Policy

Coal e-auctions: Initial price offer at technical bid stage is crucial

Our Bureau New Delhi | Updated on December 27, 2014 Published on December 27, 2014

Among the ranked, top 50 per cent of bidders will be allowed in the financial bid round

The initial price offer required to be furnished by bidders for the coal block e-auctions during the technical bid stage will play a crucial role in their selection for the financial bid round.

Based on the initial price offers given during the technical stage, bidders will be ranked and the top 50 per cent (subject to a minimum of five bidders) will be allowed to participate in the financial bid stage. This is as per the standard tender document released for the power sector and the non-regulated sectors like iron, steel and captive power plants released on Saturday.

“We are using this system to prevent any cartelisation during the financial bid stage,” a senior Government official said.

For the power sector, where the lowest bidder will be the winner, the ranking after the technical stage will be in ascending order of initial price offer. The qualified bidders will then need to submit a final offer in the second stage where they cannot go higher than the initial price quoted in the technical bid stage.

In the non-regulated sector, where the highest bidder wins, the ranking after the technical bid stage will be in descending order of the initial price offer. Qualified bidders will not be allowed to go lower than their initial quoted price.

Bidders will have to give an upfront payment, depending on the block size as well as compensation to the prior allocatee which would cover the value of the land and the mine infrastructure cost.

In the non-regulated sectors, the winning bidder will pay the bid price per tonne of coal each month for the actual mined quantity. The bid price is eligible for semi-annual escalation based on a reference index which will be published in April and October of each financial year.

In the power sector, apart from the bid price per tonne, the winners will also be required to pay ₹ 100 per tonne of coal extracted every month. The aggregate of the bid price and ₹ 100 per tonne will be used for computation of the energy charge for the purpose of determination of tariff for electricity. Bid price will be subject to an escalation based on a reference index

For both the power and non-regulated sectors, the periodic payments are over and above the statutory royalty that is payable by the miners.

To ensure continued production of coal, bidders of both sectors will have to furnish a performance security. The performance security will be an aggregate of one year’s royalty payable and the winning bid multiplied by the annual peak rated capacity of the block as per the approved mining plan.

Published on December 27, 2014
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