Coal news and updates

Some coal block auction provisions violative of CVC norms?

Certain provisions in the draft guidelines for coal block auction may lead to stage-managed withdrawals by corporates from the bidding process and may turn controversial, feel some experts.

The Approach Paper for Auctioning Coal Mines was formulated last week.

The government is now readying the final document, after receiving feedback from users and sector experts as part of a process of public consultation.

Union Coal Minister Piyush Goyal has said that the government is contemplating a transparent methodology for auction of coal blocks, which is transparent, promotes competition and optimises power tariffs.

Speaking to The Hindu on condition of anonymity, analyst firms and sector experts said that although overall the document seemed to be a well-thought-out one, there were a few gaps that would need to be plugged for increasing transparency. The proposal to ask bidders to submit an indicative price-bid with the technical bid was also not among the best practices, many felt.

Citing an instance, they said the provision for allowing the highest bidder to withdraw against the forfeiture of only the bid security amount and a mere year-long embargo on participation in future auctions was out of tune with the present CVC guidelines.

“The right way would be to re-tender the entire block.’’ Industry at large, however, felt that opening up the coal sector to commercial mining was the need of the hour, if India was to move from the a position of perennial coal shortage to self reliance. “Their intentions are right. They are trying to make a clean start,” observed an analyst with Deloitte.

Opinion was divided on the issue of reverse auction. While a section welcomed the move to pay additional royalty of Rs.100 a tonnes to coal bearing States, it was not welcome to companies which felt that this would result in very high rates.

Source: The Hindu