India Coal Indigenous People
How Adani won a coal block as the sole bidder in a government ‘auction’
Nov 07, 2023
People in central India protest as Adani's coal blocks swallow ancestral farmlands and forests.

In August 2022, the Adani Group won ownership of the Gondbahera Ujheni East coal block in central India, despite there being no other bidders in this so-called ‘auction’. The Indian coal ministry hailed the process as a ‘tremendous success’ despite having allocated 11 blocks which had only a single bidder. The process is about to be rerun for another coal block in Madhya Pradesh for which Adani was the only bidder. These deposits of coal underlie swathes of forest that are the homelands of tribal indigenous peoples.

The allocation of coal blocks to a single bidder was described by Shreegireesh Jalihal for the Reporters’ Collective on 11 October 2023. Here, Ayaskant Das takes the story further, investigating the destination of coal from the Singrauli coal blocks and the situation of the inhabitants of the forest where these coal deposits occur.

The Adani Group has acquired at least three coal blocks – Dhirauli, Gondbahera Ujheni East, Gondbahera Ujheni – in the Singrauli district of Madhya Pradesh since the government of Narendra Modi opened the sector to corporates for commercial mining (See Page 134 of Report). An Adani company has been appointed contractor – technically called mine developer and operator (MDO) – for Suliyari, a government-owned coal mine. It is trying to acquire another coal block, Mara II Mahan, which the Modi government has decided to auction despite its thick forest cover. The Adani Group has also acquired the nearby Bandhaura coal-fired power plant and is attempting to expand its capacity.

Questions are being raised regarding the allegedly arbitrary manner in which the Adani Group is being allowed to expand its footprint in Singrauli. It was allocated ownership of the Gondbahera Ujheni East coal block despite there being no other bidders in the auction. Adani has also emerged as the only bidder for the Mara II Mahan coal block. The government has therefore annulled the block’s auction – but only for the time being.

How did the Adani Group acquire ownership of a huge coal block despite being the lone bidder?

Gondbahera Ujheni East, with 250 million tons of geological reserves, was listed for auction for the first time on 25 March 2021. It figured in a list of 67 coal mines for which the Modi government invited bids for commercial mining. The government claimed that there was robust competition amongst corporates in bidding for the 67 mines. Nevertheless, only eight of the coal blocks received multiple bids. Coal blocks which received single bids only were taken off the auction list. Gondbahera Ujheni East was one of the mines whose auction process was annulled because it had just a single bidder. Names of the lone bidders of the blocks whose auctions were annulled have not been disclosed by the Ministry of Coal (‘the coal ministry’).

The general area within which the Gondbahera Ujheni East coal block occurs. Image Google

On 12 October 2021, the government published a new list of mines for auction that included Gondbahera Ujheni East, put up for a second time. Documents show that the Adani subsidiary, MP Natural Resources Private Limited, was the only bidder for Gondbahera Ujheni East in this second auction.  At this point, a powerful government committee recommended the coal block’s allocation to the Adani Group. The committee comprises the Secretaries of the departments of External Affairs, Legal Affairs, Petroleum and Natural Gas, and Coal and is known as the ECoS (Empowered Committee of Secretaries).

(In India, a ‘Secretary’ is a senior bureaucrat who heads the respective bureaucratic set up of a particular department or ministry and is directly answerable only to the minister in charge of it.)

On 12 August 2022, the coal ministry announced the names of 16 blocks which were successfully auctioned. Gondbahera Ujheni East figured in this list. The successful bidders were invited to enter into agreements with the central government before developing the mines.

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The coal ministry has only partially disclosed the process through which it awards mines to single bidders. On 20 October 2023, it issued a press release saying that 11 coal blocks had been allocated to single bidders after the government failed to receive any other bid despite being listed for auction on at least two occasions. The press release said: ‘Till date, 11 coal mines have been allocated to different bidders with the approval of ECoS [based on single bid] after 2nd attempt of auction, on the basis of transparency in auction, reasonability of offer and number of rounds the mines have been offered.’

The coal ministry claimed through its press release that the auctions of coal blocks have been ‘a tremendous success’. Ironically, it contradicts its own claims by further stating: ‘It may be noted that a large number of mines offered received no bid despite repeated offering during last seven rounds.’ That, however, is a different matter.

A massive coal mine in central India.

How did the coal ministry decide to award the 11 mines to single bidders?

The grounds on which these decisions by ECoS were made are not known. A questionnaire was emailed by this correspondent to the coal ministry asking for the grounds on which it recommended allocation of Gondbahera Ujheni East to MP Natural Resources Private Limited despite there being no other bidders for the block. No response was received at the time that this article was published.

The ECoS was formed in May 2020, about a month before the Modi government announced the opening of the coal sector for commercial mining by private players. The panel's objective was to expedite ‘successful implementation of commercial coal mining and to bring quick decision making’. It was authorised to make decisions on mines that received single bids in successive rounds of auctions.

