Govt to reject JSPL’s winning bid for coal block in Chhattisgarh

New Delhi: The government has decided to reject Jindal Steel & Power’s (JSPL) ₹230-per-tonne bid for a captive coal block in Chhattisgarh, claiming the valuation to be too low even though the company was the highest bidder for it in the recent round of auctions, a senior official said.

JSPL said it was not aware of any such decision on the Gare Palma IV/1 block and that it expected the government to decide fairly on the matter.

All other blocks will be awarded to the successful bidders in the auctions held in the first week of November, the official said.

The coal block was auctioned earlier in 2015 as well when it had received a ₹1,585-per-tonne quote from the Vedanta group’s Bharat Aluminium Company (Balco), the official told ET. “Even that was rejected as low by the coal ministry. How can the government now accept this bid which is too low than the previous rejected bid?”

In response to ET’s queries, JSPL said its closing bid of ₹ 230 per tonne was about 55 per cent higher than the reserve price of ₹150 for the block and the third highest for the six blocks that were auctioned in the recent round. “We believe the government will decide fairly with regards to the auction of the coal block. We will respect government’s decision,” managing director VR Sharma said.

This is the second time that the coal ministry has rejected JSPL’s bid for coal blocks. In the first round of auctions in 2015, the government had on similar grounds rejected JSPL’s best bids for the Gare Palma IV/2&3 and Tara blocks. The company had challenged the bid rejection in the Delhi High Court, but lost the case.

JSPL’s shares closed 2.36 per cent lower at ₹138.75 on the BSE Friday, when the benchmark Sensex ended more than 1 per cent higher.

The company had proposed to use the Gare Palma IV/1block for its Raigarh plant as well as for captive power plants near the mine.

The coal ministry had auctioned five other captive blocks in the first week of November. These were auctioned for the first time and had no parameter for comparison, and hence are being awarded to the respective highest bidders, the official said.