New Delhi | Jan 07, 2016: In order to avoid any controversy or interruptions similar to what happened in last year’s coal auction, the Centre has issued a detailed advisory to all the state governments enumerating clearly the do’s and don’ts for the first phase of non-coal mines auction, which is going on in various states.

“In case the state government decides to reserve a mineral block for specified end-use, the tender document should clearly specify the eligibility criteria and ensure adequacy of competition pool and avoid cartelization,” advised the Centre to states, learning from the cartelisation controversy which happened during coal auction.

For example, JSPL won the Gare Palma-IV/2&3 block in the coal auction, which took place last year. However, the company was not given the charge of the block because of ‘comparatively low bids’ put up by it and the competitors. The mine is still lying with the government as the case — filed by JSPL — is pending at Delhi High Court. In total, three auctioned coal mines remain unapproved by the government due to shadow of cartelization — two of JSPL, including Gare Palma-IV/2&3, and one of Bharat Aluminium Company (Balco).

The Centre is also taking extra care in order to avoid coal auction like scenario where coal blocks had to be removed from the auction process due to court orders. It has asked the state governments to have a team of standing legal counsel in all readiness to ensure that the auction process does not get hampered on account of any litigation that may arise due to court cases by prospective bidders.

“Sometimes, the bidders may file court cases across multiple jurisdictions; it is important to ensure that all these litigations are taken care in timely manner for uninterrupted conduct of auctions,” centre told the states. Additionally, it has asked the states to design timelines of the e-auction process in such a manner that there is no potential for cartelization by industry players.

The Centre has also asked the states to call a preliminary stakeholder meeting for consultation with the industry to take their inputs and feedback on the tender process.

Moreover, according to the Centre, the state governments should clearly define the communication protocol to be adopted during the entire e-auction process for adequate security and integrity of the sensitive information. “It should be strictly defined as per need to know basis only,” the centre said.

The state governments have also been advised to consider bidders as their partners and provide adequate handholding so that they face minimum challenges during the auction process as well as during mine development.

(Source: http://www.business-standard.com/)