In March 2015, the government had disallowed JSPL, saying that its bids were much lower than the prices discovered for coal blocks with similar parameters allotted to power producers.
In a major setback for Navin Jindal-led Jindal Steel and Power (JSPL), the Delhi High Court on Thursday upheld the government’s decision to cancel the company’s bid for Gare Palma IV/2 and IV/3 and Tara coal mines in Chhattisgarh in the auctions held in 2015. Though JSPL had won the bids, the government had cancelled its bids citing possible irregularities and later made Coal India, the custodian of the three blocks. Subsequently, JSPL had challenged the government’s move in the court.
The court’s order said that it cannot interfere with the government’s decision to cancel allocation to JSPL as it did not find any fault with it but making CIL the custodian of the blocks is bad in law and needs to be revisited. It said that the government will have to take a decision within six weeks on the future prospects of the mines.
It could either be re-auctioned or allotted to CIL or any other public sector company, it said. In March 2015, the government had disallowed JSPL, saying that its bids were much lower than the prices discovered for coal
blocks with similar parameters allotted to power producers. JSPL had won the two blocks at Gare Palma at R108 per tonne, and bagged the Tara block for R126 per tonne. The lawyers appearing for the government argued that the final bid price for the Sarisatolli coal mine, which had the same grade of coal and was also earmarked for specified end-use for the power sector, was R470 per tonne.
A JSPL spokesperson said the company would comment after going through the court’s order. Anil Swarup, who was coal secretary then, tweeted: “Stand vindicated. High Court endorses “clean” auctioning of the coal blocks. Kudos to Vivek Bhardwaj, Prescribed Authority & his team”. Vivek Bhardwaj is currently joint secretary in the coal ministry.
During the October-December quarter, JSPL narrowed its net loss by around 48% (YoY) at R455 crore.
The consolidated debt of the company was at about R45,000 crore. The Chhattisgarh coal mines were crucial for JSPL’s power plant and steel operations. The coal was seen to be used in its 1,000 MW Tamnar Power Plant in Raigarh district of Chhattisgarh.