 "Jindal gets stay against Govt move to cancel Tara bid")
Earlier in the day, the Naveen Jindal-promoted Jindal Steel and Power Ltd (JSPL) had filed a petition in the court against the government’s decision to cancel its bids. Last week, the Centre had announced it had cancelled the bids for the Gare Palma IV/1, IV/2, IV/3 and Tara coal blocks on the grounds that the bids were too low.
The Vedanta group-promoted Bharat Aluminium Company had emerged as the winning bidder for the Gare Palma IV/1 block.
On Monday, the JSPL stock fell as much as 14.77 per cent, before closing at Rs 154.4, down 6.17 per cent.
Advocates Kapil Sibal and Rajiv Nayar appeared for the company in the Gare Palma case and Gopal Subramanium was the counsel in the Tara block case. Sibal said the government’s order rejecting JSPL as the successful bidder was arbitrary, adding it was trying to allot the mines to Coal India Ltd (CIL). He said JSPL was the highest bidder and in case the government had not taken this step, the company would have operated the mine after March 31.
Subramanium said the effective bid for the Tara block was fair and much higher than the price and benefits offered by CIL. He added JSPL had been disqualified from participating in the e-auction for other coal mines on the grounds that it was the preferred bidder for the Tara mine.
The court issued a notice in the Gare Palma writ petition, directing the government to file a reply within two days; the rejoinder to it would be ready during the next hearing. On the Tara coal mine, the court issued a notice and directed a reply to the petition be filed within two weeks and the rejoinder to it a week thereafter. It said in the meanwhile, the government should maintain status quo on the Tara coal mine.
The government had reviewed bids for nine blocks, with five being cleared.
The bids questioned were those by JSPL, Balco and BS ISpat in the first phase of auction; while JSPL’s bid was for the power sector, the other two were for the unregulated sector. In the second phase, low bids by JSPL, Hindalco, Usha Martin and Tirumala Industries were re-examined.
“While the winning bid for Gare Palma IV/2&3, with power generation as end-use, was Rs 108 a tonne, other blocks for the same end-use received bids of Rs 37-1,110 a tonne. So, the company’s bid was just Rs 8 beyond the reserve price,” said an official on condition of anonymity. Jindal won the Tara block in the second phase of the auction for Rs 126 a tonne, while the bid received from the power sector was Rs 202-670 a tonne. For Gare Palma-IV/1, which recorded a winning bid for Rs 3,025 a tonne in forward bidding, the range was Rs 2,302-3,502 a tonne.
In its response last week, JSPL said it had followed “a consistent and prudent bidding strategy, through the coal block auction process, with a serious long-term business perspective”.
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Of the 34 coal blocks auctioned in two phases, letters of allocation for eight haven’t been signed with successful bidders; for these blocks, the coal ministry had received comparatively low bids and, therefore, these were sent for re-examination by the nominated authority for coal blocks re-allocation.
The first phase of the auctions saw 21 operational coal mines up for auction, while the second phase had 19 about-to-produce mines. JSPL had bid the lowest amounts in both the phases, for power as the end-use. Balco was the lowest bidder for the unregulated segment.
For the power sector, reverse-bidding was followed — the company with the lowest bid got the block and the price discounted below the ceiling price would be reflected in the final price of power. For the unregulated segment, there was forward bidding — the highest bidder won the block.