Coal verdict: Investors wait for policy cues
Domestic companies and global investors are waiting for cues from the government on the timeline and rules for pricing and allotting coal mines that the Supreme Court cancelled in a landmark judgement on Wednesday.india Updated: Sep 25, 2014 13:31 IST
Domestic companies and global investors are waiting for cues from the government on the timeline and rules for pricing and allotting coal mines that the Supreme Court cancelled in a landmark judgement on Wednesday.
Of the total 218 blocks, only four have been spared — one each of SAIL and NTPC, and two belonging to Reliance Power-owned Sasan Power Ltd.
Analysts also said that there could be a sharp jump in India’s coal imports in the short-term that the apex court’s decision also affects the 46 operational blocks.
“In the event of complete de-allocation of the coal blocks, the import bill of India would jump by $3 billion,” broking and research firm Macquarie said in a recent report.
Domestic industry leaders said that the court’s ruling will likely usher in transparency, but cautioned that it could hurt sentiments and business climate if the government doesn’t quickly frame new rules and carry out the bids.
“I’m sure the government has a back-up plan as to how to accomodate the mines that have been deallocated,” said Kumar Mangalam Birla, chairman, Hindalco.
Tata Group firm Tata Power said in a statement, “Tata Power would study the order... the company looks forward to opportunities of having a new, legally enforceable framework, by which coal blocks could be awarded, perhaps at an early time.”
FICCI president Sidharth Birla hoped that the apex court’s decision would act as a precursor to a review of the “coal sector policy, paving way for full-fledged coal reforms.”
“The cancellation of coal blocks involves significant investments and will impact the economy, therefore a quick response from the government will help allay the apprehensions,” he added.
Arresting the potential erosion in investor confidence is critical to sustain the momentum that the Indian economy was showing in clawing out of its deepest slump in 25 years.
India’s gross domestic product — the total value of goods and services produced in the country — grew at 5.7% during April-June 2014, from 4.6% in the previous quarter, signalling a major jump of sub-5% growth in the last two years. Wholesale inflation rate plunged to a five-year low of 3.74% in August, prompting industry leaders to pitch for lower borrowing costs to assist investment plans, critical to spin jobs and multiply income.
First Published: Sep 24, 2014 23:52 IST