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The Comptroller and Auditor General (CAG) has come down heavily on the Ministry of Coal on conducting the coal auction process 2015 in absence of necessary guidelines.
The Comptroller and Auditor General (CAG) has come down heavily on the Ministry of Coal on conducting the coal auction process 2015 in absence of necessary guidelines.

The Comptroller and Auditor General (CAG) has come down heavily on the Ministry of Coal on conducting the coal auction process 2015 in absence of necessary guidelines.

The CAG report on Coal- e auction states that, “Audit could not find any laid down parameters for evaluation of the final price bids before the Nominated Authority made recommendation to central government on the preferred bidder except the provisions of Clause 3.3.2 (c) of the standard tender document (STD), which stated that the qualified bidder that submits the lowest price offer for power sector coal mines and highest price offer for non-regulated sector coal mines shall be declared as “Preferred Bidder”.

Reply of Coal Ministry that board guidelines for coal auction could not be laid down is not acceptable: CAG

Similarly, audit could not find any laid down guidelines to be followed by the central government before giving directions to the nominated authority on the recommendations made by the said authority. The absence of broad guidelines for evaluation of final price bids by the Nominated Authority and the Central government, may, in the opinion of audit, impact the degree of robustness, transparency and fairness of the bidding process.

Ministry of Coal in its replies to CAG stated that there are numerous factors which influenced the decision of the bidder while bidding for a particular coal mine. Further, considering the fact the auction was being undertaken for first time, absence of past precedent and data, and the issues being contextual.

The CAG audit has observed that ministry reviewed the recommendations of nominated authority and examined eight cases. On the basis of examination, the ministry rejected the recommendation of the nominated authority for the declaration of “Preferred Bidder” as “Successful Bidder” in respect of three coal mines (two power sector coal mines, and one non regulated sector coal mine). In respect of other five cases, the “Preferred Bidder” was declared as the successful bidder.

Audit observed that preferred bidders of coal mines for which the recommendations of nominated authority were rejected filed petition before the Delhi high Court for setting aside the order, cancelling the auction on grounds of inter alia, unreasonableness and arbitrariness of the action of cancellation.

The reply of the ministry that broad guidelines for evaluation could not be laid down is not acceptable since both the nominated authority and the ministry have applied certain parameters while deciding on the acceptability or other wise of eight bids subjected for reexamination, the CAG report said.

While not commenting on any individual case, Audit is of the view that guidelines incorporating the parameters to be applied by nominated authority and by Ministry of Coal for evaluation of final bid prices would enhance the transparency of bidding process and may eliminate avoidable litigation.