Within seven days of closing auctions for the first set of coal blocks and declaring winners, the Coal Ministry is investigating three such awards including one that went to Naveen Jindal’s Group.

Multiple sources associated with the auctions told Business Line that the Ministry has directed the Nominated Authority to re-examine three bids as the blocks went much lower than expected.

While sources declined to name the blocks on the grounds that “investigations were on”, the other two have been won by BALCO and BS Ispat.

“If some tampering is found in the bid process the blocks may be re-auctioned,” another official said.

Though the auctions for 19 blocks (seven for power, rest for other sectors) were completed in nine days on February 22, the final agreements were yet to be signed.

The concept of reverse bidding adopted for power sector has been debated time and again. Under the concept the bidder has to bid below the ceiling price of the coal that is factored in the existing (power) tariff till it reaches zero. But, once it reaches zero then the forward bidding starts – the companies quote the highest price to win the asset.

The reverse bid was used to ensure that auction process does not lead to increase in tariffs at the consumer end. Critics of the concept said, by doing so the Government was artificially controlling the end tariff.

The seven blocks reserved for power sector saw aggressive bidding by the players, the highest being from Essar Power at ₹ 1,110 a tonne. But, this price was derived after the reverse bid reached zero and forward bidding started. This happened for all the seven power blocks.

In case of Gare Palma IV/2&3 which was won by Jindal Power Ltd, despite having 155.49 million tonne extractable reserves it still went at much cheaper rates than others at ₹ 108 a tonne. This block was earlier also owned by Jindal.

The Coal Ministry had then defended the award on the grounds that one has to consider the value generated by the power tariff reduction which goes to the consumers.

Next phase of auctions for 21 ready to produce mines begins later this week. The technical bids for these blocks will open on Monday.

Meanwhile, for 43 blocks reserved for public sector entities (both centre and state), the Ministry has received 107 applications. Gare Palma II in Chhattisgarh got the highest number of applications with nine PSUs showing interest in the block.

The total number of blocks for allotment were increased to 43 from 35 after the keen interest shown by PSUs. Earlier, 69 PSUs had applied for the 35 blocks. The allotment process is expected to be completed by April 2.

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