SECI major solar power project hits roadblock as bidding goes awry

A recent tender floated by Solar Energy Corporation of India (SECI) took a curious turn as invalid bank documents submitted by a prominent bidder landed an important project in trouble. SECI, a government enterprise under the ministry of new and renewable energy, subsequently cancelled the tender for 1 gigawatt (Gw) of solar with 2 Gw of standalone battery energy storage system. SECI detected the irregularities only after the bidding was done, forcing it to cancel the tender at an advanced stage.  

 

At the centre of it all was Maharashtra Energy Generation Ltd, a subsidiary of Anil Ambani-owned Reliance Power (RPower). It participated in the bidding process after submitting bank documents that turned out to be invalid. The company named State Bank of India (SBI) as the guarantor for its bank guarantee. SBI has denied any knowledge of that, flagging an email ID used in the communication by Maharashtra Energy Generation as fake. Business Standard has reviewed a series of email trails revealing irregularities in the documents of the bidder.

 

“We would like to inform you that email ID sbi.171313@s-bi.co.in does not pertain to our bank,’’ one such email exchange between SBI and SECI shows.

 

A detailed emailed questionnaire to SBI seeking comment on the tender and likely action in case of an alleged fraud remained unanswered till print time. SECI did not respond to a detailed questionnaire either. However, a spokesperson of Reliance Power, in an emailed response to Business Standard, said Maharashtra Energy Generation Limited that bid for SECI’s Battery Energy Storage System (BESS) project had arranged the bank guarantee/EMD through a third-party under an established agreement. “The third party arranged the bank guarantee from FirstRand Bank of the Philippines, a scheduled foreign bank in India, as per the RBI listing. The bank guarantee had an endorsement from the SBI. We were misled to believe that the said endorsement was fully valid and genuine,” the company said.

 

The company has filed a police complaint against the third party for misleading the company and forgery, according to the spokesperson. “We are actively engaged with SECI to resolve this issue to their satisfaction,” he said. Sources in the company explained that while the bank guarantee was genuine, it was later detected that the endorsement was not. There was no endorsement from SBI in reality, the sources confirmed.  

 

The email exchanges between the various stakeholders, seen by this newspaper, did not mention any third party. And,

 

Business Standard could not ascertain the identity of the third party.

 

The events leading up to the cancellation of the tender tell a story. It began in June with SECI floating a solar tender with battery energy storage system.

 

The last date of online bid submission was August 12 and offline by August 14. Submission of earnest money deposit (EMD)/bank guarantee (BG) was part of the tender mandate. The floor EMD was set at Rs 34 crore. The EMD/BG had to be from any domestic or foreign commercial bank recognised by the Reserve Bank of India and listed on its website.

 

A BG from a foreign bank had to be endorsed by the Indian branch of the same bank or SBI.

 

Maharashtra Energy Generation Ltd submitted a bank guarantee of Rs 68.20 crore on August 7 from ACE Investment Bank, Malaysia, to bid for 1 Gw capacity.

 

The company, in its communication claimed the BG was endorsed by SBI, according to an email reviewed by this newspaper. Since ACE is an investment firm and not a commercial bank listed by the RBI, its bank guarantee was found to be invalid. RfP regulations and the Integrity Pact signed by the bidders state that any wrong document could disqualify the bidder. But Maharashtra Energy got to submit another bank guarantee. There were four more bidders for this project by then.

 

On September 10, a month after the stipulated deadline, RPower’s subsidiary submitted its second bank guarantee of Rs 68.20 crore from FirstRand Bank, Philippines. The company again mentioned endorsement by SBI. In a communication to SECI, the company forwarded an email from sbi.17313@s-bi.co.in with an attachment of ‘Structured Financial Messaging System’ (SFMS) indicating inter-bank transaction availability, documents show.

 

A direct email from sbi.17313@s-bi.co.in on September 11to SECI said: “As per the request of our client, we attached SFMS copy sent from our side for the bank guarantee in favour of Solar Energy Corporation of India Limited. This is for your kind information and perusal.”

 

The attachment was signed as SBI CAG-II branch. CAG is a corporate accounts group bank unit of SBI, with a branch in Delhi. Business Standard has reviewed a copy of this email.

 

Post this, RPower participated in the bidding and emerged a winner, along with JSW Energy. The bidding concluded on September 13. JSW Energy declined to respond to a query on the subject.

 

Banking operations executive of an Indian bank, through which the bank guarantee was to be processed for SECI, denied receipt of any BG number FRIB24.0809SOL. This was conveyed to SECI in an email. In turn, this prompted SECI to reach out to SBI— the supposed guarantor for the BG.

 

SECI wrote to the ‘foreign bank guarantee’ division of SBI, enquiring about the receipt of BG. The email was also marked to the SBI ID which sent the guarantee to SECI. On September 25, fbg.cagdelhi@sbi.co.in wrote to SECI and denied any such BG with them and flagged the email ID from which it was received.

 

“We would like to inform you that email ID sbi.171313@s-bi.co.in does not pertain to our bank. Kindly arrange to make any further communication, in respect of the foreign bank guarantee on the cited email ID and on below mentioned numbers only.”

 

Business Standard has reviewed a copy of the email. Eventually, SECI terminated the tender and intimated the bidders of the same, without elaborating on the reason. JSW Energy, another winner in the tender, declined to comment on the termination.

 

According to the bidding guidelines, any entity submitting invalid documents can be disqualified and blacklisted from future tenders as well.

 

In the section-II (commitments of the bidder) of the integrity pact signed by the bidders, point (g) states: “The bidder will not misrepresent facts or furnish false/forged documents/information in order to influence the bidding process or the execution of the contract to the detriment of SECI.’’

 

According to the pact, if the bidder/contractor has committed serious transgression through a violation of Section-II, ‘’SECI may after following due processes also exclude the bidder/contractor from future contract award processes".

 

(With inputs from Amritha Pillay) 

Bidding guidelines

 

> Any entity submitting invalid documents ahead of bid submission can be disqualified from the bidding process 

 

> For violation of commitments under the Integrity Pact, SECI may, after following due processes, exclude the defaulter bidder/contractor from future contract award processes as well