Union coal ministry on Thursday approved the allocation of five coal mines for the unregulated sector after the auction of the six mines a month ago. The press release mentions no reason for the sixth coal block Gare Palma 4/1, where Jindal Steel & Power Limited (JSPL) was the highest bidder at Rs 230 per tonne at 53 percent premium over the reserve price.

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“Gare Palma 4/1 had received a bid at Rs 1,565 per tonne by BALCO in 2015 but eventually coal ministry decided not to allocate. Now that JSPL has bid at Rs 230 per tonne, the ministry is in fix as to how it can approve allocation as in the past it received a higher bid for the same block,” said a government source privy to the information.

However, coal ministry told CNBC-TV18 that decision on JSPL's bid for Gare Palma 4/1 was not rejected but still under consideration.

The coal ministry had offered 27 coal blocks for auction for the sectors like iron & steel, cement, and captive power plants but received interests for only six coal blocks.

"One should always stand with the bidding done. Given the constraints, it takes so much time to bid out. The coal prices and expectation of economic growth have changed. Besides, coal is a dying commodity,” said an analyst closely tracking coal auction.

On the last day of the auction, Vedanta bid the highest for Jamkhani coal block at Rs 1,674 per tonne, which has a capacity of 2.6 million tonne per annum. The company will benefit from the Jamkhani coal block as it struggles with coal supply issues for its aluminium plant in the state of Odisha.

Amongst other bidders, Birla Corporation's bid was the highest for two coal blocks at Rs 154 per tonne for Bikram coal block and Rs 156 per tonne for Bramhapuri coal block.

The second-highest bid came from Prakash Industries at Rs 1,100 per tonne for Bhaskarpara block as the grade of coal is high on calorific value and is well connected with the rail network. In 2015, Bhaskarpara had received a bid of Rs 755 per tonne but the winner eventually surrendered block to the government.

The winners of this round of coal block auction will be allowed to sell 25 percent of the coal produced from the mines offered in the open market.

First Published:Dec 5, 2019 5:53 PM IST