Second phase of coal auction in India postponed to March 2

The government's proccedings for the second phase of the auction of Schedule III coal blocks has been postponed till March 2.

The decision is pursuant to a petition filed by Sarda Energy in Delhi High Court, and which will be heard on February 27.

The auction proceedings were supposed to begin on February 25. Coal Ministry officials, however, said the process of auction is ongoing, and that only public announcements have been paused till first week of March.

The Coal Ministry will announce the name of qualified bidders on March 2 and e-auction will begin on March 4 which will run till March 8, said a senior official.

About 131 bidders submitted technical bids for 19 coal blocks on February 15. The technically qualified bidders were to be selected and announced by the nominated authority along with opening of initial price offers for the e-auction starting February 25.

The ministry of coal has put on hold the announcement of qualified bidders for mines that ready to start production after the Delhi High Court asked the government to look into the possibility of postponement of auction.

“The list of qualified bidders is ready and we will open the initial price offer as well. The proceedings are as per schedule. The auction will be after the high court hears the matter,” a senior ministry official said.

Sources close to the development said public disclosure would be done once the Delhi HC gives clarity on the matter. The next hearing is on Friday, where in the court would hear the arguments over the Coal Ordinance Special Provisions Act – 2014.The ordinance was promulgated to re-allocate the 204 cancelled coal blocks by the Supreme Court in August 2014.

Sarda Enery in its petition has asked for scrapping off the ‘initial offer price (IPO)’ stage of the bidding in the new coal auction methodology. The company has asked that there should be only two rounds – technical and financial in the bidding and government should not select top 50 per cent bids or top five bidders on basis of the IPO filed along with technical submissions.

“The Coal Ministry was asked by the Delhi HC to see if they can wait till the court gets clarity on the provisions of the coal ordinance. The ministry will abide by it. It’s anyways a matter of just one day. There won’t be any delay as back end proceedings are going on, only public announcements are not being made,” said a senior official in the Coal Ministry, requesting anonymity.

For a company to be eligible to bid for any Schedule III coal block, it should have incurred an expenditure of not less than sixty per cent of the total project cost of the unit or phase of the specified end use plant for which the company is bidding.”

“The company has submitted that the ordinance does not allow the government to select bidders based on IPO. However, the coal ministry has made its stand clear that the ordinance allows the government to decide the methodology for the auction of coal blocks,” said a senior government official in the know.

As per the rules of the bidding, the companies have to submit technical bids which will then be evaluated by the nominated authority for coal block re-allocation. Top five technically qualified bidders on the basis of their initial price offer go ahead and bid in the e-auction for the respective blocks. The auction consisting of 18 coal blocks in the first phase was concluded on Sunday.