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India : COAL MINISTRY asks Nominated Authority to re-examine 3 bids
Publish Date : 03-Mar-2015
The Coal Ministry has launched an investigation into three such awards including one that was offered to Naveen Jindal's Group, within a week of closing auctions for the first set of coal blocks and announcing winners. The Ministry has asked the Nominated Authority to re-examine 3 bids as the blocks went much lower than estimated. While the blocks remains undisclosed, sources said the other two have been offered to BALCO and BS Ispat.
An official said : "If some tampering is found in the bid process the blocks may be re-auctioned." The final deals were yet to be inked, although the auctions for 19 blocks (7 for energy, rest for other industries) were completed in 9 days on February 22, The concept of reverse bidding implemented for the power industry has been debated time and again.
The concept requires the bidder to bid below the ceiling price of the coal that is factored in the current (power) tariff till it reaches zero. However, after reaching zero the forward bidding begins – the firms quote the highest price to win the asset.
The 7 blocks reserved for power industry saw hostile bidding by the players, the highest was from Essar Power at Rs.1,110 per tonne. However, this price was derived after the reverse bid hit zero and forward bidding began. This happened for all the 7 power blocks.
