Business

Jindal gets stay against Govt move to cancel Tara bid

The government decision to cancel bids for four coal blocks came in for questioning at the Delhi High Court today with the court ordering a status quo on Tara block and asking the government to file a reply in the case of Gare Palma 4/2 and 4/3 blocks.

Naveen Jindal-promoted Jindal Power had earlier in the day filed a petition in the Delhi High Court against the government decision to cancel its bids. Last week, the government had announced that it has cancelled bids for Gare Palma 4/1, 4/2, 4/3 and Tara coal blocks on the ground that they were too low. Vedanta group promoted Balco had emerged as the winning bidder for Gare Palma 4/1.

The government decision to cancel the bids came after two weeks of re-examination. These blocks were now being allotted to state owned Coal India Limited till any further action. Tara in West Bengal and Gare Palma IV 2&3 in Jharkhand had power generation as their end use. While Gare Palma-IV/1in Jharkhand won by BALCO was for the unregulated sector of steel and iron.

The had reviewed bids for nine blocks with five being clear. The bids in question were put by Jindal Power, Balco and BS Ispat in first phase of auction – where in Jindal is for the power sector and the other two for unregulated sector. In the second phase, low bids of Jindal Power, Hindalco, Usha Martin and Tirumala Industries were re-examined.

“While the winning bid for Gare Palma-IV/2&3 in end use in power generation was Rs 108 per tonne, other blocks for same end use received bids in the range of Rs 37-1110 per tonne. So, the company’s bid was just Rs 8 beyond the reserve price,” said the official requesting anonymity. Jindal won Tara block in second phase of auction for Rs 126 per tonne, while the range received from the power sector was Rs 202-670 per tonne. Same is for Gare Palma-IV/1 which got winning bid for Rs 3025 per tonne in forward bidding, whereas the range was Rs 2302 to 3502 per tonne.

Jindal in its response had last week said it had followed “a consistent and prudent bidding strategy throughout the Coal Block Auction process, with a serious long term business perspective”.

Out of the 34 coal blocks auctioned in two phases, letter of allocation for eight have not been signed with the successful bidder. These are the blocks, which the ministry of coal said has received comparatively low bids and hence were sent for re-look by the Nominated Authority of coal blocks re-allocation.

First phase of auctions saw operational 21 coal mines put up for auction, whereas second phase was for 19 about to produce mines – from 14 February to 10 March. Jindal Steel & Power has bid the lowest in both the phases for end use power. BALCO, on the other hand was the lowest bidder on unregulated category.

For power sector, there was reverse bidding i.e. the company with the lowest bid gets the block and the price discounted below the ceiling price would be reflected in the final power price. For unregulated, there was forward bidding – the highest bidder won the block