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With the Coal Ministry set to put out notice for the next round of mine auctions on Monday, questions are being raised whether this time also it will be the big miners who will benefit the most.
“Since there is no restriction on the number of bids a Group, through its various entities, can make for a single mine chances of houses with larger capital being at an advantage is higher. The latest round is on forward bids concept — highest bidders will be the winners,” an industry source said.
Though the previous two rounds had the concept of reverse bid for the power sector — lowest bidder was declared winner — this issue had haunted the auctions. Big houses such as Kumar Mangalam Birla’s Aditya Birla Group and Anil Agarwal’s Vedanta besides others had made different bids for the same mine through various group companies.
This had made the Coal Ministry consider varied options. While the Ministry has now defined how it will consider multiple bids made by a company for a single mine, it does not elaborate on Group. The Ministry has decided to treat multiple bids from one company as a single bid while calculating the 50 per cent qualified bidders for the financial bid stage.
However, Coal Secretary Anil Swarup had said that the same was not feasible for a business group as there is no legal definition for a ‘business group’. On offer are 10 mines for unregulated sectors — iron & steel, Cement, and captive power plants.
Asked if the latest round will see narrowing down of time between technical and financial bids to avoid price negotiations between the participants, a senior Coal Ministry official said, “There is no change in the timeline. The gap between the two bids is not much and we do not foresee any price manipulation.”
In the previous rounds, the gap between the two bids was almost 14 days. For the coal mine auctions, bidders are required to make an initial price offer at the technical bid stage itself. Only 50 per cent of those who qualified in the technical stage (subject to a minimum of five bidders) were allowed to participate in the financial bid stage and were selected according to the initial price offering.
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