M L Sharma files petition in SC seeking quashing of coal auction to power sector

NEW DELHI: Advocate M L Sharma has filed a petition in Supreme Court seeking quashing of auction of coal blocks to all power companies, including Gare Palma IV/ 2 and 3 in Chhattisgarh that was won by Jindal Power Ltd at a very low price.

Sharma, based on whose petition the Supreme Court had de-allocated 204 coal blocks in September 24, has alleged that the coal block auction process adopted by the government was 'corrupt, illegal and unconstitutional.'

The petition has also alleged that the auction process created a serious financial loss to the treasury as the floor price fixed by the government at Rs 150 per tonne for steel sector blocks and Rs 100 per tonne fixed price for power sector mines is less than the market price of about Rs 3000-Rs 6000 per tonne.

Sharma has alleged that the government sold five parts of Gare Palma IV coal block in Chhattisgarh at different prices. The Gare Palma IV - 2 and 3 coal blocks, reserved for power sector, were retained by Jindal Power at winning price of Rs 108 per tonne while the company agreed to forego the mining cost.

Gare IV/5, earmarked for steel and cement sectors, was however bagged by Hindalco Industries at Rs 3,502 per tonne.

Coal secretary Anil Swarup has said that benefits from the auction come in three ways – auction proceeds over the life of the mines, royalty, and for coal blocks given to power plants as the reduction in power tariffs. For power plants coal block bidding take place in reverse auction method, where the bidder who quotes the lowest coal price to pass on to consumers wins.

Swarup had on Friday said the state governments were expected to earn Rs 37,050 crore as electricity tariff reduction from auction of six coal block auctions to power companies.