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Reverse bidding
3 Phases of auction of e-bid Re-gasified Liquefied Natural Gas (RLNG) have been completed so far and 4th Phase is presently under operation from 1st October, 2016 to 31st March, 2017.
3 Phases of auction of e-bid Re-gasified Liquefied Natural Gas (RLNG) have been completed so far and 4th Phase is presently under operation from 1st October, 2016 to 31st March, 2017.
Under the 4th Phase, Power System Development Fund (PSDF) support ranging from Rs 0.21 per unit to Rs 0.22 per unit has been secured by the successful bidders in the reverse auction. Piyush Goyal, Minister of state (IC) for Power, Coal, New & Renewable Energy and Mines, said this in a written reply to a question in Lok Sabha on Thursday.
Forward bidding is a standard auctions format where bidding starts at the minimum price acceptable to the seller and increases with every new bid by a fixed increment. Every bidder knows what price is being bid and the highest price bid acceptable to the seller wins.
A reverse auction is a type of auction in which the roles of buyer and seller are reversed. In an ordinary auction (also known as a forward auction), buyers compete to obtain a good or service by offering increasingly higher prices. In a reverse auction, the sellers compete to obtain business from the buyer and prices will typically decrease as the sellers undercut each other, according to Wikipedia.
A Reverse Auction is an event usually used as the last leg of sourcing and tendering to obtain the best price by encouraging competition among bidders on price. It is hosted by a single buyer and features two or more suppliers competing for business.
It is called reverse because during the auction, the price can only come down. A Reverse Auction has a number of advantages. It is very time efficient as the awarding decision can be taken in weeks instead of months, as is the case in traditional tendering.
They provide an insight to the bidders on how competitive they are and indicate their ranking amongst their peers. It reduces paperwork and increases transparency in the award process; something quite appreciated and required in the public sector. It also helps in breaking cartels.
Reverse auctions should not be universally used for all procurement. They should only be carried out for commodities which; are not core strategic to your business, have many suppliers thereby producing a competitive market, and for which the key awarding decision is price, writes purchasingauctions.com.
