Govt should quickly notify successful coal bidders: Assocham

Terming the re-examination of some bids in the coal auction as "unfair", industry body Assocham today said the government should expeditiously notify successful bidders of mines under review.
The government is re-examining the bids for nine coal blocks, including those where Jindal Steel and Power Ltd and Balco emerged as the top bidders, and a final decision on their fate it yet to be taken amid speculation of cartelisation during their bidding process.
"Assocham has urged the government to expeditiously notify these as successful bidders (and) enter into Coal Mining Development and Production Agreement (CMDPA) and issue vesting orders to achieve the dual objectives of coal ordinance i.E. Continuity of coal mining operations and optimum utilisation of natural resources," the industry chamber said a statement.

In a communication to Coal and Power Minister Piyush Goyal, Assocham said, "A fair treatment should be provided to industry members who have contested fairly and in good faith."
Subdued interest in some coal blocks leading to their subsequent withdrawal from auction process is an indicator of relative utility of a particular coal block, it added.
"Decision to re-examine bid prices through prism of trend set by 'unexpectedly high bids' should be reviewed," Assocham secretary general D S Rawat said.

He added that characteristics of each coal block varies and bidding would have been dependent on factors unique to the particular coal block like peak rated capacity, gross calorific value of coal, extractable reserves, mining cost and most importantly logistics to transport the coal to end use plant of bidders from coal mine.

"Delay in awarding coal blocks to highest/lowest bidders is not only causing uncertainty to the industry and grave concern for investors but it is also giving vested forces an opportunity to question transparency and justness of the auction process," Rawat said.
In the cases of coal blocks auctioned for power sector, the industry body highlighted that power producers would not only forego the mining cost which is included as energy charge in power purchase agreements but have also quoted additional premium which will go to the state governments and will have to be borne by the bidder.
This implies that in energy charge component of the power tariff, the coal cost would be absorbed by the company which will translate into downward revision of tariff in existing power purchase agreements (PPAs), Assocham said.

Till date, a total of 33 coal blocks have been auctioned in two tranches. While in the first lot, 19 coal mines were auctioned, in the second as many as 14 coal blocks went under the hammer.