Energy dept stays solar power plant tender process

Small firms complain bidding process favoured big companies

The Karnataka Renewable Energy Development Limited (KREDL) had released a request for proposal (RFP) inviting tenders for setting up 80-MW solar thermal and solar photovoltaic projects in accordance with the State’s renewable energy policy to make capacity additions of 126 MW of solar power in the next five years.

The power purchase agreement tariff fixed by KREDL quoted Rs 14.50 per unit in accordance with the amount fixed by the Karnataka Electricity Regulatory Commission (KERC).

The bids for the projects closed on November 24, 2011 and 22 bidders took part.
However, following complaints by small time developers, the Energy Department put them in abeyance and issued notice to KREDL.

An appeal by HBM Solar Power to the Appellate Authority in the Energy Department stated that KREDL should have followed e-tendering procedure in accordance with the Karnataka Transparency in Public Procurement Act, 1999, considering the huge sums involved.

“They have followed manual tender procedure to favour big business houses and the process is in violation of rules and is arbitrary in nature,”  they submitted.

KREDL was also offering a tariff for solar power plants for 25 years as opposed to most power purchase agreements (PPA) for wind, hydro and biomass units, which were usually for a period of 10 years. HBM had also complained that the bidder had to submit Rs 20 lakh as security bid per MW, which was beyond the capacity of small units and favoured selected big business houses, which could be picked on a selective basis by KREDL.

They also contested the Rs 30 lakh/MW performance guarantee to Escoms, which was irrational and once again beyond the capacity of small and medium industries. “Though KERC had fixed a rate of Rs 14.50 a unit for solar photovoltaic projects, the reality is that the cost per MW of solar photovoltaic projects has come down to less than Rs nine crore and the PPA tariff can be fixed around Rs seven to eight per unit,” the complaint stated.

KREDL Managing Director Prasanna Kumar, however, denied any wrongdoing on their part.

‘No violation’

“KREDL is not in the list of companies which are following the e-tendering process. So there is no violation,” he maintained. Kumar insisted that several developers had complained about the problems in uploading the bulky documents, if the entire process was online.

He said they (KREDL) would respond to the notice received from the Appellate Authority and were listing out the reasons.

“In a few days, we will get this stay order vacated,” he said.

Kumar said that departments were enlisting for e-tendering in a phased manner and they (KREDL) would shortly be applying as well. “All procedures have been followed carefully with this bidding, but we are also open to suggestions,” Kumar said.

Deccan Herald had earlier reported about the complaints regarding the Request for Proposal (RFP) floated by KREDL, which had drawn criticism from small developers. Apart from the high rates quoted for the security bid and performance guarantee, companies had questioned the ability of the Escoms to pay the developers the promised the tariff of Rs 14.50 a unit.