Delhi HC halts final bidding for 3 coal blocks

The Delhi High Court (HC) directed the government on Thursday to hold back bidding for three coal blocks in Chhattisgarh for which Sarda Energy and Minerals Limited had submitted its initial price offers (IPOs) till February 18. The company in its plea in the HC had challenged the two-phase auction process, in which half of the round one bidders would be eliminated.

A Bench comprising Justices Badar Durrez Ahmed and Sanjeev Sachdeva allowed the government to open the IPOs for the three blocks-Gare Palma IV/1, IV/4 and IV/7-as well as announce the qualified bidders, who were in the top 50 per cent bidders, and said that the same would be subject to the final outcome of Sarda's plea.

"In the present case, although we have permitted announcement of qualified bidders, we direct respondent (coal ministry) not to conduct electronic auction (final bidding) till the next date of hearing on February 18," the Bench observed.

Sarda has opposed the conditions in the auction process allowing multiple bidding by a company as well as removal of 50 per cent of bidders after opening of IPOs. Under the auction process for blocks for unregulated sectors like steel, sponge iron, cement, only the top 50 per cent of bidders after opening IPOs would move to round two of electronic auction when final financial bids are to be placed. Companies are also allowed to submit multiple bids by submitting IPOs in the name of its different bifurcated units.

The court agreed that there is logic in permitting multiple bidding, but questioned the twophased auction process saying IPO is only to determine floor price and once the same is determined, "let them (bidders) all bid". "You (government) will then get a better price." The HC also observed that having more number of players would minimise chances of cartelisation saying it felt that in the current situation, especially in the case of the three blocks, there is a distinct possibility of cartelisation.

Out of the 176 applications for mines received by the coal ministry, 134 have been found to be technically valid, coal secretary Anil Swarup told the media on Thursday. Hindalco, Adani Power and Reliance Geothermal Power are among the 134 companies which cleared the initial stage of auction for 21 blocks. JSPL, Balco, Essar Power MP Ltd, GMR Chhattisgarh Energy Ltd, GVK Power, JSW Energy, Reliance Cement Company, Ambuja Cement, Hindustan Zinc, Sesa Sterlite are some of the other major companies.

JINDALS CHALLENGE COAL ORDINANCE

>> The Delhi High Court (HC) has agreed to hear pleas of JSPL and JPL against the second Coal Ordinance 2014 provisions on Friday

>> The pleas relate to determination of compensation payable to prior allottees towards mining infrastructure and land value

>> The Jindal Group has contended that the compensation computed for some blocks in Chhattisgarh that were earlier allotted to it and it was operating prior to cancellation was irrational

>> The firms maintained that various expenses incurred by them towards mining infrastructure and acquisition of land has not been considered

>> The companies have sought that the Ordinance's provision for computing compensation be declared unconstitutional