Mandakini may surrender its coal block:Nomura
Mandakini Exploration and Mining, may be one of those regretting their exorbitant bids at the recently concluded coal auctions and is ontemplating surrendering the Mandakini coal block owing to its economic unviability. More companies could follow suit, analysts said.
´Mandakini Exploration and Mining Ltd won the Mandakini coal block in the auctions with a ´negative Rs 650/tonne´ bid implying an outgo of Rs 550/tonne of coal consumed from the block to the state government,´ a Nomura report said, underscoring the poor profit margins projections.
The report said the firm is planning to surrender the coal block on account of the government issuing an advisory to regulators to cap the fixed charges of electricity from power plants using such captive coal.
Litigation on this issue is ongoing in the Delhi high court. India´s coal ministry auctioned 28 coal blocks earlier this year, under which power companies did ´reverse bid´ wherein the lowest bidder won the blocks. Several analysts had then flagged it as unviable.