Coal ministry disqualifies Rel Power?s bid for CTL project

The coal ministry has disqualified Anil Ambani?s Reliance Power Ltd, SETSL?the joint venture company of Tata Sons and Tata Industries with South African major Sasol, Adani Enterprises, Sterlite Energy, Bhushan Steel Ltd, Jindal Steel and Power Ltd besides nine others who had submitted bids for the allocation of coal blocks for setting up of the $8 billion coal to liquid (CTL) project.

The companies have failed to fulfil an eligibility criteria of minimum individual net worth, set by the coal ministry at Rs 4,000 crore.

The process now moves to a high-powered inter-ministerial group. The group will decide whether the disqualified companies can use the net worth of their parent company to get a look in.

While Reliance Power has been disqualified by the coal ministry, another Anil Ambani?s company Reliance Infrastructure Ltd has qualified for the project.

Official sources said only seven companies have qualified on the minimum net worth criteria. Besides Reliance Infrastructure, they are Reliance Industries Limited, Indian Oil, SAIL, JSW Steel, GMR Infrastructure and GAIL.

However, even among these seven, SAIL and JSW Steel did not meet the technology criteria. This means only five companies have qualified for the project.

Net worth along with the proven technology provider were the two main pre-requisite qualification for the

companies keen to set up

this project.

For instance, Essar has applied as a consortium of Essar Oil and Essar Shipping and the consortium qualifies on the net worth criteria. Similarly, though the JV company of the Tata?s-SETSL may not qualify on individual basis,

it would qualify if the

guarantee of the parent company is accepted.

With crude oil prices rising, countries like India and China are seeking alternative sources of energy to fuel its economic growth. As a result, there has been a huge rush of proposals from the big corporate houses for being allotted coal blocks for setting up a coal to liquid project. The coal ministry had received 28 applications from 22 companies for allocation of the three coal blocks including the Radhikapur, Ramchandi and Srirampur blocks.

In its note for the IMG, the coal ministry said, ?IMG may now like to decide on the eligibility of the applicant companies. Whether application made by a consortium be accepted? If so, the nature of consortium and the tie up required among the partners along with the method of determining networth.?