In August 2022, the Adani Group controversially won ownership of a coal block in central India, despite there being no other bidders in this so-called ‘auction’. Now Adani has disclosed that it plans to sell the rights to this undeveloped coal block, known as Gondbahera Ujheni East. Experts warn that this unprecedented move could open the floodgates for speculative real-estate deals in coal-rich areas, with destabilising impacts on local economies. The livelihoods and rights of people who have inhabited these areas for generations would be further jeopardised.
Name of coal block: Gondbahera Ujheni East
Owner: MP Natural Resources Private Limited (An Adani Group Subsidiary)
Geological reserves: 250 million tons
Total geological area: 2040 hectares
Forest area: 1095 hectares
Location: Singrauli coal fields, Deosar, Singrauli, Madhya Pradesh
Current status: Set aside by Adani Group for sale
In an unprecedented development which could have far-reaching consequences on the energy security of the country, the Adani Group has decided to sell an undeveloped coal block which was allocated to it following two rounds of bidding last year. The block, Gondbahera Ujheni East, is in the Singrauli coalfields of Madhya Pradesh. (The general vicinity of the Gondbahera Ujheni coal blocks can be seen here)
The peculiar circumstances surrounding this particular coal block have previously been reported by AdaniWatch. No winner was declared in the first round of bidding for the block as there were no bidders other than the Adani Group subsidiary MP Natural Resources Private Limited. This Adani company also emerged as the only bidder in the second round of the auction, ultimately winning the coal block.
However, in its report for the fourth quarter of the financial year 2023-24, Adani Enterprises Limited has disclosed that it has put up the block for sale by ‘transferring all rights and obligations’ subject to regulatory approvals: ‘During the quarter ended 31st March 2024, the Board of Directors and Members of one of the subsidiaries of the Group, MP Natural Resources Private Limited, had approved the transfer of all rights and obligations under Coal Block Development and Production Agreement with respect to Gondbahera Ujheni East Coal Mine, subject to regulatory approvals from the concerned authorities. Consequently, all assets and liabilities pertaining to above Coal Block have been classified as held for sale.’
As per information obtained by Ayaskant Das from the Ministry of Coal through enquiries made under the Right to Information (RTI) Act, 2005, until now, no coal block, auctioned since June 2020, has been surrendered by the successful bidder. Nor has any coal block auctioned under this regime been sold to other parties by successful bidders. So far, the Modi government has allotted 107 coal blocks to successful bidders following the inauguration of the regime of commercial coal auctions in June 2020.
(This series of auctions was inaugurated by the Modi government to ‘enhance efficiency, competition and private sector participation’ in the domestic production of coal in India. Previously, the end-use of the coal concerned was often prescribed. There is no such constraint on end-use in the coal auctions)
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Details of Gondbahera Ujheni East
The Gondbahera Ujheni East has 250 million tons of geological reserves. It is in the Singrauli coalfields of Madhya Pradesh where various Adani Group subsidiaries own blocks including Dhirauli (Stratatech Mineral Resources Private Limited), Mara II Mahan (Mahan Energen Limited) and Gondbahera Ujheni (MP Natural Resources Private Limited). Adani Enterprises Limited (AEL) is also the mine operator and developer of the Suliyari coal project which is owned by Andhra Pradesh Mineral Development Corporation, a state-owned mining corporation.
Delisted in the first round of auctions
On 25 March 2021, the coal ministry listed a total of 67 mines for auction including Gondbahera Ujheni East. Commercial bids were, however, submitted for only eight of them. The Modi government boldly claimed this showed ‘tremendous’ competition amongst corporates for the coal blocks. The auction of blocks such as Gondbahera Ujheni East, which failed to attract more than one bidder, was annulled. The one bidder in the case of Gondbahera Ujheni East was Adani-owned subsidiary MP Natural Resources Private Limited.
Controversy surrounding the second round of auctions
On 12 October 2021, the central government published a new list of mines for auction that included Gondbahera Ujheni East. For a second time, Adani’s MP Natural Resources emerged as the single bidder. Despite the absence of multiple bidders, the coal block was allocated to the Adani company.
