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In the first round of commercial coal mining auctions that closed last week, the bidders — and their bids — came in all sizes.
Companies competed on the portion of revenue they would share with the respective State governments to bag the coal mines. Across mines, the round saw an average bid price of 27.32 per cent of revenue share. The highest bid came in for the Gare Palma IV/7 mine in Chhattisgarh with a closing bid of 66.75 per cent, quoted by Sarda Energy and Minerals. The lowest was quoted for the Urtan North coal mine in Madhya Pradesh, by JMS Mining, at 9.5 per cent.
Marked variation
Across the auctions, there was a marked variation in revenue share committed for the mines.
It was well above 50 per cent for some mines and, for some others, it was below 15 per cent. Responding to a query on what could be the factors behind this, Minister for Coal and Mines, Pralhad Joshi, told BusinessLine : “One is competition. The second is the atmosphere in that particular area — if it is conducive for immediate production and operation — and the quality of coal.
It differs across mines and bidders will assess it. The government has got nothing to do with that.”
A first in India
There is no end-use restriction on the coal excavated from the awarded mines. This means the companies can sell the coal in the open market or use it for their own purposes. This was the first time that coal mines were auctioned in the country without any end-use restrictions. Joshi also said he was not in favour of end-use restrictions being reintroduced.
Chhattisgarh’s Gare Palma IV/7 coal mine, won by Sarda Energy, was the most hotly contested in this round. Adani Enterprises, Bharat Aluminium Company, DB Power, Hindalco Industries, Jindal Power, JSW Steel and Nuvoco Vistas Corporation had also contested for this mine that got bid out on the last day.
The Coal Ministry had tried auctioning the mine in earlier bid rounds. That time, too, it had received the highest number of bids, at 16, in the auctions for Schedule II coal mines. In the nomination regime (that was junked by the Supreme Court in 2014), this block was allotted to Sarda Energy and Minerals; the company won it back in the latest round of bids.
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