No indicative price offer be sought during qualification stage of coal block auction: ASSOCHAM

With a view to keep coal block auction simple and two-stage bid process, apex industry body ASSOCHAM has suggested the Government that no indicative price offer should be sought during the qualification stage and all pre-qualified bidders should be allowed to bid in the coal auction process.

First round of technical bid should only consider technical qualifications as criteria for short-listing and it should not contain an elimination process based on financial bid i.e. the indicative price offer for coal block auction to remain transparent and competitive in order to garner maximum revenue from the procedure, highlighted The Associated Chambers of Commerce and Industry of India (ASSOCHAM) in a communication addressed to the Union Finance Minister, Mr Arun Jaitley.

If there is an elimination based on indicative offers, bidders would be forced to bid aggressively in the first round itself (which is akin to a closed bid) only to qualify for the final round thereby defeating the purpose of having an e-auction, it added.

This can also result into a spoilsport situation wherein a non-serious player can put in a very high bid which will become the benchmark for all serious players in financial bid while this bidder may not even come forward in the financial bid round, said Mr D.S. Rawat, secretary general of ASSOCHAM.

Besides, it has also been suggested that earmarking of coal blocks as done in previous allocation should be maintained so that plants which were planned on the basis of these coal blocks at least get a fair chance to participate in the auction.

ASSOCHAM has further recommended that the blocks which where earlier allocated to iron and steel should be earmarked only for the same as all the end use plants (EUPs) have been established and developed based on these allocated coal blocks only.

The schedule-II blocks which have come for auction have been earmarked for iron/steel, captive power plant (CPP) and cement, however, the cement industries were never set up while considering these coal blocks rather limestone mines are more required for cement plants, noted the ASSOCHAM letter to the FM.

The requirement of coal in cement plants is 1/4th of that in iron and steel plant, besides the investment is six times more for iron and steel plant and even employment generation is also 10 times more in this sector compared to that in cement, it further highlighted.

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