From Rs zero bid to sector jargons, Coal Ministry flooded with queries on e-auction

Of the 300 questions received, some were banal, while others made the officials sit up and change auction guidelines

When Anil Swarup, secretary, ministry of coal, on Wednesday, briefed the media on the status on the coal block re-allocation process, he said in jest, “Bidders have even asked: What does ‘T-0’ mean?” (T-0 is the symbol for the date on which tender notice for the e-auction of coal blocks would be published.)

Of the 300 questions the ministry had received on its auction portal, some were banal, while others made the officials sit up and change auction guidelines.

Swarup said when they received a query like what would happen if a bidder puts Rs zero as his bid price, that’s when officials thought about such a possibility. “There is a likelihood that a bidder can put Rs zero as his bid amount in the reverse bidding. So, now we have put in a provision that a fresh window would open wherein all those who have put in zero would then place forward bids on the reserve price,” said Swarup.

Reserve price is to be paid to the states and the bidders, who will pay the most, would win the coal block at a zero fuel cost passthrough. “It’s then up to the bidder if he wants his fuel cost part of the tariff to be zero. The power consumer would benefit and states would get better payment, what more can we ask for,” asked another coal ministry official. However, the portal says a Rs zero entry would stand invalid.  “We are open to feedback and queries and wherever necessary, clarification and modalities would be issued,” said Swarup. The government plans to have a two-pronged strategy for the e-auction. For the regulated sector where end-use is generation of power, there will be reverse auction. Whereas for captive power generation, steel and cement sector, there would be forward bidding model.

From the power sector, queries were mostly around the ceiling price and its reflection on the tariff, grade of coal and merchant sale of power. “All this has been specified clearly in the tender document of the coal blocks,” said a senior coal official. Every coal block has a separate tender document based on its mining capacity, grade of coal and readiness of production. From all other sectors apart from power, there were questions on the fine print of the definition of the ‘unregulated sector’.

A polyster manufacturer, for instance, has asked: Are iron and steel, cement and captive power generation to be treated as different specified end-uses or a one specified end-use under non-regulated category?

There were also clarifications sought on formation of joint ventures, sale of excess coal extracted and whether preferred bidder would be the successful bidder. To such queries, coal ministry has asked to look up the tender document.

“The tender document is the most comprehensive bid document prepared for the coal sector. It’s self-explanatory with exhaustive terms and conditions,” said an official. The ministry has uploaded all auction-related documents on www.mstcecommerce.com.

“How much of information would be made public during the auction process is under contemplation,” said Swarup. Similar kind of e-auction in the telecom sector for 2G spectrum saw list of final winners with their bid quote being uploaded online at the day’s end.

For those curious, T-0 is the symbol for the date on which tender notice for the e-auction of coal blocks would be published. The subsequent auction proceedings would be done thereafter and has to be concluded 69 days after the T-0 date.