The third tranche of the commercial coal block auctions has drawn to a close with the sale of the Namchik Namphuk block in Arunachal Pradesh finally getting concluded following an extended round of bidding.
Notably, auction for the block started on 10 Feb’22 at a floor price of 38% but was extended to 11 Feb after fierce bidding began among the participants.
The block was heavily contested by the 10 bidders in the fray, the maximum number for any block in the current tranche. In the end, Platinum Alloys came out on top by quoting a bid price of 344.75%!
Bids climb higher
The just-concluded round of coal block auctions saw record high bid premiums. First it was Koilajan, then Garampani and at last Namchik Namphuk received sky-high bids in the auction based on revenue-sharing model.
These blocks located in the north-east have one thing in common: they have low coal reserves, which indicate risk awareness of the investors given the need for long-term capital investment in blocks with larger reserves amid uncertainty over the future of coal.
In particular, Namchik Namphuk comprises a mix of coking and non-coking coals and possess requisite clearances, thereby attracting high bids.
The allotment will provide the winners a direct market in the region as operations at Coal India unit North Eastern Coalfields in Assam remain suspended since Jun’16.
Auction round-up
The other coal block offered on the final day – Utkal-C – was bagged by Jindal Steel and Power Ltd. at a final bid price of 45%.
Note: Brinda and Sasai are two separate blocks, but considered as one for sale.
With this, the sale of 10 blocks have been concluded in the third tranche. These were sold at an average bid price of 92%, supported by the record bids seen for the three coal blocks in the north-east.
The premiums were particularly high compared to the previous two tranches which had recorded an average final price of 27.78%, with the highest bid for a single block standing at 75.5%.
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