The recently held highly publicized coal block auctions have come as a bonanza for some, and left many serious players in a lurch inspite of emerging as the winning bidder. The one’s who are left in a lurch inspite of being winning bidders but not declared as successful bidders in the schedule III auctions include serious players from Aluminium, Cement and Power sector. When the Government announced the list of successful bidders on Saturday, some of the winning bidders like Aditya Birla Groups Hindalco, Naveen Jindal’s Jindal Power and Jaypee Cement would have been perplexed with the policy dilemma.
On Saturday (March 14th) only 8 out of the 13 winning bidders found their names in the list of successful bidders released on MSTC website. This comes soon after a similar precedent when 3 winning bidders of the first round of multi-bidder transparent e-auctions were left out of the list of successful allottees. The exclusion of leading core infrastructure sector players like Hindalco, Jaypee, Jindal Steel and Power, BAlCO etc. leaves a major question mark on the policy process and its interpretation. Further posing a serious question mark on the entire process itself is the exclusion of some of the largest coal mines due to court orders on Gare Palma IV/6, Utkal B and Jamkhani mines.
“The uncertainty over the 8 auctioned coal blocks along with the exclusion of 3 major coal blocks from the auction process indicates the chinks both in the policy as well as its implementation”, an observer said. “The net impact of the flip-flop impacts 473.77 Mn Tonne out the 1.69 BN Tonne of extractable reserves, implying that less than 72 per cent of domestic coal that had come under the high decibel auction process has been awarded. With merely 15 days left in the Supreme Court imposed deadline of March 31st, the fate of Rs1 lakh crore of investments in India’s core infrastructure sector have come under a dark cloud”, he added.
If the 3 blocks of Utkal B1, Utkal B2 and Jamkhani with extractable reserves of 322.15 Mn Tonnes had to be left out from the auction process at the last moment after Delhi HC order. Factoring in these blocks, the success percentage of “successfully awarded blocks v/s blocks initially planned to be auctioned” barely comes close to the 60 per cent mark. By no definition the end result of the high decibel auction process can be termed as successful unless the 8 blocks withheld are awarded to the highest bidders. This will also ensure that the “Make In India” initiative of government gets a boost with the core infrastructure players like Hindalco, JSPl, Jaypee Cements etc getting the much-needed ore security.
While 764 Mn Tonne of Coal was to be auctioned in Schedule II, there is clarity on 559.55 Mn tonne awarded to 13 successful bidders as 3 coal block allottees were left out from the final list. likewise in Schedule III auctions, 1043.63 Mn Tonne from 14 blocks was earlier planned for auctioning. With 3 Blocks taken out of the auction purview based on Delhi HC order, the concerns are further escalated as 5 out of the 13 winning bidders have been left out for now. This has resulted in clarity on only 664.171 Mn tonne of coal from 8 blocks, leaving 379.46 mn tonne from 6 blocks (including Jamkhani) buried under the pits for now. If one were to add the reserves of mines like Durgapur II Taraimar, Durgapur II Sariya, Dongri Tal II etc. Which were withdrawn from auctions due to lack of interest from basic minimum bidders, the picture would get even gloomier.
Another industry observer feels, “The experience from coal auctions is far from its expected outcome. Maximizing revenue to make windfall gains for national exchequer was never the intent. Each Block has its own characteristics and its cost - value matrix differs significantly from player to player. If a block sees lukewarm or cold response during the auction, it is a reflection of the feasibility from the business perspective for participating bidders. And once auction results based on established policy parameters are clear and announced, excluding winning bidders from list of successful bidders is a major dent on domestic and global investor sentiment. A dent that will hammer sentiments of many more sectoral policies in the pipeline. “