5th round of captive coal block auctions deferred indefinitely

17 July 2017

The coal ministry has deferred indefinitely the fifth round of captive coal block auctions citing lack of demand from steel makers, despite a request from the steel ministry to continue the bidding for interested firms.

The ministry has issued a notification to the prospective bidders that the demo e-auction and the e-reverse auction (financial bidding) will not take place as scheduled. It had last year annulled the fourth round of coal mine auctions due to lack of adequate number of bidders.

A senior coal ministry official said the bidding has been deferred due to lack of adequate number of bids from steel makers, most of which are in bad financial position. The coal ministry has received a request from steel ministry to award the blocks to interested firms, he said.

Most of the captive coal blocks offered did not receive even the minimum three bids required for reverse e-auction. In such cases, the coal ministry suspends the bidding. The ministry, hence, decided to defer the bidding, he said.

The fifth tranche of mine auctions was carried at steel ministry’s insistence. The coal ministry had in April this year offered six blocks – five in Jharkhand and one in Madhya Pradesh – for production of iron and steel. The blocks include Rohne OCP with estimated reserves of eight million tonnes and Rabodih containing 2.5 million tonnes of coal.

Only a few firms including JSW Steel and Tata Steel evinced interest in the fifth round of coal auctions. Steel companies dominate the list of 12 most stressed loan cases being pursued under the insolvency and bankruptcy code.

The list includes five steel companies – Essar Steel, Bhushan Steel, Bhushan Power & Steel, Monnet Ispat and Electrosteel Steels. Most of these five companies have been referred by the lenders to National Company Law Tribunal. Jindal Steel & Power Ltd, a prominent player with most number of captive coal blocks before the Supreme Court de-allocated 204 mine leases, did not bid for coal blocks in the fifth auction tranche.

The last date for technical bid submission for the latest round of auctions was May 22. The coal ministry is examining the technical bids and is expected to take a final call by July 17.

Source-ET