Mumbai: Jindal Steel and Power Ltd (JSPL) today moved the Delhi High Court against the decision of the Centre to cancel coal blocks allocated to it.
JSPL said it feared the blocks Gare Palma IV/2, IV/3 and Tara in Chhattisgarh might be allocated to someone else as the government is “moving very fast”.
The matter was mentioned before a bench of justices B D Ahmed and Sanjeev Sachdeva by senior advocate Rajiv Nayar, who sought an urgent hearing. The court listed the matter for hearing today before the appropriate bench.
Shares in Jindal Steel slumped as much as 14.9%, heading towards their biggest daily loss since June 11, 2013. They pared some of the losses later.
The absence of coal blocks for the company’s power business leaves its 3.4 gigawatt (GW) of capacity near-stranded with linkage of only 1.2 GW in place, analysts at brokerage Kotak Institutional Equities said in a report to clients.
“Limited linkage and the absence of captive coal blocks would make imports an expensive and logistically difficult choice for fuel,” the report added.The absence of coal blocks for the company’s power business leaves its 3.4 gigawatt (GW) of capacity near-stranded with linkage of only 1.2 GW in place, analysts at brokerage Kotak Institutional Equities said in a report to clients.
“Limited linkage and the absence of captive coal blocks would make imports an expensive and logistically difficult choice for fuel,” the report added.
The loss of the coal mines will have an adverse impact on the load factor of Jindal Steel’s power plants in Chhattisgarh where the mines in question are located, chief executive Ravi Uppal said in a television interview.
“The present government is working so hard to see all the stalled projects become functional. Here we have a project which is functioning and I see no reason that anything should be done which will cause a functioning project to become a stalled project,” Uppal told ET Now news channel.
Coal Secretary Anil Swarup could not be reached immediately for comment.
Although the winning bids for the mines were the highest in their individual auctions, they were low compared with the winning bids for other similar blocks. The company won the Gare Palma-IV/2&3 blocks (set aside for the power sector) in Chattisgarh, clubbed for bidding, at Rs 108 a tonne, the lowest bid for any block so far.
The total capacity of these two mines is 155 million tones, with an annual peak rated capacity of six million tonnes, the highest among the blocks on auction. The mine comes with an operational power plant and the company has signed power-purchase agreements with Tamil Nadu and Karnataka.
After winning the block, Jindal Steel and Power Ltd (JSPL) had tweeted, “Change in tides, #JPL wins back GARE PALMA IV/ 2 & 3 coal mine #WontGiveItBack”, the hashtag a take on the Indian cricket team’s ad campaign theme for the ongoing ICC World Cup.
Late last week, however, the coal ministry after two weeks of re-examination rejected bids received for three of the eight coal blocks being scrutinised, citing “comparatively low bids”. The third block had been won by Bharat Aluminium Company (Balco), which is promoted by the Anil Agarwal-led Vedanta Group.
Senior government officials said last week that their analysis showed the bids for these blocks were found to be too low compared with those from the same sectors for other blocks.
“While the winning bid for Gare Palma-IV/2&3 for end use in power generation was Rs 108 a tonne, other blocks for same end use received bids in the range of Rs 370-1,110 a tonne. So, the company’s bid was only Rs 8 beyond the reserve price,” an official had told Business Standard.
JSPL was one of the worst hit when in August last year, the Supreme Court ordered cancellation of captive coal blocks allocated over the past two decades. The company had nine blocks, of which three totalling 100 million tonnes were operational. Of the total penalty of Rs 7,000 crore imposed on owners for operational blocks, JSPL had paid the highest, Rs 3,000 crore.
The company had also filed a petition in the Delhi High Court against the provisions in the second coal ordinance regarding determination of compensation to be paid by prior allottees.
Of the 42 operational coal blocks cancelled, JSPL owned one of the largest coal reserves in Chhattisgarh, the Gare Palma IV, which had also achieved the highest production by the time Supreme Court verdict arrived.
Naveen Jindal is also one of the accused in the coal block allocation scam. The company recently cancelled its $10-billion coal-to-diesel project in Odisha, supposed to get coal from one of the cancelled mines of 1.5-billion-tonne capacity.
