UP govt rejects Lanco's bids

The PSU power utility UP Power Corporation Ltd on behalf of the UP government today moved an application before the power regulator UP State Electricity Regulatory Commission (UPSERC) seeking re-bidding for the award of the two projects to the private sector through International Competitive Bidding (ICB).
 

The power regulator on May 16 has issued notice to the Lanco Anpara Power Ltd, against the increase in capacity of Anpara C from 2X500 to 2X600, against the regulatory approval for 1,000 Mw. The Anpara C through tariff based bidding was awarded to Lanco in September 2006.

Lanco in April last had won both coal based thermal power , Rs 9,000 crore, 660X3 Bara and Rs 6,500 crore, 660X2 Karchana projects on levelised tariff based International Competitive Bidding ( ICB).
 

The other bidders in the fray included Reliance Energy, Essar Power, Crompton Greaves, Torrent, AES of USA and three others. The Lanco's price of Rs 2.88 per unit for the Bara and Rs 2.83 for the Karchana was found to be the lowest. Accordingly the bids evaluation committee recommended that both the projects to be awarded to the Lanco.

Confirming the receipt of the request for rebidding for the two projects Vijay Kumar chairman of the UPSERC said "UPPCL has said in its request to the regulator that the lowest price quoted by the successful bidder was too high and we will approve the request for re bidding by Wednesday ''. He added "the UPPCL will complete the process of rebidding in next two weeks where only the eight companies which had earlier participated in the ICB would be eligible to quote the fresh price ''.

There will be no RFQ and RFP as this process has already been completed, Vijay Kumar further added.

Feedback ventures, the consultant appointed by the UPPCL had submitted its report to the bids evaluation committee. The committee endorsed the report and sent it to the Energy Task force (ETF) headed by the state's chief secretary. The ETF examined the report of the consultant and the bids evaluation committee. The ETF rejected the report of the bid evaluation committee which was also endorsed by the state cabinet earlier this week.

The UPPCL sources said the ETF found the tariff of Rs 2.88 per unit for Bara and Rs 2.83 per unit for Karchana to be too high and unsustainable in the long run. Sources said the ETF questioned the rationale of the price quoted by the Lanco as the same company which was awarded contract for 2X500 Anpara C in 2006, had won the bid on the basis of quoting lowest price of Rs 1.91 per unit. The UPPCL sources said the ETF rejected the arguments of the consultant which defended the difference of close to 54 percent between the price for Anpara C and the Bara and Karchana.
 

A senior official of the UPPCL said the freight cost of the coal was higher for Bara and Karchana as compared to Anpara C. He also argued that since the fixed charges for the Bara and Karchana quoted by the Lanco were also lowest so the company will be able to supply power at much cheaper rates. The ETF however rejected the contention so the application for re bidding was filed before the regulator today.