CAG picks holes in coal mine auction

Girja Shankar Kaura

Tribune News Service

New Delhi, July 26

The Comptroller and Auditor General (CAG) has raised questions about the first two rounds of e-auction of coal blocks saying the level of competition was disappointing.

In its report tabled in Parliament today, it said the competition might have been restricted in the auction of 11 coal blocks due to multiple bids by corporate groups made through joint ventures or subsidiaries.

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Pointing out that there were some systemic and procedural issues that needed to be addressed, it said in 11 of the 29 coal mines successfully e-auctioned in the first and second tranche, a number of qualified bidders at the e-auction stage were from the same company or parent-subsidiary firm coalition or joint ventures.

In a scenario where the standard tender document allowed the participation of joint venture and limited the number of qualified bidders, the audit could not draw an assurance that the potential level of competition was achieved during the stage II bidding, it said.

It, however, clarified that in the third tranche, the Coal Ministry amended the clause of joint venture participation for increasing participation.

Inconsistencies in following some assumptions and errors in computing intrinsic value resulted in under-determination of upfront amount in 15 blocks, under-determination of floor prices in six non-regulated sector coal mines and revised fixed rates in all nine power-sector coal mines.

It appreciated efforts made by the Ministry of Coal in planning and implementing a new paradigm of allocation of natural resources.