Coal Exchange: To draw consultants, govt reduces performance bank guarantee to 10% in RFB

• Bidders had requested the ministry to reduce the performance bank guarantee to 5-10 percent

• The govt will now consider consultants with experience of working with Central energy PSUs as eligible for bidding for the project

New Delhi: Acting on the suggestions made by bidders who are vying to win the consultancy for providing strategic and implementation management consulting to the Ministry of Coal for setting up India's first Coal Trading Platform or Exchange, the government has reduced the performance bank guarantee from 25 percent to 10 percent in the Request for Bid (RFB). Bidders had requested the ministry to reduce the performance bank guarantee to 5-10 percent, a notification released by the Ministry of Coal showed.

A performance bank guarantee is submitted by a bidder as a kind of security against the performance obligations mentioned in a contract. In case, there is a default in the performance, non-performance or short performance of a contract, the beneficiary's loss is made good by the bank which issues the guarantee.

Govt to consider consultants with experience of working with Central energy PSUs

One of the other key amendments made by the Ministry of Coal in the RFB is that it will now consider consultants with experience of working with Central energy PSUs as eligible for bidding for the project and for the evaluation of technical bids. The conditions for eligibility now requires parties to have successfully completed "Consulting assignments… for Government(s)/Regulator(s)/ Central PSUs/ Committees constituted by Governments(s)/Regulator(s)."

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The backdrop

In order to increase the domestic availability of coal and loosen control over the market, the government has been planning to set up a Coal Trading Exchange. The Ministry of Coal had floated an RFB for engaging a consultant for the project on November 25, 2020. "The Ministry of Coal has decided to undertake the process for selection of a Consultant, which will depute a team in accordance with the Terms of this RFB. The bidder, selected in accordance with the provisions of the RFB, shall assist the Ministry of Coal by deploying dedicated professionals in order to provide assistance and coordinate various implementation aspects of the project. The project would be implemented in accordance with the terms and conditions stated in the consultancy agreement to be entered into between the Ministry of Coal and the Consultant (the "Consultancy Agreement")," the RFB said. The pre-qualification and technical bids for the project open on January 11.

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