Digitizing Procurement in CIL Presented by : T. K. MISHRA, GENERAL MANGER (MM)-HOD, CIL HQ

Indian Coal Sector: 2017-18 India is the 2nd Largest Coal producing country after China Coal is the main source of India’s Energy and shall continue to reign in near foreseeable future Coal based generation at 951 Billion units grew 6.13% & formed 91% of total power generation.(FY 2017-18) Out of 349 Giga watt (GW) of total capacity, 197 GW or 56% is coal based

Inventory of Indian Coal Resources up to 1200 M depth : 319.02 BT (148.79 BT Proved, 139.16 BT Indicated , 31.07 BT Inferred) (as on 1.4.2018) Distribution of Coal Production (All India) Indian Coal is generally high Ash and Low Sulphur GCV - 4400 Kcal/ Kg

Corporate Structure & Operations Spread over Eight States in India ~ Jharkhand, WB, Orissa, CG, MP, UP, Maharashtra & Assam Operates 369 Mines organized in 82 Areas ~ UG Mines- 174, OC Mines-177, Mixed - 18

Credentials One of the Largest coal company in the world Anticipated production of over 600 Mt in 2018-19 84 % market share in India 2,88,687 employees (as on 1.1.2019) Meets 40 % of India’s Primary Commercial Energy requirement Listed in Stock Exchange One of the 8 Maha-Ratna companies in India – Highest recognition from Govt. of India for PSUs

Physical Performance of CIL : Last 5 Years

e-Procurement CIL has implemented e-Procurement way back in 2007 itself where Reverse Auction for the first time was used for procurement of Explosives. In the year 2013, based on the initial success of NIC at MCL, MoU was signed on 22nd April, 2013 for developing e-procurement cum Reverse Auction portal for CIL and its Subsidiaries. NIC developed a dedicated GePNIC E-procurement portal (www.coalindiatenders.nic.in) for CIL and its subsidiaries in 2013. Approx. 33000 Tenders were floated in the FY 2017-18 of Tendered value of Rs. 43,000 crores approx.

e-Procurement process for tender value < 1 Cr Tender are uploaded in the portal with the following in soft format: Notice Inviting Tender (NIT) Technical Parameter Sheet (TPS) Form based General Technical Evaluation (GTE) – optional Price Bid (BOQ) All critical dates of the tender are indicated against each Tender Bidders are to upload their bids by uploading the filled in TPS, BOQ and GTE (if applicable) as per NIT.

e-Procurement process for tender value < 1 Cr EMDs are paid by the bidders online mode. EMD of unsuccessful bidders is refunded through system automatically. On scheduled date & time of tender opening, bids are opened by the Tender openers with DSC (minimum two openers are required to open the bids). System automatically evaluates offers based on TPS and generates a comparative statement of prices. Only the documents of the system declared L-1 bidder are downloaded and after evaluation of the uploaded documents, shortfall documents, if required, are sought from them.

e-Procurement process for tender value > 1 Cr For estimated tender value more than 1 crore, the tenders are finalised through a reverse auction system. Upon opening of the Tender, system displays item-wise L-1 price. A reverse auction platform is created in the online portal, displaying only the item wise start bid price, which is the L1 price received. For Works and Services tenders, the start bid price is L1 price or the estimated cost + 10% whichever is lower. Initial period of Reverse auction (R A) is kept as two hours. Auto extensions of time by ten minutes in case of any reduction recorded in the last ten minutes is allowed till no bid is received in the last 10 minutes. The bidder’s identity is not disclosed during the reverse auction process. This anonymity feature ensures obtaining most competitive price through RA.

Benefit Ensures a transparent, impartial and fair process. Recorded a reduction in finalization time, compared to conventional two part evaluation system of tender Receipt of very competitive L-1 price through Reverse Auction process, thereby saving crores of Rupees

BCCL CCL CIL CMPDIL NCL NEC SECL WCL MCL Avg.  As on date Average time cycle in Conventional Tender process Average time cycle in New process % of Improvement BCCL 84.97 58.80 30.80 CCL 125.00 84.39 32.49 CIL 108.59 68.53 36.89 CMPDIL 138.00 67.31 51.23 NCL 144.66 98.65 31.80 NEC 75.71 55.63 26.52 SECL 118.30 72.36 38.83 WCL 113.09 84.14 25.60 MCL - - 70.92  -- Avg. 111.63 73.55 34.11

H-1 Bidder Elimination To encourage serious bidding and obtaining realistic start bid price for RA, CIL implemented the following: Item-wise H-1 bidder (in case of goods)/ H1 bidders (for Works and Services) will be disallowed to participate in Reverse Auction, if more than three techno-commercially acceptable bids are available. If two bidders have quoted the same H-1 landed cost, the bidder who submitted/frozen the bid later will not be able to participate in Reverse Auction.

