Hours before the contenders for 24 operating captive coal mines attend a pre-bid meeting on January 10, the existing allottees have only one question on their minds: will they be able to retain control over the assets?
Serious investors Sources involved in bidding preparations say that there is a “very high” possibility that the existing allottees will get their assets back through the auction if they pay the ₹295/tonne penalty (for every tonne of coal extracted from such mines) as ordered by the Supreme Court.
This assessment rests on two counts.
First, the existing allottees will be considered “serious” investors with adequate knowledge in developing a coal asset.
Secondly, since the existing allottees have already booked the past cost on mine development and infrastructure, they wouldn’t require fresh capital outlay for such mines.
Tilting balance With the balance tilted in their favour; the existing allottees are expected to bid aggressively to retain the blocks. Seven blocks have been earmarked for the commercial power generation sector, 16 for captive users in iron and steel, cement etc and one exclusively for the steel sector.
Power utilities have to follow the reverse auction route to ensure that the least costly coal producer controls the mines. The rest of the assets will be allotted to the highest bidder.
Nevertheless, the existing allottees are nervous. The concern is that the ongoing fuel crisis may force some firms to overlook commercial viability and bid aggressively for the blocks.
With many power generation assets stranded for want of fuel, the promoters may make higher bids to acquire feedstocks.
A prominent eastern India-based private electricity company with captive assets said it was gearing up to bid for more assets, to hedge its risks.
“With at least three major private generation utilities in the eastern region suffering from a fuel crisis, we don’t rule out the prospect of aggressive bidding,” said an executive from the power firm.
There is a concern that some of the allottees in the past were awarded higher reserves than they needed.