Picking up after 'Coalgate' and the 2G scam: How the bidding is unfolding

Picking up after 'Coalgate' and the 2G scam: How the bidding is unfolding
Picking up after 'Coalgate' and the 2G scam: How the bidding is unfolding
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| The News Minute| March 10, 2015| Updated 1:32 p.m. IST|

Coal and spectrum allocations, which were topics of hot debate in the run up to the 2014 elections, have until now fetched the BJP-led government more than the reported Rs 3 lakh crores after the latest rounds of bidding. 

According to an Economic Times report, 32 coal blocks have been auctioned so far online and they have added Rs 2.07 lakh crore to the government’s kitty already. 

This after the coal block allocation scam, which had rocked UPA-II and had severely dented Manmohan Singh’s credibility as the Prime Minister. 

The final report tabled by the CAG on the coal block allocation in August 2012 stated that "windfall gains to the allocatees were Rs 1856 (Rs 1.86 lakh crore) billion". This resulted in the Supreme Court verdict in September 2012, which ordered for the cancellation of 204 out of the 218 coal blocks allocated since 1993. 

Out of those 204 coal blocks, 32 have been auctioned so far with the first 19 alone making the exchequer rich by Rs 1 lakh crore during the first tranche of bidding. Thus, the thirteen subsequently auctioned mines, which had gone under the hammer in the second tranche of bidding which is currently underway, have fetched Rs 1.07 lakh crore. 

A SBI estimate from a report in January 2015 says that the "total payment to the states in next 30 years would be more than Rs 4 lakh crore for 204 blocks that have been cancelled by the Supreme Court. In addition to this, an equal amount will also flow to the states treasury by way of royalty". 

On March 4, the Lok Sabha passed Coal Mines Bill with the Coal and Power Minister, Piyush Goyal issuing a warning regarding a crisis in the sector and of closure of mines. There were guarantees of a transparent bidding process that was to take place online after the Supreme Court order on de-allocations.

On Monday, after 31 rounds of bidding, two mines, Utkal C in Odisha and Lohari in Jharkhand together fetched over Rs 11,000 crore.

Here is the first list of successful bidders.

(Source: MSTC Limited website)

The spectrum allocation, on the other hand, assumes importance as frequencies in four bands, 800, 900, 1800 and 2100 MhZ are being auctioned together. 

After completion of the sixth day of bidding on Tuesday, the amount which is assured to the government fell for the first time since bidding commenced last Wednesday. The revenue from the allocation dipped to Rs 92,000 crore yesterday from Rs 94,000 crore on Monday. 

According to another Economic Times report, as per the end of the fifth day of bidding on Monday, the government were assured of Rs 94,000 crores. This is Rs 12,000 crore above the Rs 82,000 figure the government had set down as an estimate. 

The 2G spectrum scam, which cost the exchequer somewhere to the tune of Rs 1.76 lakh crores as per the CAG report filed in 2010, led to the Supreme Court cancelling 122 licenses of 9 mobile operators in 2012.

Furthermore, licences for all frequencies, except the 2100 band, were allotted during the first round of allocations 20 years ago and their licences are due to expire. So the 900 MhZ band, which supports longer distances telephonic capability with fewer towers and also 2G and 3G is expected to interest bidders. 

The Aditya Birla Group owned Idea Cellular is the most susceptible, hence, with 75% of its revenue coming from this band and also Reliance Communications, who also have most of their infrastructure catering this spectrum. Reliance Jio, owned by Mukesh Ambani and the only 4G broadband providers in the country meanwhile are vying with Bharti Airtel for the 4G services in the 800 Mhz spectrum.   

In 2010, the government had earned over Rs 1 lakh crore from the first auctions of the 3G and 4G spectrums. 

The auction headed into its sixth day today.

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