Gujarat halts solar pump tender after taking advance from farmers

Puts business of 25 SMEs & Rs 200-cr project in jeopardy

The Gujarat government has halted its solar pump programme after making headway in both procurement and distribution, it is learnt.

In January, the state government came out with a tender for 5,000 solar-powered agriculture pumps worth Rs 200 crore. Around 25 small & medium enterprises (SMEs) were awarded the contracts. 10% of the cost of each pump was also collected from 7,500 farmers as guarantee money. The state government even wrote multiple letters to contractors to expedite the work.

Now six months later, in its communication with contractors and discoms, the state government has confessed its inability to fund the programme, saying funds from the Union ministry of new and renewable energy (MNRE) are not adequate. Executives at the contractor firms claim the Gujarat government removed the criteria in the tender to get any funding from MNRE. 

While the farmers are upset, SMEs who were banking on this large contract are in the soup with orders in the backyard and no takers. One of them is learnt to have even threatened suicide in a communication to the state authorities.

Other contractors are caught between queries from the farmers and inaction from the government department. While 10% of the cost was collected from farmers, the remaining was to be financed by the state or Centre. A typical solar pump costs Rs 3.5 lakh, the executives said.

Barely six months ago, the Gujarat Urja Vikas Nigam Limited (GUVNL) had directed the five state-owned power distribution companies to call for tenders to install solar water pumping systems. Cumulatively 5,457 pumps were directed to be installed in different areas under the jurisdiction of the respective discoms. In July, GUVNL wrote to managing directors of all the discoms asking for “abeyance of the project”.

“MNRE has sanctioned central finance assistance of Rs 46.25 crore towards installation of 5,000 solar pumps against proposal of 10,309 solar pumps. The sanction is subject to fulfilment of certain conditions. Since there are differences in conditions specified by MNRE, and scheme implementation by GUVNL, the competent authority has decided to put further activity of the tender in abeyance till further instruction,” said the letter, reviewed by Business Standard. A similar letter was sent by the discoms to all contractors. 

The GUVNL spokesperson did not respond to a message sent seeking official comment. The MNRE secretary could not be reached, despite several attempts.

The contractors claim they are under pressure, as farmers are directing their queries to them, having submitted an initial amount. “No contract is sacred if the government backs out and it belittles their all efforts and contracts. All the contractors have placed the orders and will suffer losses if this project doesn’t go through,” said one contractor. 

While most contractors are looking at a major loss, some are worried about their loss of credibility. Among the 25 contractors, most are local SMEs active in water and energy solutions, while and one is a major Delhi player in the solar off-grid space.

The Gujarat government had proposed installing solar pumps for the 400,000 farmers without any power connection. The state has installed close to 20,000 pumps till date. 

Story in numbers

• In January 2017, the government came out with the tender for 5,000 solar agriculture pumps worth Rs 200 crore
• 25 SMEs were awarded the contracts
• 10% of the cost of each pump was also collected from 7,500 farmers as guarantee money
• The remaining was to be financed by the state or the Centre
• A typical solar pump costs Rs 3.5 lakh, executives said
• The state government even wrote multiple letters to contractors to expedite the work