The third tranche of auctions for sale of coal blocks got off to a flying start on the opening day, and the momentum continued on the second day too.
The bidding process witnessed a new milestone being set in terms of the final offer, with sale of Garampani block concluded at bid price of 288.25%, fetching a premium of 272% over the floor price.
This comes only a day after the record for the highest bid was breached with the sale of Koilajan block which was sold at 81.5%.
It is important to note that the same set of participants were in the fray for Garampani as on the previous day, for Koilajan. After a long rally, Assam Mineral Development Corporation came out on top again this time, thus securing its second coal block in these auctions.
Based on the revenue sharing model, sales of coal blocks are carried via auction in which the bid parameter is the percentage share of revenue payable on actual production.
Usually, bidders have been reluctant in securing coal blocks at such high price offers. In fact, the average final price was recorded at 27.78% over the two tranches that have been concluded so far.
However, Garampani and Koilajan caught attention primarily due to the lesser geological reserves, which has been a major criteria for preference in these auctions. Both these blocks located in Assam have geological reserves below 1 mnt, comprising of premium non-coking grade of G5 specification.
Dominance of end-users
Apart from Garampani, two other coal blocks were offered on sale for the day, and both were secured by the end-user industries but at nominal price offers.
Meenakshi coal block, located in Odisha, was sold at a bid price of 10.25% against the 10% floor price. The block was bagged by Hindalco Industries.
Sale for Majra block began at a comparatively high floor price of 18%, but it was secured at ease in the final round by BS Ispat at a bid price of 18.25%.
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