sale 1,99,800 TPA 1,96,000 TPA Notified Price Rs. 1,700 per tonne Rs. 17,00 per tonne Applicable Round Premium Rs. 310 per tonne Rs. 360 per tonne Total Applicable Price Rs. 2,010 per tonne Rs. 2,060 per tonne Total Annual Revenue Rs. 40.16 Crore Rs. 40.38 Crore
CPP
Provisional Allocated Quantity
66
Each round will be considered a valid offer to purchase the Link Quantity at the stated price. Moving to the next round does not mean the previous offer is discarded or becomes invalid.
The auction will stop once the Demand Supply Ratio is lower than or equal to 100%.
In case in any of these rounds the Demand Supply Ratio is more than 100%, bidders will be provisionally allocated their pro-rata share.
The revenue from the last and the penultimate rounds will be compared and the and the round generating maximum revenue for CIL will be selected.
— For rounds where Demand Supply Ratio is more than 100%, the rounded down pro-rata quantity will be used for calculating the revenue to CIL
Others
67
If the round at which the auction stops has Demand Supply ratio of 98% with a notified price of Rs 1,700/tonne and total premium of Rs 360/tonne. The penultimate round has Demand Supply ratio of 102% with a notified price of Rs 1,700/tonne and total premium of Rs 350/tonne. In such a scenario, for comparing the two round, following methodology will be considered:
Since revenue at the penultimate round is more than the revenue in the round at which the auction stops, CIL may choose this round and provisionally allocate each Bidder their pro-rata share with a premium of Rs. 350 per tonne
Description Allocation and Revenue Calculations for Penultimate
Round
Allocation and Revenue Calculations for Round at which
the auction stops
Bidder 1 Bidder 2 Bidder 3 Bidder 1 Bidder 2 Bidder 3
Link Quantity (TPA) 32,000 62,000 1,10,000 30,000 60,000 1,06,000
Pro-rata Allocated Quantity (TPA) 31,373 60,784 1,07,843 30,000 60,000 1,06,000
Total Quantity Available for Sale 2,00,000 TPA 1,96,000 TPA Notified Price Rs. 1,700 per tonne Rs. 1,700 per tonne Applicable Round Premium Rs. 350 per tonne Rs. 360 per tonne Total Applicable Price Rs. 2,050 per tonne Rs. 2,060 per tonne Total Annual Revenue Rs. 41.00 Crore Rs. 40.38 Crore
Others Example – Provisional Allocated Quantity
68
If the penultimate round has Demand Supply ratio of 203% with a notified price of Rs 1,700/tonne and total premium of Rs 310/tonne and the round at which the auction stops has Demand Supply ratio of 98% with a notified price of Rs 1,700/tonne and total premium of Rs 360/tonne, following methodology will be considered:
Since revenue at the round at which the auction stops is more than penultimate Round, CIL may choose the last round and provisionally allocate each Bidder their pro-rata share with a premium of Rs. 360 per tonne.
Description Allocation and Revenue Calculations for Penultimate
Round
Allocation and Revenue Calculations for Round at which
the auction stops
Bidder 1 Bidder 2 Bidder 3 Bidder 1 Bidder 2 Bidder 3
Link Quantity (TPA) 63,700 1,23,300 2,19,000 30,000 60,000 1,06,000
Pro-rata Allocated Quantity (TPA) 31,379 60,739 1,07,882 30,000 60,000 1,06,000
Total Quantity Available for Sale 2,00,000 TPA 1,96,000 TPA Notified Price Rs. 1,700 per tonne Rs. 1,700 per tonne Applicable Round Premium Rs. 310 per tonne Rs. 360 per tonne Total Applicable Price Rs. 2,010 per tonne Rs. 2,060 per tonne Total Annual Revenue Rs. 40.20 Crore Rs. 40.38 Crore
Others Example – Provisional Allocated Quantity (contd)
PAYMENTS
70
Periodic Payments & Price Indexation
The premium determined through the auction process will be converted into
percentage terms i.e. percentage of the notified price and this percentage premium
will remain constant throughout the tenure of the FSA
Notified price will be reviewed semi-annually and any modification (upward or downward) in the notified price post such review shall be considered as indexation and such modified price will be referred as “Indexed Notified Price”.
The price charged will be the sum of (a) notified price (or indexed notified price post review if any) and (b) the percentage premium multiplied by such notified price (or indexed notified price).
