NEW DELHI: After a successful round of auctions, the government is expected to reject two bids from Jindal Steel and Power Ltd (JSPL) for Gare Palma and Tara coal blocks citing “very low” bids and talk of cartelization.
Sources in the government said an interministerial committee, re-examining some of the bids, was ready with its findings on the two blocks won by JSPL and a decision would be taken at the ministerial level. They added that fresh bids may be invited for the two blocks or they may be allocated to Coal India for production.
Auctions for 34 blocks were completed last week with state governments expected to get Rs 2.13 lakh crore, including royalty, from these mines over the next 30 years. While the coal ministry was getting ready to hand over the blocks this week, the four-five blocks that are under the lens would be not transferred, said sources.
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The government, which had claimed the auctions as a major success, is keen to avoid any controversies at a time when it is trying to repair the damage to the crucial sector and get the engines of the economy roaring again. Sources said the government is firm on maintaining transparency in the system, which has been hailed by the industry as well as investors.
In case of Gare Palma IV/23, there were three bidders – JSPL, GMR and Adani. GMR and Adani withdrew after just one round of bidding and Jindal’s bid of Rs 108 a tonne, against a reserve price of Rs 100 a tonne, was accepted. Although the mine has the highest annual production capacity, it received the lowest winning bid among those reserved for the power sector.
Sources said that among the developed mines, Talabira and Sirsa Tola had received bids of Rs 478 and 470 a tonne, respectively. Even less developed ones such as Jitpur (Rs 302 a tonne) and Mandakini (Rs 650 a tonne) received higher bids.
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Similarly, JSPL had bid Rs 126 a tonne for Tara block, which was earlier owned by the Chhattisgarh Mineral Development Corporation, and is said to be one of the richest mines.
“The bids are surprisingly very low and it does not make sense for the government to award the blocks at such level,” said a source. A questionnaire e-mailed to JSPL spokesperson on Monday evening went unanswered.
For the Naveen Jindal firm, Gare Palma IV/23 is particularly crucial as there is a power plant running on the coal extracted from this mine for which power purchase agreements have been signed with Tamil Nadu and Karnataka. In fact, there was much jubilation in the company as well as the stock markets when JSPL managed to “win back” the mine during the auction. The allocation for the block was among the 204 cancelled by the Supreme Court.