Jindal's bid among three unapproved by govt

Bids for eight coal blocks were sent for re-examination; these three mines likely to remain with Coal India for now.

After two weeks of re-examination, the coal ministry did not approve bids received for three of the eight coal blocks being scrutinised, citing "comparatively low bids".

Two of these were won by Jindal Steel and Power. These blocks are likely to go to state-owned Coal India till any further action, said sources. 

The two that were won by Jindal Steel and Power are Tara in West Bengal and Gare Palma IV/2&3 in Jharkhand, meant for power generation. The third coal block meant for steel, cement and iron sectors, Gare Palma-IV/1 in Jharkhand, was won by Bharat Aluminium Company (Balco).

Sources in the government said because of stark differences between bids in the same category, these were not approved. Among the eight blocks for which bids were being re-examined, five have been approved. 

The bids in question were put by Jindal Steel and Power, Balco and B S Ispat in the first phase of auction.

In the second phase, low bids from Jindal Steel and Power, Hindalco, Usha Martin and Tirumala Industries led the government to initiate a re-examination. 

Jindal Steel and Power will be hit the most, losing two mines. The other loser is the Vedanta Group-promoted Balco. Jindal Steel and Power had won back its Gare Palma-IV/2&3 block at the lowest bid, Rs 108 a tonne. 

Senior government officials said their analysis showed the bids for these blocks were found to be too low compared with those from the same sectors for other blocks. 

"While the winning bid for Gare Palma-IV/2&3 for end use in power generation was Rs 108 a tonne, other blocks for same end use received bids in the range of Rs 370-1,110 a tonne. So, the company's bid was only Rs 8 beyond the reserve price," said an official, requesting anonymity.

Jindal Steel and Power won Tara block in the second phase of auction for Rs 126 a tonne, while the bid range from the power sector was Rs 202-670 a tonne. 

Gare Palma-IV/1, too, got a winning bid for Rs 3,025 a tonne in forward bidding, with the bid range being Rs 2,302-3,502. 

Of the 34 coal blocks auctioned in two phases, letters of allocation for eight have not been signed with the successful bidder, as the ministry said the bids were low when compared with those for other blocks. Thus, these bids were sent for a re-examination. 

In the first phase, 21 operational mines were auctioned, while in the second 19 about-to-produce mines were auctioned (from 14 February to March 10).

Jindal Steel and Power bid the lowest in both the phases for blocks meant for power generation. Balco, on the other hand, was the lowest bidder in the unregulated category. 

Reverse bidding was followed for the power sector, In this method, the company with the lowest bid gets the block and the price discounted below the ceiling price is reflected in the final power price.

For the unregulated sector, forward bidding, that is, the highest bidder wins the block, was used.