Relaxation MSE Bidders in RA However, for implementing policy of MSEs and Make in India of GoI, System was devised for allowing preferential bidders Tenders are published to allow MSEs and Make in India bidders to submit their bid as Preferential bidders. MSEs and Make in India bidders will not be eliminated to participate in RA, even if they are H-1 bidder.

Preferential Bidders ‘Make in India’ Micro and Small Enterprises Domestically Manufactured Electronic Products Pharma CPSEs Ancillary Units

Issues Faced Bidders not taking initial price bid seriously L1 bidder not submitting Shortfall Documents L1 bidder getting rejected during techno-commercial evaluation Time Consuming Procurement Process in case of multiple item tenders with multiple bidders RA not getting triggered

Solutions Proposed Elimination of H-1 bidder Techno-Commercial evaluation of only upto L-3 bidder In case of L-1 defaulting, higher penalties (100% of EMD or Rs. 10 lakhs, whichever is lower is to be forfeited) EMD amount increased to Rs. 50 lakhs Standard NIT with uniform Technical Specifications, Eligibility, etc.

Initiatives in upcoming Purchase Manual Procurement of Capital Equipment on “Life Cycle Cost” concept basis Guidelines issued by GeM/GoI will be followed for purchase through GeM, even if the same is not indicted or not in line with in Purchase Manual/e-Procurement guidelines of CIL For approval of extension of already concluded Depot Agreements, the Competent authority will be the same as applicable for Single Tender procurement as per DoP. No shortfall documents shall be asked for tenders valuing upto Rs 10.00 lakhs. In case Reverse Auction is not triggered, and order could not be placed on L-1 bidder, the case will be retendered.

Procurement through GeM The purchases through GeM by Government users have been authorised and made mandatory by Ministry of Finance, Rule No. 149 in the GFR, 2017 Up to Rs.50,000 - Through any of the available suppliers on the GeM, meeting the requisite quality, specification and delivery period. Above Rs.50,000 and up to Rs.30,00,000 - Through the GeM Seller having lowest price amongst the available sellers, of at least three different manufacturers, on GeM, meeting the requisite quality, specification and delivery period. Above Rs.30,00,000 - Through the supplier having lowest price meeting the requisite quality, specification and delivery period after mandatorily obtaining bids, using online bidding or reverse auction tool provided on GeM

Procurement through GeM Subsidiary Wise number of orders placed and value of orders from 1st April, 2018 to 15th January, 2019 are as under: S.No Sub. No. of Orders placed on GeM Value of orders on GeM (Rs. In Lakhs) 1 CIL HQ 16 38.66 2 CCL 127 243.06 3 NCL 1522 2372.06 4 ECL 17 24.08 5 WCL 173 181.43 6 MCL 224 781.64 7 SECL 367 500.32 8 BCCL 23 53.57 9 CMPDI 98 208.96 TOTAL 2567 4403.78

Issues resolved for procurement through GeM Sl No Issues Solutions 1 Only one item in one Bid Document Provision of Bunch bidding implemented by GeM which resembles e-tendering for a module order 2 Verification of Sellers credentials and quality of products GeM has incorporated manufacturers verification of reseller in some cases. 3 No provision to add additional technical specifications On request GeM has made provision to add additional technical specifications 4 Non Availability of items on GeM Portal On taking up matter with GeM, items if and when required have been registered on GeM portal

MSME - payment through TReDS platform MSMEs supplying to top-notch corporates can get their invoices discounted at or close to banks’ benchmark lending rates if they get on to the Trade Receivables Discounting System (TReDS) Financiers - banks and non-banking finance companies discount suppliers’ invoices based on the strength of the corporate buyers’ credit rating. Receivables Exchange of India Ltd (RXIL) is the first entity to receive the approval from RBI to launch India's First TReDS Exchange. RXIL as a joint venture between SIDBI and NSE. CIL has signed an MoU with RXIL for providing an electronic platform to facilitate transactions in TReDS platform. All the subsidiary companies have been directed to get themselves registered with similar company for participating with TReDS platform

Startup India Startups are normally Micro and Small Enterprises which may not have a track record. These will have technically capability to deliver the goods and services as per prescribed technical & quality specifications and may not be able to meet the qualification criteria relating to prior experience –prior turnover. All Central Ministries/ departments may relax condition of prior turnover and prior experiences in public procurement to all Startups (whether MSEs or otherwise) subject to meeting of quality and technical specifications in accordance with the relevant provisions of GFR, 2005 All facilities have been extended by CIL to the Startups

Awards Received Coal India Ltd has been awarded for “Innovative use of its fully automated tendering process” at a national workshop organised by the Ministry of Finance, Department of Expenditure, NIC, Ministry of Electronics and Information Technology in January, 2018.

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