According to some of the Power Sector Bidders, the aggressive bidding by some of the bidders would lead to disaster in the tariff and capital cost of the power projects.
Several bidders have taken a very aggressive call discounting the mining fee by making money elsewhere such as coal sizing/handling costs, washing costs, selling of rejects/middling in open market, port charges, transportation/shipping costs etc. in their landed price of coal to their power plant.
This will lead to a chaos in the sector and will hamper the sustainable growth of the coal sector.
It was expected the Power Ministry will prepare new Standard Bidding Documents & Guidelines by incorporated the past experience and plugging all the loopholes to encourage the bidders to bid for serious and mature bids which will be sustainable in the future and provide overall growth in the Sector.
However this philosophy is not evident in the present coal block auction process and the entire process is plagued with several important loopholes.
If the present auction process continues in the same way then it will defeat the sole purpose of the sustainable and transparent growth in the sector and will lead to a complete failure of the system which will end up providing control of the majority of the mines in the hands of few mighty bidders only.
The sector experts also pointed out that aggressive bidding will also not encourage investments in the sector. Some even suggested that the best solution today will be to handover these mines to Coal India in the interim and let the Ministry to develop a full-proof bidding guideline first so that the serious & sustainable bidding takes place leading to an overall growth of the coal sector.
