An Indian power distributor asked for 1,200 MW of round-the-clock power for January and received offers for 40 MW: just 3.3%.
Two ways to fill a reverse auction: filter before bidding, as YPF is doing with the pipe for its gas pipeline, or open the door and see who turns up. Plus this week’s technique: how many suppliers to invite and how to prepare them.
1. Argentina LNG: a Japanese reverse auction open only to pre-approved suppliers
What happened. On 9 November, the Argentina LNG consortium (YPF, Eni and XRG) opened the auction for the pipe of its trunk gas pipeline: 527 km between Neuquén and Río Negro and a contract worth about US$2 billion (about €1.805 billion), according to Más Energía.
The interesting part is the design: only suppliers whose technical, legal and financial terms have already been approved, and who have signed the contract, can bid. The system lowers the price round by round, those who accept it stay in, and nobody knows how many rivals are left. Afterwards, the consortium will split each pipeline into sections among several suppliers so as not to depend on just one. As of 13 November, no award has been published.
The precedent does have a result: in July, the civil works for the same pipeline were awarded using the same method, and the winning bid came in 15% below the rival consortium’s, a saving of more than US$150 million (more than €135 million) on about US$1.2 billion (about €1.083 billion).
Type of figure: declared, against the rival bid. The numbers don’t fully add up (15% of 1.2 billion would be about 180 million): we give the more conservative one. Euros at the ECB rate of 12 Nov 2026 (€1 = US$1.1081).
What your company can copy:
- Close everything except price before the auction. If the winner can reopen lead times or guarantees afterwards, the auction has only set the starting point for another negotiation.
- Don’t say how many are left. The pressure lasts until the end because nobody knows whether they are alone. It works with three prequalified suppliers; with one who knows it is alone, it doesn’t.
- Decide the split in advance. If you are going to divide the volume among several suppliers, write it into the rules: a supplier that doesn’t know whether it is playing for 100% or 30% bids with a safety margin.
2. Tamil Nadu (India): two energy auctions cancelled for lack of real competition
What happened. Tamil Nadu’s power distribution company (TNPDCL) cancelled two power purchases in three days, according to DT Next. On 27 October, the one for 1,000 MW for evening peak hours, with bids of 37 to 41.50 rupees per kWh. On 29 October, another one covering November to January, with bids of up to 35 rupees. The terms of the second allowed prices far from the market to be rejected.
The detail is in the coverage. For round-the-clock power, bids covered only 6.7%, 40% and 3.3% of what was requested for November, December and January; in the morning slot there was surplus supply (110% to 125%). Benchmark: according to BigMint, the 7 pm hour on the Indian power exchange cleared at 10 rupees per kWh every day from 1 to 27 October.
| Figure (per kWh) | Rupees | Euros | Dollars |
|---|---|---|---|
| Bids in the peak-hour auction | 37 – 41.50 | about 0.36 – 0.40 | about 0.39 – 0.44 |
| Power exchange, 7 pm hour (October) | 10 | about 0.10 | about 0.11 |
Type of figure: declared (state government, via the press). Peak-hour bids were 3.7 to 4.2 times the exchange price (our own calculation). Euros at the ECB rate of 12 Nov 2026 (€1 = 104.21 rupees); dollars at the cross rate derived from the ECB rates (US$1 ≈ 94.05 rupees).
What your company can copy:
- Count capable suppliers before launching. The question isn’t who sells the product, but who can deliver this volume within this timeframe. If there are fewer than three, it isn’t an auction: it’s a negotiation, and you prepare it as such.
- Separate what has competition from what doesn’t. In the morning slot there was surplus supply; for round-the-clock power there was none. Lumping them into one process spoils the part that was working.
- Write down that you can declare it void. Tamil Nadu could say no because it had a market benchmark and a clause that allowed it. Without both, you sign whatever price you’re given.
3.3%
That’s the share of January’s round-the-clock power covered by bids in Tamil Nadu: 40 MW out of 1,200 requested. No auction design can fix that.
The rule: you need at least three real bidders, who can win and know how to use the platform on auction day. Since someone drops out at every step, you have to invite more and filter before inviting.
Illustrative example. An annual packaging purchase that cost €118,000 (about US$130,800) last year:
| Step | Suppliers | What happens |
|---|---|---|
| Market identified | 12 | Who sells the product |
| Invited | 7 | Filtered by volume, lead time and region |
| Prequalified | 5 | Documents and terms accepted |
| Complete the test bid | 4 | Registered a week ahead and a 15-minute trial |
| Bid on auction day | 4 | Reserve price: €112,000 (about US$124,100) |
From 7 invited you get 4 bidders: invite roughly twice as many as you want to see bidding. If the last bid closes at €104,000 (about US$115,200), the saving is €14,000 (about US$15,500), 11.9% against the last price paid (made-up figures to illustrate the calculation). And if 48 hours before only two suppliers are ready, postpone it or change the procedure. Inviting many more doesn’t help either: a supplier that can’t win doesn’t prepare its bid, and every invitee who doesn’t bid teaches the market that your auctions aren’t serious.
What to report: for each auction, the full funnel: invited, prequalified, test bid and real bidders. And how many finished within 5% of the winner: those are your real competitors.
How to apply it this week: a procurement checklist
- Write down in one line what volume and lead time the winner of your next auction has to cover.
- Count the suppliers who can meet it. If there are fewer than three, don’t launch it as an auction.
- Invite about twice the number of bidders you want to see, with specification and contract closed: whoever comes in accepts them.
- Registration a week ahead, a 15-minute test bid and a written reserve price, with the right to declare the auction void.
Our view
At ProcuOS we believe the number that decides an auction isn’t how many suppliers you invite, but how many can win it. Ten invitees of whom only two can fulfil the order make an auction of two, with the false comfort of having called ten. YPF does the opposite: it filters out everything that isn’t price before starting and reaches the auction with signed contracts. Tamil Nadu opened the door and, for January, received bids for 3.3% of what it needed.
That preparation (who is prequalified, who has done the trial, who isn’t answering) is the least visible part of an auction, and running it in a spreadsheet that goes back and forth by email is the quickest way to reach auction day without knowing how many will bid. That’s why it makes sense to prepare the reverse auction on a secure, reliable platform that is easy for suppliers to use, where every invitation, every registration and every bid is recorded. And with a serious reserve price: that’s what lets you say no when competition doesn’t show up.
This is how ProcuOS electronic negotiation works.
Have a good weekend, and may your next auction start with the right suppliers.
— The ProcuOS team
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Previous edition: Designing lots in a reverse auction: 2 cases and one technique.
Sources
- Más Energía (LM Neuquén): the tender for Argentina LNG’s pipes is launched, and how the Japanese reverse auction works (9 Nov 2026)
- DT Next: Tamil Nadu cancels a second power purchase in three days over high prices (30 Oct 2026)
- BigMint: Indian states turn to tenders and reverse auctions to secure peak-hour power (Oct 2026)
