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APR 01 2015

Coal auction: further probe into Jindal Power bid likely

  • Economic Times, ET Bureau / Hyderabad
  • Created: Wed 01st APR 2015

The Coal Ministry is likely to further investigate into the bidding pattern of the contentious Chhattisgarh coal blocks won by Jindal Power Ltd.

With ample indications that the government has not got the right valuation for the coal mines under dispute — including Gare Palma IV/2&3 — it is appropriate that further investigation is conducted, sources said.

The bids for Gare Palma IV/2&3, Gare Palma IV/1 and Tara mines, all in Chhattisgarh, were rejected by the Ministry after the same were re-examined for outliers in the bidding pattern. However, the companies (Jindal and BALCO) are disputing the Ministry’s decision to reject the bids.

Asked what the outliers were in the bidding pattern found by the Nominated Authority and subsequently by an inter-ministerial committee, sources said the bid history indicated that only one bid was made for Gare Palma IV/2&3 mines (Jindal Power) though there were four distinct qualified bidders – taking three bids of Jindal as one.

Besides, bidding for power sector mines was aggressive and the process continued beyond the initially scheduled two hours, some up to 11 hours. However, for this mine, bidding wasover in a much shorter time span – in about an hour. Another indicator of the mine not getting its true value is that smaller mines, in terms of extractable reserves, fetched higher prices, while Gare Palma IV/2 &3, having maximum reserves, was bid for the lowest amount.

Despite having 155.49 million tonnes extractable reserves at Gare Palma IV/2&3, the bids went at the lowest rate at 108 a tonne. Jindal Power owned this block prior to de-allocation as well.

Meanwhile, for the 67 blocks/mines (e-auctioned as well as allocated in phase 1) transition to the new owners and in some cases starting of mining activity will start from April 1. Of these, 29 have been auctioned, and 28 awarded to State and Central public sector enterprises having extractable reserves of over 200 million tonnes, approximately.

Total revenue generated through the life of the mines will be 3.35 lakh crore – 2.37 lakh crore through auction/allotment, 96,902 crore royalty, and 932 crore upfront payment. The upfront payment amount has already been transferred to the host states, an official said.

The government is now preparing itself for the next series of auctions and allotments. The number of blocks to be auctioned could be anywhere between 15 and 20. Total number of blocks to be offered will be around 35.

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TOTAL Jindal Power Ltd Bharat Aluminium Company Ltd Coal Coal Mines Power

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