An example is worked out below Original Notified Price (Rs./tonne) 1,700
Premium (Rs./tonne) 250
Total Price Payable by Successful Bidder (Rs./tonne) 1,950
% Premium over Notified Price (to remain constant) 14.71% Upward Revised Notified Price (Rs./tonne) 2,000
Premium Payable @ 14.71% of Rs. 2,000 / tonne 294 Total Price Payable by Successful Bidder after Price Revision (Rs./tonne) 2,294 Downward Revised Notified Price (Rs./tonne) 1,500
Premium Payable @ 14.71% of Rs. 1,500 / tonne 214 Total Price Payable by Successful Bidder after Price Revision (Rs./tonne) 1,714
71
Performance Security
The Successful Bidder, shall provide to the relevant CIL Subsidiary, a Performance Security within 45 days of issuance of the LOI in the form of an Irrevocable and unconditional guarantee from an Acceptable Bank (in the format specified in the Scheme Document) or in the form of a non-interest bearing security deposit
Performance Security = 6% x [Allocated Quantity of the Successful Bidder] × [Aggregate of the (Notified Price or Indexed Notified Price, as the case may be) and (% Winning Premium x Notified Price or Indexed Notified Price, as the case may be)]
The amount of Performance Security shall be suitably revised in case of change in Notified Price
Validity of Performance Security is till 3 months from the date of expiry of the FSA
The Performance Security may be forfeited by the relevant Subsidiary in the manner specified in the Agreement
“Acceptable Bank” shall mean a Scheduled Bank as listed in the Second Schedule of the Reserve Bank of India Act, 1934 excluding those listed under the headings of Gramin Banks, Urban Co-operative Banks and State Co-operative Banks
KEY FSA TERMS AND MODIFICATIONS IN EXISTING FSA
73
Grade Variation
In case of a variation in grade of coal (decided on the basis of third party sampling) as compared
to the Allocated Quantity grade, Bidder shall pay the Notified Price (or the latest Indexed Notified
Price as the case may be) of the supplied grade plus the Winning Premium (in percentage terms)
on the Notified Price (or the latest Indexed Notified Price as the case may be) of the supplied
grade without factoring in royalty payments, taxes etc. as under:
Particulars Case I: Supplied
Grade is lower than
Contracted Grade
Case II: Supplied
Grade is higher than
Contracted Grade
Allocated Grade to Bidder G6 G6
Notified Price (Rs./ Tonne) (B) 2,280.00 2,280.00
Premium (Rs./ Tonne) (C) 300.00 300.00
Premium as % of Notified Price (D=C/B) 13.16% 13.16%
Actually Supplied Grade G7 G5
Notified Price of Supplied Grade (Rs./ Tonne) (E) 1,920.00 2,750.00
Premium of Supplied Grade (Rs./ Tonne) (F=E*D) 252.63 361.84
Price Payable for Supplied Grade (Rs/Tonne) (I = E+F) 2,172.63 3,111.84
74
Independent Third Party Sampling
Each Successful Bidder off-taking coal via rail mode may choose an agency from the following:
— list of independent third parties provided by CIL from time to time or
— CIMFR or CIMFR appointed agencies.
Bearing logistical issues, in case of off-take of coal via road mode, a single independent third party sampling agency will be appointed by respective CIL subsidiary for sampling coal supplied to various purchasers from a particular source
Third party sampling, if requested by the Successful Bidder, shall be done from the delivery/ loading point at supplier’s end
Costs of third party sampling
— shall be borne equally in case of transport via rail mode
— in case of transport via road 50% of the cost of third party sampling will be borne by respective CIL subsidiary and the residual 50% cost shall be shared by the parties who have requested for Third Party Sampling on a proportionate basis (depending on quantity of coal supplied).
The procedure for conduct of Third Party Sampling shall be as detailed in the Agreement.
75
Key Modifications required in Existing Model FSA
Duration and Lock-in
As per Para 1(ii) of the Policy, tenure of the FSA may be as decided by MoC subject to a maximum of 15 years
Under the Auction Process, the Agreement shall come into force from the date of signing of the Agreement and shall be valid for a term of 5 (five) years from the date of signing. Upon expiry of the aforesaid period of 5 (five) years, the Agreement may be extended for a further period of 5 (five) years on mutually agreed terms
The Agreement shall have a lock-in period of 2 (two) years
Change in Control
Change in Control of the Successful Bidder and/ or any transfer of the Specified End Use Plant along with the rights in relation to the Allocated Quantity shall be permissible with prior approval of the relevant Subsidiary if:
Such change in Control does not result in the Successful Bidder becoming non-compliant with any of the Eligibility Conditions or the transferee of the Specified End Use Plant along with the rights in relation to the Allocated Quantity continues to satisfy all of the Eligibility Conditions
Such change in Control and/ or transfer occurs in accordance with Applicable Law and the conditions for transfer and/ or assignment contained in the Agreement
76
Key Modifications required in Existing Model FSA …2
Exit Options
Post the expiry of lock-in period, the Successful Bidder may seek an exit after serving a prior written notice of three months.
If the Successful Bidder exits the Agreement prior to expiry of the lock-in period of 2 (two) years, the Performance Security shall be forfeited in its entirety and the Successful Bidder shall be disqualified from participating in the subsequent tranche of auction for the non-regulated sector conducted by CIL
Indemnification
The relevant Subsidiary shall be indemnified by the Successful Bidder for any claims or action that may arise inter alia on account of any misrepresentation of the Bidder misrepresentation, unwilling or otherwise
77
Key Modifications over the earlier FSA …3
Quantity and Compensation for short delivery / lifting
— If level of delivery by the relevant Subsidiary or level of lifting by the Successful Bidder falls below 75% (seventy five per cent.) then the defaulting party shall be liable to pay compensation to the other party in the following manner:
The penalty shall be computed in the same manner as done slab wise for computation of income tax. However, unlike income tax the percentage of compensation shall grow on a linear basis within each slab.
