CAG faults first e-auction of coal mines by NDA govt

The country’s top auditor, Comptroller and Auditor General (CAG), has picked holes in the maiden e-auction of coal mines by the NDA government in 2015.

In its report tabled in Parliament on Tuesday, the CAG stated that competition may have been restricted in auction of first two tranches involving 11 coal blocks due to multiple bids by corporate groups made through Joint Ventures (JVs) or subsidiaries.

The report said, “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.”  The coal ministry held the first e-auction in March 2015.

This was done after the Supreme Court cancelled allotment of 204 blocks in 2014.

In 11 out of 29 coal mines successfully e-auctioned in first and second tranche, a number of qualified bidders (QBs) 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-auction, 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, the audit report said. In the third tranche, the Coal Ministry amended the clause of JV participation with the objective of increasing participation, it added.

The NDA government has so far allocated 75 coal mines for specified end users (31 through e-auction and 44 coal mines through allotment) and these mines expected to generate more than Rs 3.53 lakh crore during the life of mine/lease period for mine-bearing states.