The third day of bidding in the second phase of the coal block e-auction saw the highest, as well as the lowest bids. Jindal Power beat those such as Adani and Lanco to grab a block for power at the lowest bid so far. The lowest bid in the first phase of the auction, also by Jindal Power, is being re-examined by the coal ministry.
Quoting the highest bid in the second phase so far, the Aditya Birla Group-promoted Hindalco Industries won the Dumri coal block in Jharkhand for Rs 2,127 a tonne; for this block, the end-use is the steel, iron and cement sectors. In the first phase, Hindalco had won four rich coal mines through high bids, as much as Rs 3,502 a tonne in one case.
For the Dumri block, there was forward bidding by contestants such as Bharat Aluminium Company, Sesa Sterlite and Usha Martin. The block, which has an annual extractable capacity of a million tonnes, was earlier owned by Nilachal Iron & Power. Hindalco will pay West Bengal Rs 212.7 crore a year as auction amount, apart from the royalty.
The Naveen Jindal-owned Jindal Power won the Tara coal block in West Bengal with a bid of Rs 126 a tonne. For the coal block, with power generation as the end use, there was reverse bidding. Other companies in the fray were Adani Group (three bids from its three subsidiaries), JSW Energy and Lanco.
After the win, Naveen Jindal tweeted, “Jindal Power Ltd just won the #Tara coal block by God’s grace.” When the company had won back the Gare Palma-IV/2&3 in first phase of the auction at a bid of Rs 106 a tonne, the company’s official handle had tweeted “#Won’tgiveitback”. The low bid and the short duration of auction proceedings had led to a re-examination by the coal ministry.
The Tara block, previously owned by the Chhattisgarh Mineral Development Corporation, is touted one of the richest mines in the list of blocks in the second phase of the auction. As auction proceedings, the Jharkhand government will get Rs 75.6 crore a year, apart from royalty.
The third mine auctioned on Saturday was Nerad Malegaon in Maharashtra. The mine, with an annual capacity 0.36 million tonnes, was won by Indrajit Power. The end use is the iron, steel and cement sectors.
While there is reverse bidding for coal blocks for the power sector, for unregulated ones (end use iron, steel and cement sectors), the forward bidding model is followed. However, on receiving any bid for no amount at all, even the power sector follows forward bidding. This results in power rates being cheaper by at least six paise for every fall of Rs 100 in the bid amount.
Through the e-auction, the government is re-allocating coal blocks cancelled by the Supreme Court. In the first phase of the auction, held on February 14-22, 18 blocks were auctioned, earning state governments cumulative revenue of Rs 1.35 lakh crore. The second phase, during which 11 mines are being auctioned, will end on Sunday.