Great swathes of forest and farmland in the Singrauli district could be transformed into gaping coal pits if the Adani Group's agenda is realised.

Will the Modi government award Mara II Mahan to Adani, the block’s lone bidder?

In the seventh round of commercial coal block auctions launched by the government on 29 March 2023, Mara II Mahan, which has 955.96 million tons of geological reserves, was put up for sale. An Adani Group subsidiary, Mahan Energen Limited, was the only bidder for this block. Accordingly, the government cancelled its allocation process. It issued a notice on 31 July 2023 that the security amount deposited by the bidder against Mara II Mahan would be returned.

It is open to speculation if Mara II Mahan will be put up for auction in subsequent rounds, whether the Adani Group will bid for Mara II Mahan again, or whether the ECoS will recommend awarding the coal block to Adani Group. However, the biggest question that hovers over Mara II Mahan is why the coal block was listed for auction in the first place, given that 90% of it lies beneath forest.

The Adani Group is developing coal, coal and more coal in central India.

The Reporters' Collective has reported that a corporate lobby group, the Association of Power Producers, of which the Adani Group is a member, has lobbied the government to auction Mara II Mahan by way of a letter to the coal ministry. The report claims that, in December 2021, the coal ministry then wrote to a subsidiary agency, the Central Mine Planning & Design Institute (CMPDI), which provides consultancy and support services for mineral exploration and mining, to consider the feasibility of auctioning Mara II Mahan. The coal ministry allegedly cited the association’s demand in its letter. It also asked CMPDI to consider the feasibility of auctioning 14 other coal blocks. The letter was sent within days of the letter from the Association of Power Producers. In April 2022, the CMPDI reportedly recommended against opening the 15 coal blocks, including Mara II Mahan, given the inevitable destruction of forest that would ensue.

Ignoring the recommendation of CMPDI, the coal ministry reportedly informed the Union Ministry of Environment, Forests & Climate Change (‘the environment ministry”) in August 2022 that it intended to open five of the 15 blocks for mining. Mara II Mahan was listed for auction in March 2023, subject to a Modi government prerequisite that only underground mining would be allowed (See Page 15 of CMPDI presentation).

The Suliyari coal mine in the Singrauli district - several adjacent coal blocks have been earmarked for mining by the Adani Group.

Four coal blocks in Singrauli – Suliyari, Dhirauli, Mahan and Mara II Mahan – are contiguous. Gondbahera Ujheni East and Gondbahera Ujheni are also cojoined. Gondbahera Ujheni is the Adani Group’s latest acquisition in the Singrauli coalfields. On 28 March 2023, the Adani-owned MP Natural Resources Private Limited was declared the successful bidder of Gondbahera Ujheni from amongst three bidding firms.

Rubble from a Singrauli coal mine spills across adjacent agricultural land.

The prospective auctioning of Mara II Mahan has been contentious for over a decade

India’s previous national government, the Congress-led United Progressive Alliance government, rejected a proposal to extract coal from Mara II Mahan on environmental grounds. Even though the government had allocated Mara II Mahan to a joint venture company Yamuna Coal Company Private Limited, the Forest Advisory Committee (FAC), an expert body that advises the environment ministry about the impacts of diverting forest land for industrial projects, had rejected a proposal by Yamuna Coal Company to prospect for coal in Mara II Mahan.

‘Keeping in view the good quality of the forest available therein it may not be feasible for the Central Government to accord its prior approval under the Forest (Conservation) Act, 1980 for diversion of these areas for coal mining projects,’ the FAC said in a meeting held on 28 November 2011.

The coal block covers a geological area of 53.06 square kilometres, of which 90 per cent is forested. Very dense parts of these forests occur in 18.23 square kilometers of the coal block area. Its allotment to Yamuna Coal Company was cancelled following a historical judgement of the Supreme Court of India, in which allocations of 214 coal blocks were annulled on grounds of ‘illegality’ and ‘arbitrariness’.

A stream flows through a forested area threatened by Adani-driven coal projects in central India.

Why is the Mahan coal block controversial?

Like Mara II Mahan, the Modi government has placed a pre-condition that mining in the Mahan block will occur only through the ‘underground method’. It was listed for auction simultaneously with Mara II Mahan, with which it shares a boundary (see graphic).

Again, like Mara II Mahan, the auction process of Mahan coal block was annulled by the Modi government due to the lack of multiple bidders. A notice for return of its bid security was announced on 31 July 2023. The unsuccessful bidder was a firm called Special Blasts Limited, which was incorporated in August 1988 in Raipur, the capital city of the central Indian state of Chhattisgarh. Documents accessed by this correspondent from the Registrar of Companies indicate that Special Blasts Limited is not linked to the Adani Group.

