1. 13 firms fail to regain coal blocks; impact seen on end-use units

13 firms fail to regain coal blocks; impact seen on end-use units

As the first phase of coal block auction was coming to an end late on Sunday, it emerged that at least thirteen companies...

By: | New Delhi | Updated: February 23, 2015 1:32 AM
Supreme Court, Coal blocks, Coal ordinance

This shows that the reallocation process, pursuant to the Supreme Court order cancelling 204 blocks for arbitrary and illegal allocations, could have a marginal-to-significant adverse impact on many existing ventures. (Reuters)

As the first phase of coal block auction was coming to an end late on Sunday, it emerged that at least thirteen companies that have invested hugely in end-use plants could not regain possession of the blocks previously held by them.

While many of them opted out of the race, others lost out in the bidding and had to settle for other blocks that could add to their costs, due to locational disadvantages and/or end-use differences. Among them, four firms that have made the largest investments in end-use units have together already spent close to R40,000 crore. The exact investment figures in case of others were not immediately available.

This shows that the reallocation process, pursuant to the Supreme Court order cancelling 204 blocks for arbitrary and illegal allocations, could have a marginal-to-significant adverse impact on many existing ventures.

As the winners of 19 of the 20 producing blocks in the first phase of the auction were known, three companies have won back the blocks held by them earlier. Their investments have been around R17,000 crore (see chart).

Coal-bid3

At the time of going to press, bidding for the last of the operational blocks — Gare Palma IV/7 in Chattisgarh — was still underway and had reached a price offer of R2,233/tonne. This block with extractable reserves of 53 million tonnes, is reserved for the unregulated sectors.

Among those who have lost out in the bidding for the blocks held earlier,  Hindalco Industries managed to win three other mines, the most by any company while GVK Power, Monnet Ispat and JSPL failed to win any mine.

Initially, 23 operational mines were earmarked for first phase of e-auction but due to the intervention of Delhi High court in case of two blocks and lack of bidders’ interest in other two meant that only 19 blocks were eventually put up for auction. The government is working out the modalities of a ‘custodian’ that will oversee these mines to ensure they keep producing till they are auctioned later. .

The coal-bearing eastern states are looking at the prospect of  revenue flows of Rs 1.07 lakh crore over a 30-year period from the producing mines auctioned.  Madhya Pradesh and Chattisgarh emerged as the biggest beneficiaries with more than one-third of the total revenue envisaged to go to each of them.

The next tranche of coal block to go under the hammer would be the 20 near-operational mines in Schedule III which originally consisted of 32 blocks. The government expects the bidding, which will start from Tuesday- to be rather subdued compared to that of schedule II mines as some of them require capital investment in infrastructure before mining can start.

  1. S
    Shriram Mehendale
    Feb 23, 2015 at 12:57 pm
    Very good at least some negative news have been reported on coal block auction.? We need to know are whether the companies who could not make it are in any way remotely connected to congress or Indian Express has any connection with them ?
    Reply

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