On 20 October 2023, the government issued a press release stating that, so far, 11 coal blocks had been allocated despite the lack of multiple bidders on the advice of an Empowered Committee of Secretaries (ECoS), an expert panel of top bureaucrats of the Modi government. The grounds on which the ECoS decided to allocate these blocks to single bidders were not made public. A questionnaire was emailed by these authors to the coal ministry which elicited no response. In an RTI application filed thereafter, the ministry said that the grounds for auction of these mines cannot be disclosed under the provisions of the Act.
Responses to the allotment
News articles published thereafter, including a report by AdaniWatch, prompted India’s biggest Opposition political party, the Congress, to highlight the questionable way in which coal blocks were being allocated to corporates.
‘According to the publication AdaniWatch, in 2022 the [Adani] Group was awarded the Gondbahera Ujheni East coal block in Madhya Pradesh, despite it being the sole bidder in the so-called auction. The mine had been one of several that had failed to find more than one bidder, when originally auctioned in 2021,’ said the statement by Jairam Ramesh, head of Congress communications, on X (formerly Twitter) on 7 November 2023.
What does the ministry say about transfer of rights and obligations of coal blocks?
In response to the RTI queries of this correspondent, the ministry said that, until now, no coal block has been surrendered by any successful bidder in the coal auctions. The ministry also said that no coal block has been sold and that no rights and obligations under Coal Block Development and Production Agreement (CBDPA) have been transferred to other parties. However, the ministry also advised that provisions of the CBDPA between the successful bidder and the government allow change in control or transfer after successful allotment.
Section 5.2.1 of the CBDPA/CMDPA lays out the procedure for transfer of rights and obligations of successfully allotted coal blocks: ‘Any change in Control of the Successful Bidder or any transfer of the coal mine by the Successful Bidder, shall be subject to applicable laws and may be undertaken after the lock-in period, with an intimation to the Nominated Authority, no later than 15 (fifteen) days prior to (a) the proposed change in control of the successful bidder; or (b) transfer of the coal mine by the successful bidder, as the case may be and provided that pursuant to such change in control, the successful bidder continues to meet the eligibility conditions or in case of transfer of coal mine by the successful bidder, the transferee meets the eligibility conditions …’
What would be the implications of sale-transfer or trading in coal blocks on the energy security of India?
Experts are of the opinion that this move by the Adani Group could open the floodgates for trading in coal blocks by corporate players. Trading could defeat Modi's stated purpose of commercial auctions of coal deposits, which is to enhance energy security by substituting domestic extraction of coal for imports. There remain certain aspects of the coal-mining regime that should be addressed before bidders are allowed to trade in coal blocks, say experts.
What are the issues that need to be addressed?
‘The transferee company should be subject to scrutiny based on the same criteria on which the originally successful bidder had been selected,’ former bureaucrat EAS Sarma told AdaniWatch through a statement. ‘The transferee ownership details including beneficial owners' details should also be subject to such scrutiny and disclosed in the public domain.
‘If there are cases pending against them or if they are heavily debited to banks, the transfer should not be permitted. The reasons cited for the transfer should be examined to see whether the originally selected bidder has breached any conditions of the allotment. Since the affected communities have a heavy stake, they should be informed of the details of the transfer and given an opportunity to raise objections, if any.’
What would be the implications of trading on communities affected by coal mining?
Activists and experts are of the opinion that trading could give rise to speculative real-estate business in areas rich in coal. This would, in turn, have far-reaching consequences for the rights and livelihoods of communities, many of them tribal, that have resided in coal-bearing areas for generations.
‘Matters could worsen for local communities when corporates seek to add value to the trading commodity, that is, coal blocks,’ said R Ravi, chairperson of mines, minerals, and PEOPLE (mm&P), a collective of individuals, communities and institutions affected by mining.
‘A block with zero encumbrances would fetch a higher price in the market as compared to blocks which have unresolved issues pertaining to land acquisition, forest clearance or community consent. Tribals who have been dependent on the natural resources of coal-bearing areas, including forests and wildlife, for generations could be shortchanged in the process of value addition by corporates.
‘Legal frameworks guaranteeing the rights of tribal communities might be circumvented by corporates in their bid to add value to the coal blocks.’