The first day of the coal block e-auction was dramatic in more ways than one.
It started with a zero-rupee reverse bid for the Talabira-I coal block kept for the power sector at a reserve price of Rs 100.
At the other end, Rs 1,002 a tonne emerged as the opening bid for the Sial Ghoghri coal block -- kept for the unregulated sector, already Rs 852 a tonne over and above the floor price of Rs 150 set by the government.
By the evening, the Anil Ambani-promoted Reliance Cement emerged as the successful bidder at Rs 1,402 a tonne for Sial Ghoghri.
The Talabira-I coal block ultimately went to GMR Chhattisgarh at a negative bid of Rs 478 a tonne after nine hours of bidding.
Incumbent holder Hindalco of the AV Birla group lost the block in the process and has the option to sell the infrastructure developed by it to GMR.
Hindalco, which had its steel and captive power plant attached to this mine, will now have to bid for another block to get coal supply.
Vying for the Talabira-I block were Adani Power Ltd, Essar Power MP Ltd, GMR Chhattisgarh Energy Ltd and OPG Power Generation Pvt Ltd.
For Sial Ghoghri, with six million tonnes of coal reserves, the fight was between Reliance Cement, Vedanta Group’s Hindustan Zinc Ltd and OCL Iron & Steel.
With Rs 1,402 as the winning bid, the entire coal has been valued at Rs 841.2 crore over a 15-year period.
Reliance Cement will have to pay the Madhya Pradesh government an upfront payment of 2.5 per cent of the net present value in the first tranche, followed by an equal amount and then 5 per cent within one year.
The Sial Ghoghri block earlier belonged to Prism Cement, which did not participate in the bidding for it.
Bidding started at Rs 1,002 a tonne and rose to Rs 1,030 a tonne after an hour of slow going. Bids were required to come in multiples of Rs 2 per tonne.
The coal ministry officials present had already started calculating the revenue that Madhya Pradesh would get out of the block.
But in half an hour, the bid jumped to Rs 1,180 a tonne.
The auction being done on the coal e-auction portal mstcecommerce.com and was streamed live by the Press Information Bureau for reporters and coal ministry officials. Which bidders were pushing up prices was, however, not in the public domain.
In a matter of minutes, bids touched Rs 1,300 a tonne.
That prompted coal minister Piyush Goyal to rush to the PIB conference hall and hail it as a “historic day” that, according to him, “would change the fortunes of the country”.
The government has a two-pronged strategy for e-auction of cancelled coal blocks.
Where end use is generation of power, there will be a reverse auction -- whoever quotes the lowest tariffs to ensure that the impact of the coal price on power tariffs is minimal would get the mine.
Whereas for unregulated sectors, there would be a forward bidding model. But the game changed on the very first day. So much was the eagerness to get a coal block that Talabria-I with 28 million tonnes of reserves received a zero-rupee reverse bid.
That, under auction rules, led to forward bidding.
The zero bid meant the bidder would take the fuel cost on his account books rather than passing it on to the consumer.
A delighted Goyal said, “This indicates that the price of coal would go down and so will the price of power. We promised and we can see live here that it’s happening. Power cost is falling.”
VYING FOR COAL
- The first phase of e-auction started on Feb 14 and will continue till Feb 22
- 23 operational coal blocks are being put up for auction
- A minimum of two blocks will be auctioned each day
- The govt is re-allocating 204 coal blocks whose allotments were cancelled by a Supreme Court order in August 2014
The image is used for representational purpose only
