Reverse Bidding Methodology for auction of Coal Mines for Power Sector

Reverse bidding methodology was adopted in the auction of coal mines earmarked for power sector under the provisions of Coal Mines (Special Provisions) Act, 2015 and the rules framed there under in order to ensure that there is no rise in power tariffs. This was stated by Shri  Piyush Goyal, Minister of State (IC) for Power, Coal & New and Renewable Energy in a written reply to a question in the Lok Sabha on Thursday.

Under the reverse bidding methodology, bidders have to submit bids below the Coal India Limited’s notified price for corresponding grade of coal which is the ceiling price. The lowest bid submitted is taken as the fuel cost in determination of power tariff. In case, bid price reaches Rs. Zero in reverse bidding, the bidding changes to a forward one where bidders have to quote additional premium payable to the State Government where the mine is located, over and above the fixed reserve price of Rs. 100/- per tonne. The reverse bidding methodology for auction of coal mines for power sector has been designed keeping in view the interest of power consumers.

The Minister further stated that The Ceiling Price and the Closing bid in Rs./Tonne in respect of the coal blocks auctioned to the Power Sector is as under:-

coal mine

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