Second phase of coal auction postponed to March 2

The ministry will announce qualified bidders on March 2 and the e-auction will begin on March 4

The second phase of the auction of coal mines on the Schedule III list, which are ready for production, has been postponed till March 2. The auction was supposed to begin on Wednesday. Coal ministry officials, however, explained the auction process was underway, though public announcements have been put on halt.

The coal ministry will announce the name of qualified bidders on March 2 and the e-auction will begin on March 4, which will run till March 8, said a senior official. Some 131 bidders submitted technical bids for 19 coal blocks on February 15. The technically qualified bidders were to be selected and announced by the nominated authority, along with the opening of initial price offers for the e-auction, starting Wednesday.

The decision is pursuant to a petition filed by Sarda Energy in the Delhi High Court, hearing of which will take place on Friday. The ministry has put on hold the announcement of qualified bidders for mines that are ready to start production after the Delhi high court asked the government to look into the possibility of a postponement of auction.

“The list of qualified bidders is ready and we will open the initial price offer as well. The proceedings are in line with the schedule. The auction will be after the high court hears the matter in detail on Friday,” said a senior official.

Sources close to the development said public disclosure would be done once the court gives clarity in the matter. The next hearing is on Friday, where the court would hear the arguments over the Coal Ordinance Special Provisions Act, 2014.

The ordinance was promulgated to re-allocate the 204 cancelled coal blocks by the Supreme Court in August 2014. Sarda Energy, in its petition, has asked for the scrapping of the initial offer price (IPO) stage of the bidding in the new coal auction methodology. The company has asked that there should be only two rounds — technical and financial in the bidding and the government should not select top 50 per cent bids or top five bidders on the basis of the IPO filed along with technical submissions.

“The ministry was asked by the court to see if it could wait till the court got clarity on the provisions of the coal ordinance. The ministry will abide by it. It’s anyway a matter of just one day. There won’t be any delay as back-end proceedings are going on, only public announcements are not being made,” said a senior coal ministry official requesting anonymity.

For a company to be eligible to bid for any Schedule III coal mine, it shall have incurred an expenditure of not less than 60 per cent of the total project cost of the unit or phase of the specified end-use plant for which the company is bidding.

“The company has submitted that the ordinance does not allow the government to select bidders based on IPO. However, the coal ministry has made its stand clear that the ordinance allows the government to decide the methodology for the auction of coal blocks,” said a senior government official in the know.

By rules, companies have to submit technical bids, which are then evaluated by the nominated authority for coal block re-allocation. Top five technically qualified bidders on the basis of their initial price offer a go-ahead and bid in the e-auction for the respective blocks.