Bidders concerned over reverse bidding in coal mine auction

Ahead of the coal block auction, several players in steel and power sectors have aired their reservations about the reverse bidding mechanism and have raised a lot of queries on the same with the government.
In the reverse mechanism, the authority sets a ceiling price and bidders have to bid lower than that. The lowest bidder wins the auction.
"A lot of queries have come to the Coal Ministry on the reverse bidding of coal blocks," an official said.
Industry body Assocham said there are gross anomalies in the auction process -- forward as well as reverse auction.
It said that because the mid-size companies will have disadvantages against the large capacities, in terms of sustainability and thereby fear of takeover by large companies.

The body said there should be a provision to put a cap on transportation cost and the provision of additional premium (bid beyond zero) should be eliminated.

When asked what the government is doing about reservations expressed by bidders on reverse bidding, a top Coal Ministry official said, "We can't satisfy everyone."
The Coal Ordinance says that the Nominated Authority (Coal Joint Secretary Vivek Bhardwaj) will in consultation with the Central Government, determine the floor price or reverse price in accordance with such rules as may be prescribed.
The rules says that the Centre may recommend the methodology for determination of the floor or Reserve Price, as the case may be, to the nominated authority which shall make the "determination of the same in accordance with the Ordinance and these rules."

The government will auction 21 coal blocks in the first lot this month.