The 214 mines whose allocations were set aside by the Supreme Court of India in September 2014 included Mahan. This coal block had been allotted by the UPA government to a joint venture company formed by the Essar Group with another Indian business conglomerate, Hindalco Industries Limited. The Congress-led UPA government had provided environmental approval (in December 2008) and forest approval (in February 2014) for the Mahan mining project. The coal block has geological reserves of 107.41 million tons spread over 9.8 square kilometres. However, 97% of the coal block area is forested.

The coal ministry of the UPA government had allocated Mahan with a prior condition that there should be underground mining only. But it reversed its own condition later. Through a letter dated 14 June 2007, it approved a proposal to carry out open cast mining in Mahan. Acquisition of land measuring 1116 hectares had been completed for the 1.2 million-tons-per-annum (MTPA) project when it ran into controversy (See Part B Serial No. 3 of Mahan coal block summary issued by the coal ministry).

Local communities protest in the courts and on the streets against coal projects that engulf their ancestral lands.

Local communities were engaged in a long legal battle against the UPA government for allegedly granting illegal clearances to the Mahan coal mining project. The allottees – Essar Group and Hindalco – had alleged a ‘foreign conspiracy’ hatched by international NGO Greenpeace International in cahoots with Indian environmental organisations to derail the Mahan project.

In December 2014, the Modi government itself decided against auctioning Mahan, despite all necessary approvals being in place, because it fell within ‘inviolate forests’. When the Modi government decided to include Mahan in the seventh tranche of auctions for commercial coal mining earlier this year, it acted in contradiction to its own decision taken nine years ago.

What is the present state of coal mining activities in Singrauli?

Mining has already begun in the Singrauli coalfields, with large swathes of forest land already cleared. The government allowed clearing of 259 hectares of forest land for the Adani-operated Suliyari coal mine which began production in March 2022. Efforts are also underway by the Adani Group to procure permission for clearing 1436.19 hectares of forest land for its Dhirauli coal mine.

More than half of the 10.95 square kilometres geological area of the Gondbahera Ujheni coal block is under forest cover. Similarly, nearly 35 per cent of the 11.3 square kilometres of Gondbahera Ujheni East’s geological area is under forest cover. In addition, nearly 785.49 hectares of forests – the equivalent of 1500 football fields – are proposed to be cleared for Essar Group’s Bandha open cast mining project in the Singrauli coalfields.

Not very far from these coal blocks in Singrauli, near the village of Bandhaura, is a coal power plant belonging to the Adani Group. It is being expanded at a cost of Rs 12,800 crores (US $1.5 billion). Two units of 800 MW each are being added to the 1200 MW coal-power plant. The Adani Group subsidiary, Mahan Energen Limited, which unsuccessfully bid for Mara II Mahan, completed acquisition of the Bandhaura power project from the Essar Group in March 2022. The Adani Group has said it will procure 6.5 MTPA coal from the Dhirauli block to meet additional fuel requirements at the Bandhaura plant. It has also said that the project will generate enhanced profitability for the local population through the ‘trickledown effect’.

The impacts on real people

Politicians claim the Singrauli region will transform into an economy like Singapore’s owing to the proliferation of coal-based industries. The district has also been described by politicians and corporates as India’s ‘energy capital’. Singrauli has over 10% of India’s total installed coal-fired power capacity. It also has huge coal deposits underneath forests that have provided livelihoods for local tribal communities for generations.

In April 2023, this correspondent visited the area and spoke to people who live in the heart of the forest.

People live in the forests set to be impacted by the Adani Group's coal operations in Singrauli.

‘Our forests have been taken away bit by bit for digging the earth to extract coal,’ said Sukhlal Baiga, the head of a tribal family, when this correspondent visited his household in mid-April.

‘We have also lost huge swathes of our land and forests to the numerous coal-fired power plants that have sprung up in Singrauli in the past few decades. With livelihood resources gone, many tribal families have migrated out of these forests. Their whereabouts are unknown. Our own future is in limbo because we hear that there are plans afoot to extract more coal from underneath our forests.’

As dusk advanced upon the forests of Singrauli that April afternoon, members of Sukhlal Baiga’s household went about hastily arranging things for the long night ahead.

‘We still don’t have electricity here, despite all the power plants and coal mining. Our daily chores must be completed before sunset,’ Sukhlal said.

His house, a tile-roofed brick tenement, is located beside a stream in a hamlet called Basi within a forest clearing. Sukhlal and his family belong to the Baiga tribal community, a hunter-gatherer ethnic group. Not a single Baiga household in this hamlet has been ensured a regular supply of electricity.

A Baiga household in the heart of the forests.

The only source of power here are the solar panels doled out by the government a few years ago. But these panels provide only for minimal electricity needs. The Basi households are not eligible for special welfare schemes run by the government for the Baiga community because they have not been designated as ‘particularly vulnerable’ in this district, in contrast to many other Indian states where the Baiga community has greater numbers.

And just across the way are Adani’s massive coal blocks, ready for excavation.