Report of the Comptroller and Auditor General of India on e-Auction of Coal Mines

The CAG has picked holes in the e-auction of coal mines by the NDA government last year saying multiple bids by corporate groups through joint ventures or subsidiaries did not give an assurance that potential level of competition was achieved in the first two tranches. In a report tabled in Parliament, the Comptroller and Auditor General of India (CAG) said competition may have been restricted in auction of 11 coal blocks on account of multiple bids by corporate groups made through JVs or subsidiaries. "Audit could not draw an assurance that the potential level of competition was achieved during...bidding of 11 coal mines auctioned in the first two tranches," it said. In 11 out of 29 coal mines successfully e-auctioned in first and second tranche, a number of qualified bidders (QBs) in the e-auction stage were from the same company/parent subsidiary company coalition/joint venture (JV), CAG said. In a scenario where the standard tender document (STD) allowed the participation of JV and simultaneously limited the number of QBs which could participate in the e-action, Audit could not draw an assurance that the potential level of competition was achieved during the stage II bidding of these 11 coal mines auctioned in the first two tranches. In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added. Reacting on the report, an official source said that as only 6 per cent of the qualified bidders were joint ventures companies and only one successful bidder was a JV company, it is clear that this provision did not restrict competition.

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