Delhi High Court orders removal of 2 JSPL coal blocks from auction

NEW DELHI: The government’s plan to auction coal blocks received a blow on Wednesday as the Delhi High Court halted the sale of two mines that were previously attached to a steel plant of a Naveen Jindal firm but have now been reserved for the power sector.

The order comes as a relief to Jindal Steel & Power Ltd (JSPL) which had challenged the government decision to change the end use for the Utkal B1 coal block in Odisha and Gare Palma IV/6 in Chhattisgarh to power from steel. The court has also ordered separation of the Utkal B1 and B2 blocks, which the government had merged, the company said in a statement. "The specified end use as also issue of their merger is to be reviewed in light of the observation made in the judgement before they are put up for auction again," it said.

Coal secretary Anil Swarup asserted that this was not a setback to the auction process as these blocks were not part of the 23 being bid out in the first phase, although industry insiders said the high court action would trigger more litigation as there were 15 blocks where the government had changed the end-use of coal to production of power. These were previously reserved for non-regulated industries like steel and cement.

"The court has asked us to review the end use of the two blocks and we will complete the review of just these two blocks in a week," Swarup told ET.

Welcoming the court ruling, JSPL said it was "optimistic that the (government’s) technical committee will consider the merits for end use of coal blocks as envisaged earlier". JSPL has already invested more than Rs 30,000 crore in setting up plants in Odisha and Chhattisgarh to use coal produced from the Utkal B1 and Gare Palma IV/6 mines, it said.

JSPL had argued that as per the ordinance, payment of Rs 295 per tonne penalty was the only eligibility criteria for bidding for the blocks and that the government does not have the right to change the end-use provisions.

Meanwhile, Bhushan Steel has approached the Delhi High Court on Wednesday challenging the auction process. Sarda Energy and Jayaswal Neco have also approached the court over various matters.

ET on February 6 reported about allegations of coal miners, that the government had exaggerated the grade of coal than the actual in tender documents of several mines and offered no compensation for land taken on lease for mining purposes. The variation in the grade mentioned in the bid documents from the actual output will have an impact on the pricing of coal blocks, royalty and tax rates and efficiency of end-use projects.

On Jayaswal Neco’s petition, the Delhi High Court has issued a notice to the Centre and passed an interim order saying that any steps taken on "the tender process in respect of Gare Palma IV/4 coal block shall be subject to further orders of this court". The company’s plea will be heard by the court on February 23, along with GVK Power’s petition seeking higher valuation for its mining infrastructure.