Odisha to hold fresh bids for 20 mineral blocks after complaints of anti-competitive practices

KOLKATA (miningweekly.com) – The government of the eastern Indian state of Odisha has cancelled the bidding process for 20 iron-ore and manganese mining leases, which were put up for auction in October last year, following controversies over alleged “unfair and unethical” practices of some bidders.

The state government will now call for fresh tenders on December 6, under revised auction rules, plugging the loopholes that were taken advantage of by some bidders.

All the 20 mineral blocks had been put up for fresh auction as existing mining leases were slated for expiry on March 31, 2020. The cancellation of the bidding process and the invitation of fresh bids will delay the granting of new mining leases by a month, with the Odisha government having previously targeted granting new leases by January 2020.

Officially, the state government has cited “administrative inconvenience” as the reason for cancelling the bidding process and conducting auctions afresh. Sources said that this followed after some bidders lodged complaints that a certain bidding company had taken advantage of loopholes in the auction rules to put in multiple bids for the same mineral blocks through several subsidiaries under the same ownership and acting as a cartel resorting to restrictive and anti-competitive practices.

One complaint lodged against the bidding process said that the auction rules did not have any specific clause prohibiting subsidiaries of the same parent company from putting in multiple bids for the same mineral block and this had led to a cluster of bids from the same conglomerate, leading to unfair and anti-competitive bidding process.

Government officials conceded that it had not been able to anticipate that bidders would take advantage of the loophole in the auction rules, and said that in the revised auction notice to be floated on December 6 the provisions would be modified. It had been decided by government to adopt auction rules, in the case of the allocation of coal blocks, barring subsidiaries, affiliates and associates of a single company from putting in multiple bids for the same asset.

Accounting for over half of the country’s total iron-ore reserves, Odisha's call for the auction of the 20 mineral blocks, part of 300 blocks where existing mining leases are scheduled to expire on March 31, 2020, offers fresh mining leases for 50-year mining rights, up from 30 years as is usually granted.