(FE)
The government is likely to set up the proposed coal exchange, which will provide a platform for purchase and sale of domestically produced coal by the next financial year, official sources told FE. The need for a coal exchange comes amid the rising domestic production of coal. which crossed 1 billion tonnes in FY25.
“The proposal for the coal exchange is ready and by FY27 we should have it. After it is finalised, rules will be framed,” the source said, adding that the Coal Controller Organisation will act as the regulator for the exchange.
The exchange is expected to help state-run Coal India to sell coal outside the allocation (long-term linkage) mechanism and private captive miners to offload surplus coal in the open market more efficiently. Once the sale on the platform reaches a certain threshold, price discovery of the key fuel for power generation will be more efficient. Currently, the benchmark for domestic coal prices is the notified prices of CIL which in turn depends on the internationally traded prices.
The Coal Controller Organisation, under the Ministry of Coal collects and maintains coal production data of all private and public sector coal mines in the country and inspect collieries to ensure the correctness of the class, grade or size of coal. It also acts as the appellate authority in case of dispute between consumers and owner.
While the government has been keen on setting up a coal exchange, there have been some delays. An exchange will help the country to reduce its dependence on international markets for determining coal prices, the Union Minister of Coal and Mines, G Kishan Reddy had earlier said, adding that it will be launched soon.
The proposed exchange will serve as an online coal trading platform for commercial miners and the public sector companies including Coal India, with buyers having the options in coal grades and location. The government has opened up the sector for the private players introducing commercial coal mining through auctioning of coal blocks back in 2020.
Currently, state-run Coal India sets the notified price for the coal produced by the company and its subsidiaries’ for long-term linkages. For non-coking coal, CIL fixes notified prices for each grade for the regulated sector and non- regulated sector. In respect of coking coal, produced by certain subsidiaries of CIL, the power of notifying the prices has been delegated to the subsidiaries. The company also sells surplus coal through e-auctions.
India’s coal production has reached 1.05 billion tonnes in FY25, compared to 997.83 million tonnes in FY24, marking a 4.99% growth, as per provisional data from the coal ministry. Production from commercial and captive mines also surged, reaching 197.50 MT, up 28.11% increase from 154.16 MT recorded in the previous year.
Coal imports fell 8.4% to 183.42 MT in April-December FY25 from 200.19 MT in the same period of FY24, saving $5.43 billion in foreign exchange, as per the government’s data. The Non-Regulated Sector saw a sharper decline of 12.01%, while imports for blending by thermal power plants dropped 29.8%, despite a 3.53% rise in coal-based power generation.
The country’s coal production has increased owing to several measures taken by the government to increase domestic availability including auctioning of new mines. The government has projected coal production to reach 1.13 billion tonnes in the upcoming financial year 2025-26, according to the sources.
“The exchange will help provide more market access to all the players and help realize the true market price of coal,” Coal India’s chairman and managing director P M Prasad has earlier told FE in an interview.
