Mines mired in controversy are the most attractive
New Delhi December 29, 2014: In the coming e-auctions of cancelled but operational coal blocks, the ones with most controversy are likely to witness the stiffest fight from bidders.
From the seven operational blocks allocated to the power sector, Gare Palma-IV/2 & IV/3 and Talabira-1 stand out as the most attractive. Gare Palma in Chhattisgarh has the largest amount of reserves; Talabira, in Odisha, boasts of ready infrastructure and close proximity to evacuation facilities.
However, Gare Palma was earlier owned by Jindal Steel & Power and Talabira was with Hindalco. Both companies are being probed for irregularities in award of blocks.
"Legal cases against the promoters notwithstanding, these two blocks are the best of all. We would see new players with mining expertise contesting hard with the original owners, who'd make the most of the second chance to get their lost mines back," said a power sector expert.
Experts said new entrants such as Sterlite Energy, Essar, GVK and Larsen & Toubro are the ones to watch. "These companies have technical capabilities and ready infrastructure to put to use the mined coal. They would compete hard for getting an operational block," said an industry executive.
Gare Palma is part of a cluster of four mines in Chhattisgarh owned by JSPL which are under litigation. The charges against JSPL are of criminal conspiracy, excess mining and selling to a third party from the captive block. By the Supreme Court's directive, JSPL would also pay the highest amount of penalty, close to Rs 3,000 crore, for its four cancelled blocks.
The Central Bureau of Investigation has registered a charge of undue favours to the Kumar Mangalam Birla-owned Hindalco for getting allocation of the Talabira block.
The Tokisud block allotted to GVK Power was under fire from the government for delay in production. It was on the verge on getting de-allocated when it went under litigation through a public interest suit filed against all the allocations made over two decades by the government-appointed screening committee. The block has rich reserves with an end-use power plant in a 20 km radius.
"Wherever the end-use is in proximity and the earlier owner has put in more than 80 per cent investment, he would want the mine back," said a power sector executive.
The Sarshatali coal block in West Bengal is the only one which is non-operational but about to produce. This might make it a little less impressive, as mining clearances would need to be taken afresh.
The government has allotted 24 blocks for e-auction during February 14-22. Of this, seven are for the regulated power sector, for which there would be reverse auction. The rest are for steel, cement and captive power production, wherein there would be forward bidding.
Last week, the coal ministry uploaded mine- wise tender documents for the e-auction on mstcecommerce.com. Government- owned MSTC would conduct the e-auction through its online trading platform.
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