The coal ministry?s cautious approach towards auctioning blocks to private sector captive users is being viewed as a dilly-dally approach by the parliamentary panel on coal and steel, fearing the auction may not take place at all in the UPA-2 regime.
The coal ministry has invited suggestions on the draft RFP before it embarks on the process of inviting bids. It is likely to take stakeholders? suggestions in every stage of the bidding process.
?This has been done to ensure that there is enough transparency in the entire system in view of the ensuing coal scam and that the stake holders? views are aptly reflected,? a ministry official said.
As per the draft RFP for coal block allocation under Rule 3 of Auction by Competitive Bidding of Coal Mines Rules, 2012, the ministry wants to adopt a single-stage, two-envelope process where bidders will submit their bids in two parts — techno-commercial and price offers. The draft RFP says bidders should have operational plants where coal is meant for end use and the requirement is unmet. It has, however, not specified the financial criteria for bidders to be eligible to participate in the competitive bidding. According to the draft document, bids submitted would be valid for a period of at least 180 days from the due date but the validity may be extended by mutual consent of the respective bidder and the authority. According to the official, the ministry is likely to float the final RFP between January last week and February first week and may put 12 blocks on auction. But Kalyan Banerjee, chairman of the parliamentary standing committee on coal and steel, said the government was dilly-dallying the auction and there were possibilities that the general election came in between and the auction held back. ?Auction by Competitive Bidding of Coal Mines Rules, 12 was done mainly to introduce the system of auctioning coal blocks, but the government went on with the allocation process,? Banerjee said, adding the parliamentary panel had long tabled a report in Parliament criticizing the government for undue delays but there was no movement from the government?s part. The government allocated 19 coal blocks to PSUs and state governments under the Auction by Competitive Bidding of Coal Mines Rules, 12 on the strength of a provision in the rule allowing the ministry to allocate blocks to only government companies for specific use. The blocks were allotted for power plants and underground coal gasification.
According to the ministry official, the process of auction has been delayed because of Crisil’s recommendation of offering blocks only after full exploration and obtainment of the geological report. The process of obtaining geological report started in January last year. Crisil was engaged mainly to determine the floor price of such blocks. But without any geological data, it could not determine any floor price. In fact, firms such as Tata Steel had been insisting on determining reserves and coal quality before auctioning a block since bidders would not be able to pay without knowing the type of coal and the amount of reserves in it.