Punjab Cabinet approves progressive bidding process for auctioning of mines

The Punjab government today decided to grant mining contracts through progressive bidding to boost revenues and curb illegal mining, including that of sand, in the state.

The Supreme Court had earlier this month given its approval on the state government's decision to replace reverse bidding with progressive bidding of mines, an official spokesman said here.

The apex court had issued directions to immediately stop all mining activities and also directed contractors to remove their machinery from the sites, thus paving the way for the mines to be returned to the state government for re-auction at better commercial terms.

The decision on re-auction of mines through progressive bidding was taken at a meeting of the state cabinet, held here today under the chairmanship of Chief Minister Amarinder Singh, according to the spokesperson.

Following the decision, the contractors of the mines auctioned through reverse bidding process would be given their advance profit for the balance term of their contracts, he said.

The spokesperson said that a total of Rs 11 crore is expected to be paid out for this purpose.

The mines would be re-auctioned through progressive bidding and the advance profit given would be added in the reserve price of the mines at the time of their auction through the new process, he said.

The cabinet had taken a decision in its meeting on April 19 last year to auction the mines in Punjab through progressive bidding.

It had decided to convert the contracts of mines allotted through reverse bidding as per average per tonne bid received for the mines auctioned through progressive bidding as per the mechanism approved by it.

The reverse bid mining contractor was given the option to either convert his contract as per the cabinet's decision or surrender in accordance with Rule 39 of the Punjab Minor Mineral Rules, 2013.

However, the reverse bid mining contractors preferred to file 83 civil writ petitions in the Punjab and Haryana High Court, where their pleas were disposed of vide an order dated January 12.

Thereafter, 42 SLPs were filed in the Supreme Court, where the state government filed an affidavit stating that it was ready to pay advance profit of the reverse bidding for the remaining tenure of their contract.

On May 10, the apex court had directed the government to make an assessment by May 18, and pay the advance profit to the petitioners by May 25.

Accordingly, the assessment of mines has been made to pay the profits to auction the mines.

During the proceedings, the state had presented before the high court and the Supreme Court a strong case on how reverse bidding capped the sale price at a 'khad' or mine and how the price got padded up by the time sand reached the market, leading to inflated prices.

On the other hand, under progressive bidding, the mine would be auctioned for its true and real value, leading to increased state revenues to the extent of an additional Rs 400 crore, the spokesperson said.

This would also curb illegal mining as mines, which were earlier being obtained at throwaway prices, would now be auctioned at commercial rates, forcing contractors to join the governments efforts to crack down on illegal mining activities, the spokesperson said.