Jindal Power wins ‘most sought-after’ Gare Palma coal block in ongoing auction

Representative image

The Naveen Jindal-promoted Jindal Power emerged as the preferred bidder for the Gare Palma Sector IV/2 and Gare Palma Sector IV/3 blocks as part of the ongoing auction of commercial coal mines. With technical bids from 15 companies, this was the block with the highest number of technically qualified bids in the latest round.

Jindal Power‘s closing bid for the block was at 30.75 percent share in the revenue generated, according to data posted on the MSTC website, MSTC is the nominated authority for the auctions. Located in Chhattisgarh, this is an explored block with an expected output of 7 million tonnes of thermal-grade coal annually. Jindal Power is expected to use the coal for its coal-based power plant at Tamnar in the same state.

“In the current round of auctions, Gare Palma Sector IV/2 and Gare Palma Sector IV/3 block is one the larger mines and one of the operational ones, which explains the higher interest in it. For Jindal Power, they operate the remaining parts of Gare Palma and were also the original allottees of this mine before the SC (Supreme Court) deallocation, so bidding and winning makes strong business sense for them,” said Hitesh Avachat, associate director, CareEdge Ratings.

Along with Jindal Power, there were 14 other qualified bidders for this block, including JSW Steel, Bharat Aluminium, Gujarat Mineral Development Corporation.

Of the 141 blocks up for auction, bid results for 18 mines have been announced so far. Of these, Shree Cement, Dalmia Cement, JSW Steel, Ambuja Cement, JSW Cement were among the winning bidders. Of the 18 winning bids, the highest so far was at 65.50 percent revenue share, by a bidder named Coal Pulz Pvt Ltd for the Namchik Namphuk block in Arunachal Pradesh.

“Some of the revenue bids for blocks so far are on the higher side, it was so in the last round too. Time will tell if they are viable. The focus right now seems to be to secure a coal source where costs can be controlled and predicted to some extent,” said Avachat.

JSW Cement’s winning bid for the Marwatola VI block in Madhya Pradesh was at 42.50 percent and JSW Steel quoted 31.50 percent revenue share for the Parbatpur Central block in Jharkhand.

Shree Cement said the company has participated in the coal block auction with the intention of creating fuel security through long-term fuel supply sourcing options for its operations while having the flexibility to use the coal for other commercial purposes as well. The company on February 27 quoted a winning bid of 27.25 percent of revenue for the Datima coal block, located in Surajpur tehsil in Surguja district of Chhattisgarh.

The mines auctioned so far in this round are expected to generate a combined annual revenue of more than Rs 1407 crore, excluding the Gare Palma blocks and three others, according to the coal ministry. Data for the other blocks was not available.