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  1. Coal Auction: Competition may have been restricted, says CAG

Coal Auction: Competition may have been restricted, says CAG

Competition may have been restricted in case of 11 coal blocks that went under the hammer in the first two rounds of mines auction held last year on account of multiple bids by corporate groups made through JVs or group subsidiaries, government auditor CAG said today. "Audit could not draw an assurance that the potential level of competition was achieved during...bidding of 11 coal mines auctioned in the first two tranches," Comptroller and Auditor General (CAG) said in the latest report on e-auction of coal mines.

By: | New Delhi | Updated: July 26, 2016 3:16 PM
In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added. (Reuters) In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added. (Reuters)

Competition may have been restricted in case of 11 coal blocks that went under the hammer in the first two rounds of mines auction held last year on account of multiple bids by corporate groups made through JVs or group subsidiaries, government auditor CAG said today. “Audit could not draw an assurance that the potential level of competition was achieved during…bidding of 11 coal mines auctioned in the first two tranches,” Comptroller and Auditor General (CAG) said in the latest report on e-auction of coal mines. In 11 out of 29 coal mines successfully e-auctioned in first and second tranche, a number of qualified bidders (QBs) in the e-auction stage were from the same company/parent subsidiary company coalition/joint venture (JV), according to the CAG report tabled in Parliament. In a scenario where the standard tender document (STD) allowed the participation of JV and simultaneously limited the number of QBs which could participate in the e-action, Audit could not draw an assurance that the potential level of competition was achieved during the stage II bidding of these 11 coal mines auctioned in the first two tranches.

In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added. Reacting on the report, an official source said that as only 6 per cent of the qualified bidders were joint ventures companies and only one successful bidder was a JV company, it is clear that this provision did not restrict competition. “The Delhi High Court in W.P (c) No 1384/2015 has upheld this provision of the auction. It has stated that the process is neither arbitrary or irrational or designed to favour any particular bidder and has worked out well,” according to the source. Inconsistencies and inaccuracies in following some of the assumptions and various errors in computing of intrinsic values resulted in under-determination of upfront amounts in 15 blocks, under-determination of floor prices in 6 non- regulated sector coal mine and revised fixed rates in all nine power sector coal mines, CAG said.

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