coal india limited€¦ · for linkages which are due to expire post march 31, 2017, the extant...

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


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


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

http://www.mstcecommerce.com/auctionhome/coallinkage/index.jsp







16


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


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


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


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


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


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


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


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— 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


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


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


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


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


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


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


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 300% 100

62

Example - Non-Discriminatory Ascending Clock Auction

30 MT @ INR 1200/tonne


Ascending Price with Demand Converging to 9 MT Quantity Offered





100/tonne as Demand/Supply 333%





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


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


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 60% but up to 50% of Allocated Quantity 20 – 40

Below 50% of Allocated Quantity 40

78

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

THANK YOU

New Delhi (Regional Office)

World Trade Tower Ground Floor Barakhamba Lane New Delhi – 110 001

T: +91 (11) 2348 5200 F: +91 (11) 2341 8773

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