'HC wants ex-allottees to be allowed to bid for own mines'

Menaka: Your comment on the victory that JSPL had in the Delhi High Court today? What do you make of it?

A: What the high court wants is that the prior allottee should be given an opportunity of submitting a bid for their own mine because based on those mines they have already set up an end use plant, they have created employment and they have already committed financially. So those on the block on the base of which they had built all these things at least they should be given an opportunity to bid for those blocks. That is a basic logic and similar is the case for others like Hindalco and Bhushan Steel also.

If you see the intention of the ordinance when it came after this high court judgment in September the ordinance came in October the government’s intention was very clear that the bid will be a sectoral bid which means steel will have to fight with steel, cement will have to fight with cement and other smelters this aluminum smelters or captive power plants will have to fight among themselves. However, when the approach paper came somewhere in December they had changed it to regulated and non-regulated.

So what has happened in the process whatever mines like our mines it was reserved for iron and steel - we are in iron and steel and captive power. Similarly, other steel plants had the end-use plant linked to their mines. All those mines now could fall in the category which is non-regulated. Now steel plant will have to fight with cement plant and they will have to fight with aluminum smelters for their captive power requirement. So essentially what will happen is the steel plant or steel companies which have been suffering for last four years with our recession their balance sheet is not as strong as the cement and aluminum companies balance sheet. Their purchasing power is quite different from their purchasing power so there is no level-playing field for steel companies. So the government will have to change that also and allow steel company to bid and compete with the steel, cement to cement. So the government needs to change the approach and from non-regulated-regulated they should go for sectoral play.

Menaka: I don’t now what the Delhi High Court order says because we don’t have the full order with us. What we do know is that as of now these two blocks will not be part of the power end use auction and that the Delhi High Court has directed a government appointed committee to review the allocation of end use. Do you think that this decision by the Delhi High Court will encourage several more companies even like yours who are unhappy with having to compete with cement, to approach the courts and ask for a review of this end use process and this may impact or delay the entire auction?

A: It looks like, because what the court ultimately wants because we are already set up end use plants based on particular mines which is allocated to you though it is termed illegal by the court but the illegal process was done by the government, not by the innocent allocates or innocent companies who have believed in the process and they have gone ahead while setting up the end-use plant.

Menaka: It cannot be the governments need or requirement to make it easy for you to easy to bid. The government is following Supreme Court directives and opening up this sector and making it more competitive in the spirit of natural resource allocation. So, I am just wondering your request that steel plants should have to compete only with steel and cement should have to compete only with cement, is that something you are likely to take to court now encouraged by this Delhi High Court decision in favour of JSPL?

A: We are examining those things also and it will encourage us certainly if we are given right legal advice, we may go and take all legal recourse for that.

Menaka: So, this JSPL decision encourages you to do that, that is what I am asking?

A: Yes, it certainly encourages us, it compels us to think on those lines because you will appreciate we are neither given right of first refusal, we have already set up everything.

Menaka: Right of first refusal is not something that the government is obliged to give you?

A: In mining and mineral development regulation act when amendment has come where the government is putting up all the other mineral for auction they are given first right of refusal to existing mine owner and their lease is expiring because they also know they already have the end use plant linked to those things, employment is created, financial commitment is made to take care of all those things they have already given right of first refusal in that case. Why not the same thing they apply for the coal block also.

Nigel: For your particular coal block that is going to be up for auction the highest numbers of bids were received, it was more than 10 bids were received. Now you are talking about a level playing field and the likes do you believe that this could remove some part of the competition if this goes ahead.

A: If sectoral biding is made there will be a level-playing field and will not be an unhealthy competition.

Nigel: Do believe that this could derail the entire auction process or do you think it is strictly reserved to these two?

A: By March 31, all running blocks, the government will have to handover to the successful bidder any delay because the government is running very tight schedule. As per the existing schedule, by end of March, they will be able to handover the mine to the new allottees or the successful bidder. So, any delay in that will have potential to jeopardize or substantially delay the whole process.