The Gujarat-based Deep Industries-led consortium that provisionally won seven out of the eight coal-bed methane blocks auctioned last October was disqualified in the final round. The company has approached the Central Vigilance Commission (CVC) for a probe into the matter. The firm has alleged inappropriate assessment of the bids by the authorities.
The move comes at a time when finance, coal, law & justice and petroleum ministries are about to recommend to the Cabinet Committee on Economic Affairs (CCEA) to whom seven of the eight blocks are to be awarded. Provisional results had showed Deep CH4 as the highest bidder for seven blocks and Essar Oil the top bidder for the remaining one.
While seeking a probe into the reported disqualification of the consortium and possible allotment of the blocks to the next highest bidders, the Deep Industries-led consortium has told the CVC that the purported ground for rejection is ?frivolous? and it has not been given a second chance to provide the information required by the director general of hydrocarbons (DGH). A consortium member and a government official confirmed the development.
The petroleum ministry recently told the finance, law and coal ministries that the DGH had recommended rejection of Deep CH4 Pvt Ltd?s bids as it has not provided the annual report of its parent company US-based Coal Gas Mart, which had won the Singrauli and Godavari CBM blocks in the earlier auction. The consortium, however, is of the view that unlisted companies in the US are not required to include financial discussions as part of their annual report and their fiscal health could be understood from their financial statements.
The DGH also said the bidder did not submit documents establishing the legal existence of the parent such as the company?s charter, a person privy to the development told FE.
The consortium told the CVC that the government did not seek any clarification from it and appears determined to disqualify it without giving a chance to provide any extra information that the government may need to assess the bid. It was in the interest of the government to fully explore the credibility of the highest bidder, the consortium told the Central Vigilance Commission. An official of the Deep CH4 consortium said it had offered to share Rs 1,900 crore with the government over the second highest bidder for the seven blocks. Lanco Infratech has four-fifth participatory interest in two of the blocks provisionally won by the Deep consortium.
The auction was part of the Centre? s plan to let entrepreneurs explore and commercially produce CBM, a clean fuel found between layers of underground coal as per a licensing policy that allows full foreign participation in the entity bidding for blocks. Companies getting the blocks can sell CBM at market prices to buyers. Operators can import equipment without paying customs duty but they are not exempt from income tax.