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Govt may bar multiple bids by one co in coal auctions

The coal ministry is looking at barring multiple bids by any corporate group in the next round of bidding for mines, according to coal and power minister Piyush Goyal.

The move is aimed at curtailing the probability of price rigging or cartelization that the ministry believes led to wide variation in the winning bids, described as “outliers“ by ministry officials, for blocks in the first round of mine auction for power projects.

These outliers had prompted the ministry to put under scanner bids for several blocks and finally reject the winning bid of Naveen Jindal group firm for Gare Palma IV2&3 blocks.

“Yes, I am thinking of limiting one group to one bid in one auction. Or if they put in multiple bids at the time of shortlisting, only one of their lowest bids will be considered and the rest will be eliminated,“Goyal said on the sidelines of the inaugural function of Coal India's new headquarters.

“In fact, those who have bid multiple, if they had requirement for two units which together fit into the total capacity of a mine, I could have understood. But, those whose one unit needed the whole mine and they still bid multiple, I have actually raised questions about their integrity,” Goyal said.

Blocks for powering generation units are auctioned through reverse bidding, wherein companies have to bid below the reserve price. The lowest bidder in a block is considered winner.

But, once the bidding price hits zero, companies go into forward bidding and the highest quote is chosen as the winner. Companies can take advantage of multiple bids to rig price and also create barriers for others in a block.

In the last round of auctions, the Vedanta Group put in 25 bids for 14 out of 23 producing blocks that were being auctioned.

The group used its various arms, some of them even competing for the same block, to put in multiple bids. The Aditya Birla Group put in 15 bids for eight blocks.

Jindal Steel and Power, which was hit the most when the Supreme Court cancelled allocation of 204 blocks in September last year, put in 13 bids for six blocks.

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