Performance Incentive
— There shall be no performance incentive under the Agreement because contracted quantity will be 100% of the EUP’s Normative Coal Requirement.
Security
— Successful Bidder shall be entitled to create encumbrances over the Agreement or rights granted to it under the Agreement for the purposes of availing financing from a bank or financial institutions for financing the EUP without any prior approval by relevant CIL Subsidiary.
Level of Delivery/ Lifting of Coal in a Year Percentage of Penalty for the failed quantity
Below 75% but up to 70% of Allocated Quantity 0 - 5
Below 70% but up to 65% of Allocated Quantity 5 - 10
Below 65% but up to 60% of Allocated Quantity 10 - 20
Below 60% but up to 50% of Allocated Quantity 20 – 40
Below 50% of Allocated Quantity 40
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Key Modifications required in Existing Model FSA …4
Termination
Failure of a party to perform its obligations under the Agreement because of a force majeure, for a period beyond 90 (ninety) days in any continuous period of 180 (one hundred eighty) days
Successful Bidder being prevented /disabled under Applicable Law from using coal, for reasons beyond their control
Any material change in the coal distribution system of the relevant subsidiary of CIL due to a Government directive/ notification, post the execution of the Agreement
The matter pertaining to the diversion or breach of end use of coal leads to suspension of the deliveries and the matter cannot be resolved
Encashment of the Performance Security or suspension of coal supplies
In the event a party suffers insolvency, appointment of liquidator (provisional or final), appointment of receiver of any of material assets, levy of any order of attachment of the material assets, or any order or injunction restraining the party from dealing with or disposing of its assets
A party commits a breach of terms or conditions of the Agreement
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80
Consumption Norms as per CEA – CPPs
Grade GCV Considered
(kcal/kg)
Sub Critical Technology Super Critical Units
# Less than 100
MW 100 MW to less than 200 MW
200 MW to less than 250 MW *
250 MW and above #
Unit Heat Rate (kcal/kWh)
2,770 2,615 2,500 2,375 2,250
Annual Consumption at 85% PLF (Tonnes per MW per annum)
G4 6,100 3,381 3,192 3,052 2,899 2,746
G5 5,800 3,556 3,357 3,209 3,049 2,889
G6 5,500 3,750 3,540 3,385 3,215 3,046
G7 5,200 3,966 3,744 3,580 3,401 3,222
G8 4,900 4,209 3,974 3,799 3,609 3,419
G9 4,600 4,484 4,233 4,047 3,844 3,642
G10 4,300 4,797 4,528 4,329 4,113 3,896
G11 4,000 5,156 4,868 4,654 4,421 4,188
G12 3,700 5,574 5,263 5,031 4,780 4,528
G13 3,400 6,066 5,727 5,475 5,201 4,928
G14 3,100 6,653 6,281 6,005 5,705 5,404
G15 2,800 7,366 6,954 6,648 6,316 5,983
81
Consumption Norms as per CEA – CPPs. . .2
Notes:
• In case of power projects where approved heat rate by Regulator is higher than above
considered value, the Heat Rate approved by Regulator would be considered for the
purpose of working out normative coal consumption requirement.
* In case of main stem pressure is 150 ata or above the Unit Heat Rate shall be reduced by 100
kcal/kWh
# In case of units having Motor Driven Boiler Feed Pump (MDBFP) of 500 MW and above size
units including Super Critical units the unit heat rate shall be reduced by 50 kcal/kWh.
𝑨𝒏𝒏𝒖𝒂𝒍 𝑪𝒐𝒂𝒍 𝑪𝒐𝒏𝒔𝒖𝒎𝒑𝒕𝒊𝒐𝒏 𝒂𝒕 𝟖𝟓% 𝑷𝑳𝑭 𝑻𝒐𝒏𝒏𝒆𝒔 𝑷𝒆𝒓 𝑴𝑾 𝑷𝒆𝒓 𝑨𝒏𝒏𝒖𝒎
=𝑼𝒏𝒊𝒕 𝑯𝒆𝒂𝒕 𝑹𝒂𝒕𝒆 ∗ 𝟐𝟒 ∗ 𝟑𝟔𝟓 ∗ 𝟖𝟓%
𝑮𝑪𝑽
82
GCV of Coal Grades considered for Others Sub-sector
Grade Gross Calorific Value Range (Kcal/ Kg) Average Gross Calorific Value (Kcal/ Kg)
G1 >7,000 7,150
G2 6,700-7,000 6,850
G3 6,400-6,700 6,550
G4 6,100-6,400 6,250
G5 5,800-6,100 5,950
G6 5,500-5,800 5,650
G7 5,200-5,500 5,350
G8 4,900-5,200 5,050
G9 4,600-4,900 4,750
G10 4,300-4,600 4,450
G11 4,000-4,300 4,150
G12 3,700-4,000 3,850
G13 3,400-3,700 3,550
G14 3,100-3,400 3,250
G15 2,800-3,100 2,950
G16 2,500-2,800 2,650
G17 2,200-2,500 2,350