Coal India Ltd's plan to develop two underground coal gasification (UCG) projects in Jharkhand and Maharashtra through private sector participation seems to have run into a procedural hurdle and may be re-tendered.

Private sector energy majors Essel Mining and Lanco Infratech were leading the race to bag contracts for exploration and development of the respective projects on profit-sharing mode with CIL.

Designed on the lines of the NELP (New Exploration Licensing Policy), the projects would have allowed CIL to foray into the UCG sector as well as city gas distribution without any direct financial commitment. All the bids for the projects were backed by firm foreign technical collaborations.

Withdraws bids

According to sources, soon after opening the price bids, one of the contenders, Gurgaon-based Aryan Coke Beneficiation, for both the projects decided to withdraw its bids. Had it not call it quits, Aryan would have emerged as the lowest price-bidder (L1) for both the projects.

As per the ethical guidelines set by the Vigilance Commission for the public sector, if the lowest bidder opts out of the race, the tendering process should be scrapped. The norm also suggests that the respective bidder should not be allowed to take part in future bidding.

As the withdrawal took place within minutes of opening the bid and much before formal evaluation of the tenders based on both “quality” as well as “cost” parameters, the company initially decided against scrapping the bidding process. Accordingly, Essel and Lanco were short-listed as the preferred contractors.

Fresh tenders?

However, weeks away from awarding the contracts, CIL appears to be reconsidering its decision. “Considering the vigilance guidelines we may have to float fresh tenders for the projects,” a company official told Business Line on the condition of anonymity.

“The projects were beautifully designed. The tendering process was also flawless, to the best of our knowledge. A delay at this juncture may send wrong signals to the interested investors and their foreign collaborators,” the official said.

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