Will India’s recent coal block auctions actually burden banks and skew the fuel market?

The first part of Scroll’s analysis of the coal block auctions took a close look at the auctions for the steel, cement and aluminium sectors. It found an extremely wide divergence in the winning bids. Some blocks went for twice the notified price of coal, or the price at which the bulk of India’s coal is sold, while others fetched a quarter of it. A similar divergence is also visible in the auctions of coal blocks for the power sector. Here, the concern is over the viability of the some of the bids. In a report published on March 16, which analysed the second round of auctions for the power sector, stock brokerage firm HDFC Securities said, “We believe there is a high probability of end use plants becoming unviable, even after factoring in merchant sales.”

the second part of our two-part story on the ongoing coalblock auctions. See previous post.

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Are the coal block auctions as successful as the Modi government claims?

At a gathering in Paris last month, drawing attention to the coal block auctions that have taken place under his government, Prime Minister Narendra Modi boasted, “Twenty coal blocks out of 204 have been auctioned so far and we got more than Rs. 2 lakh crore from them.” The factual error in the statement – 31 blocks, not 20, have been auctioned in two rounds – might be the least of the problems with the government’s triumphal sentiment.

To start with, as a report in Business Standard explains, the Rs 200,000 crore is not a one-time payment flowing into government coffers, but revenues that are likely to accrue over the lifetime of the mines. These revenues include royalties that states would have earned regardless of whether the mines had been allotted or auctioned.

While auctions are an improvement over the discretionary allotments of the past, and the government has shown swiftness in moving ahead with them, what isn’t well understood is that the design of the auctions has a significant impact on their transparency and outcomes. Competitive auctions are meant to provide a market-based mechanism to discover the value of a resource. But poor design could impede price discovery.

As the government prepares for a third round of auctions, Scroll in a two-part series, takes a closer look at the first two rounds. Our analysis raises worrying questions about both the design of the auctions and their outcomes.

Ambiguous drafting continues to dog the NDA’s coalblock auction plans

an iffy clause in India’s new coal bill

the coal bill was passed by the lok sabha yesterday. it now goes to the rajya sabha. the auctions will start soon. and i am waiting to see how fair the auctions are. and whether oligarchs again manage to corner the damn blocks.

india’s coal boom and attendant air quality fears…

another update on the looming captive coalblock auctions

out today. this update on the emerging blueprint for coalblock auctions.

With the draft rules of the proposed coal block auctions in the public domain, a set of industry experts says things are getting muddled as the government tries to balance contrasting objectives…  “The government is again committing the historic blunder of tying itself in knots,” says Vinayak Chatterjee, chairman and managing director of Feedback Infrastructure, a Gurgaon-headquartered consultancy. He and other industry executives that ET spoke to outlined five major concerns.

these concerns are: might oligopolies resurface in the coal sector? should blocks be given free to government companies? is the government micromanaging these auctions? are the auctions being designed well? and, why is the government persisting with the captive coalblock concept?