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New UserCoal block auction II: Ministry looking at ‘one group, one bid’ cap
27 Apr 2015
In the next round of auctions, the Coal Ministry may cap the number of bids a corporate can make for a mine at one. If multiple bids are made, the best one will be counted.
In the first round of auctions, one group could not only put in more than bids but all or many could make it to the final list. Now, it will be just one bid from one group. Learning from the recently concluded first round of auctions wherein corporate majors made multiple bids for the same block through group companies, the Ministry is looking to tighten up the process.
Though the norms set a minimum number of bids for a mine to be put up for auction, they did not place any restrictions on multiple bids by one group.
Thus, for instance, Naveen Jindal’s Jindal Steel & Power Ltd (JSPL) put in multiple bids for same mines — Gare Palma IV/8, Jamkhani, Utkal C, Gare Palma IV/1, Gare Palma IV/2&3, and Gare Palma IV/7.
Aditya Birla Group and Sesa Sterlite used sister companies to make several bids. Players like Jaypee and Adani Power also followed the same approach.
“We did learn certain lessons and we want to ensure that there is no misuse of bidding norms… The government is not having ostrich-like approach and is open to improvement,” said a senior government official. The Coal Ministry is examining this aspect and will take a call soon, the official added.
For the mines auctioned till now, bidders were required to make a price offer at the technical bid stage itself. Only 50 per cent of those who qualified in the technical stage (subject to a minimum of five bidders) were allowed to participate in the financial bidding and were then ranked according to the initial price offering.
This clause actually helped the government as some mines that got single bids were taken off the block.
But it also resulted in limiting the competition. Now, if the government decides to cap the bids a company can make to one, it will open up the field for others.
In the first round, 33 mines/blocks were auctioned raising over ₹2-lakh crore. The government is now preparing for the next set of auctions and allotments. The number of blocks to be auctioned could be between 15 and 20. The total number of blocks to be offered will be around 35.