Unnerving industries that have responded enthusiastically to the coal block auctions, the government has decided...
Unnerving industries that have responded enthusiastically to the coal block auctions, the government has decided to “re-examine” the bids received for five schedule III (near operational) blocks, citing quick completion of bidding and the winning bid prices being in the vicinity of opening prices. The move created uncertainty for the winners of the five blocks, Hindalco, Jindal Power, Jaypee Cements, Usha Martin and the unlisted Tirumala Industries. Whether they would get the blocks would now depend on the final government decision, based on the review by a nominated authority.
Earlier, the Centre had asked the nominated authority to review the bidding process of three mines among those auctioned under schedule II (operational) blocks. Although, as reported by FE earlier, the authority hasn’t found any malpractice, a final view in these cases is still due.
With the decision to re-examine the bids for five near-operational blocks, the nominated authority on Sunday published the results of only 8 out of 13 mines that have been auctioned, withholding the names of successful bidder in the other cases.
Of the five mines withheld by the nominated authority, four belong to the unregulated sector while one is from the power sector. These include the Brinda and Sasai block that were won by Usha Martin, Meral won by Tirumala Industries, Dumri bagged by Hindalco and Mandla South that went to Jaypee Cements. The only block earmarked for the power sector that has been sent for review is Tara, which was won by Jindal Power. “The three blocks in the first round along with five blocks in the second round have been taken out in the final list. These are the blocks where bids were closed in five to eight rounds. This means that the difference between the opening price and closing price was much lower than other blocks,” a source told FE. He added that in case of the Brinda and Sasai block, bidding opened at Rs 1,802 per tonne and closed at Rs 1,804 per tonne in forward bidding. Similarly, bidding for Meral opened at Rs 725 a tonne and closed at Rs 727 a tonne.
Naveen Jindal’s Jindal Power has been the worst hit by the government’s decision as two of its mines — one each in schedule II and schedule III — have been held back for review. The company had managed to bag the blocks in each phase at the lowest price among blocks earmarked for the power sector.
While the government has maintained that a review of the auction process is routine and should not be construed as a probe, the delay in deciding the fate of three schedule II blocks has created uncertainty for the companies involved. The coal ministry hopes that a decision on the three blocks will likely be announced on Tuesday. “The uncertainty over the eight auctioned coal blocks along with the exclusion of three major coal blocks from the auction process indicates the chinks both in the policy as well as its implementation”, an industry insider told FE.
As reported by FE earlier, coal ministry officials have maintained that the government reserves the right to re-auction such mines if it feels a greater value can be extracted from them. This stance has led to unease among the companies. “Once auction results based on established policy parameters are clear and announced, excluding winning bidders from the list of successful bidders is a major dent on domestic and global investor sentiment, a dent that will hammer sentiments of many more sectoral policies in the pipeline, ” another industry source told FE.