March 13, 2015
https://www.facebook.com/mehtarahulc/posts/10152652582901922
https://www.facebook.com/mehtarahulc/posts/10152652582901922
Many existing big steel companies / power companies will get coal at Rs 100 to Rs 400 per tonne . So new / small companies will end up buying coal at Rs 3000 / tonnee . IOW , the existing auction scheme of SoMoKe neither fetches much revenue and promotes cronyism , oligopoly and inefficiencies in market !!!
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SoMoKe have added 10s of rides in auction . egb block-X will be autioned, but bidder nust have power plan, must have power plant in same state, bideer must have power purchase agreement with that state etc etc. So only Jindal / Adani will qualify, And so coal mine goes for Rs 108 / tonne !!!
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Next mine will have rider attached that miner must have steel company !! A steel company which far away will not be able to bid, as it has now way to move coal from that mine to its steel factory. So a steel factory near by will bid pittance, and still get the mine !!
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And now say company-A has two coal mines --- X and Y. It got X for Rs 108 / tonne and Y for Rs 3500 / tonne. Suffices to say that it will get coal only from first mine and will leave second mine unused !!! Or worse, it will get coal from second mine and show on paper that coal was obtained from first mine !! So all revenue forecast that are being made are useless.
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AND THE AUCTION DOES NOT SET "MUST USE" CONDITION !!!
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IOW, I can hig a mine by bidding Rs 3500 / tonne , mining no coal, PAYING NO ROYALTY ,and thus stop competitors from using that mine at lower prices.
,
And worse ---- a small company will have to buy coal from open market !! And for that , it will have to pay Rs 2000 / tonne or may be twice more !! Why the large oligopolies got coal for Rs 108 / tonne to Rs 800 / tonne !! So the coal auction will do a HUGE damage to a large number of small / new companies , and favors the large / incumbent company. The inefficiencies reduce only due to new players. So the way SoMoKe rigged he coal auction has created a huge dent in efficiency.
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And finally to make matter worse, SoMoKe OPENLY insist that videshies should be allowed to own the coal mines !!
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Solution?
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The first solution is Right to Recall Coal Minister. This is must to ensure that apex person doesnt do cheating the way we saw in this auction.
.
Next , the mining should be delinked from users. The miners should have been asked to give "tell the cost that you would need to mine X tonne of coal and take it to nearest railway station". And the miner which gives lower cost should be given mine. Each buyer should be required to buy at same market price, depending on quality of coal only. And the difference should be equally divided amongst citizens of India. IOW, each buyer gets coal at almost same price , except that bulk buyer may get at say 10% to 20% lower price because transport costs for bulk buyer per tonne is lesser. This ies exactly what I had proposed in DDMRCAM , see chap-5 of http://rahulmehta.com/301.htm .
.
.
SoMoKe have added 10s of rides in auction . egb block-X will be autioned, but bidder nust have power plan, must have power plant in same state, bideer must have power purchase agreement with that state etc etc. So only Jindal / Adani will qualify, And so coal mine goes for Rs 108 / tonne !!!
.
Next mine will have rider attached that miner must have steel company !! A steel company which far away will not be able to bid, as it has now way to move coal from that mine to its steel factory. So a steel factory near by will bid pittance, and still get the mine !!
.
And now say company-A has two coal mines --- X and Y. It got X for Rs 108 / tonne and Y for Rs 3500 / tonne. Suffices to say that it will get coal only from first mine and will leave second mine unused !!! Or worse, it will get coal from second mine and show on paper that coal was obtained from first mine !! So all revenue forecast that are being made are useless.
.
AND THE AUCTION DOES NOT SET "MUST USE" CONDITION !!!
.
IOW, I can hig a mine by bidding Rs 3500 / tonne , mining no coal, PAYING NO ROYALTY ,and thus stop competitors from using that mine at lower prices.
,
And worse ---- a small company will have to buy coal from open market !! And for that , it will have to pay Rs 2000 / tonne or may be twice more !! Why the large oligopolies got coal for Rs 108 / tonne to Rs 800 / tonne !! So the coal auction will do a HUGE damage to a large number of small / new companies , and favors the large / incumbent company. The inefficiencies reduce only due to new players. So the way SoMoKe rigged he coal auction has created a huge dent in efficiency.
.
And finally to make matter worse, SoMoKe OPENLY insist that videshies should be allowed to own the coal mines !!
.
Solution?
.
The first solution is Right to Recall Coal Minister. This is must to ensure that apex person doesnt do cheating the way we saw in this auction.
.
Next , the mining should be delinked from users. The miners should have been asked to give "tell the cost that you would need to mine X tonne of coal and take it to nearest railway station". And the miner which gives lower cost should be given mine. Each buyer should be required to buy at same market price, depending on quality of coal only. And the difference should be equally divided amongst citizens of India. IOW, each buyer gets coal at almost same price , except that bulk buyer may get at say 10% to 20% lower price because transport costs for bulk buyer per tonne is lesser. This ies exactly what I had proposed in DDMRCAM , see chap-5 of http://rahulmehta.com/301.htm .
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