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While the government fights at least 11 legal cases across the country over the ongoing coal e-auction, the power sector has complained that aggressive bidding by some of the bidders, would lead to disaster in the tariff and capital cost of the power projects.
“Several bidders have taken a very aggressive call discounting the mining fee by making money elsewhere such as coal sizing/handling costs, washing costs, selling of rejects/middling in open market, port charges, transportation/shipping costs etc.in their landed price of coal to their power plant,” said a power sector executive.
This, the market sources feel will lead to a chaos in the sector and will hamper the sustainable growth of the coal sector.
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“It was expected that the ministry would have developed the new standard bidding document and guidelines by incorporating the past experience and plugging all the loopholes so as to encourage the bidders to bid for a serious and mature bid which could be sustainable in the future and will provided overall growth in the sector. This philosophy is not evident in the present coal block auction process and the entire process is plagued with several loopholes,” said a power sector executive.
Another executive with a power generation company said that several bidders have raised these issues in the ‘Pre-Bid conferences’ for Schedule II and III and other occasions to the Ministry but the authorities have not taken any action to do a course correction on these issues.
“If the present auction process continues in the same way then it will defeat the sole purpose of the sustainable and transparent growth in the sectorand will lead to a complete failure of the system which will end up providing control of the majority of the mines in the hands of few mighty bidders only,” he said.
The sector experts also pointed out that aggressive bidding will also not encourage investments in the sector. Some even suggested that the best solution today will be to handover these mines to Coal India in the interim and let the Ministryto develop a full-proof bidding guideline first so that the serious & sustainable bidding takes place leading to an overall growth of the coal sector.
