(Disclaimer: This article has been written by Rajeev Kumar in Gulail. Original publication has been linked below.)
It all began in 2006 when the Gujarat Urja Vikas Nigam Limited
(GUVNL) invited tenders for the purchase of 2000MW electricity. Three
companies – Adani Enterprises Limited, Jindal Power Limited and Power
Trading Corporation (PTC) India Limited filed tenders on 26 June 2006.
Adani offered a price of Rs 3.7038 per unit, Jindal Rs 3.48 per unit and
PTC offered a price of Rs 3.25 per unit. Adani and Jindal had bid to
supply 500MW and 150 MW power respectively, while PTC had bid to supply
440 MW (190 MW from Chitarpur Coal and Power Limited and 250 MW from JSW
Energy Limited at Ratnagiri). PTC is a power trading company which
purchases and sells power.
But the Tender Evaluation Committee of the GUVNL found these rates
unreasonably high and hence it re-invited financial bids from the
bidders who had already submitted their RFQ (request for qualification)
documents. On 9 November 2006 three companies – Adani, Jindal and PTC –
filed fresh tenders offering rates of Rs 3.2939, Rs 3.24 and Rs 3.2497
respectively. The Evaluation Committee recommended that Jindal’s bid
should be allotted tender because it was offering the lowest price. When
PTC and Adani came to know about the Jindal offer, they too offered to
supply power at the same rate as Jindal. As a result the corporation
sent letters of intent to all the three companies to supply power at the
same rate, which was Rs 3.24 per unit.
The day PTC received the letter of intent it wrote back proposing to
increase its total power supply from 440 to 630 MW. But strangely the
GUVNL rejected its proposal contending that it could not be considered
since the letter was received after the letter of intent had been sent.
The rejection of PTC’s revised offer was shocking to say the least.
It shows that the Gujarat government had already made up its mind to
make a closed-door deal with the Adani group. The state needed at least
2000MW power whereas the total contract capacity of all successful
bidders was just 1590MW. In such a scenario the rejection of PTC’s
renewed proposal made no commerical or financial sense. On the contrary
it exposes a case of favouritism and corruption. Gujarat was grappling
with severe power shortage. To make up for the widening gap in demand
and supply, the governmnet was buying merchant power (the business
terminology for power that is purchased on temporary basis as
distinguished from power purchased under long term agreements) from
Adani Enterprises at an exorbitant rate of Rs 5.31 to Rs 5.45 per unit.
Documents available with Gulail show that between October 2006 to
August 2007 alone, Gujarat government had paid Rs 322 crores to Adani
Enterprises for short-term power at a rate of Rs 5.45 per unit.
On the one hand the Modi government was purchasing expensive
short-term power from Adani and on other it resolutely refused to accept
additional 190 MW power from PTC which was cheaper by Rs 2.21 per unit.
Why?
 |
| Wasting Public Money... |
The story of crony capitalism doesn’t stop at this. At this stage
Adani and Modi governmnet held hush-hush back door mettings and decided
to award Adani the contract for 1000 MW at Rs 2.89 per unit. A similar
opportunity to lower their bid offers was not offered to PTC and Jindal.
Instead they were unilateraly issued termination letters invalidating
the earlier issued letters of intent. The ground for termination was
cited as lower tariff of Rs 2.89 offered by Adani.
The subsequent judicial process revealed that the contract with Adani
was signed on 8.1.2007 while the LOIs of Jindal and PTC were cancelled
on 12.1.2006. It is a classic case of politician-corporate nexus under
which diefferent rules were set for different companies. It shows that
the Modi regime had already made up its mind to award contract only to
Adani while shutting its doors to Adani’s competitors.
Even though PTC and Jidnal were willing to supply long term power
they were denied the opportunity to renegotiate even as Adani entered
into closed door negotiations to lower its offer price after the letter
of intent had been sent.
Shantanu from Prayas Energy Group, a Pune based NGO dedicated to democratizing energy governance in India, stressed, “There needs to be transparency in the tender process. There should be no tampering with the documents related to bidding and after the details have been set there should be no changes implemented in the original conditions that were laid out.”
Jindal Power filed a writ petition in the Gujarat High court against
this one-sided decision of the GUVNL, following which the HC on 24
January 2007 put a stay on the tender process, which essentially meant
that GUVNL could not go ahead with the deal with Adani. In response
Adani Power Limited filed a Civil Application asking for the stay to be
vacated. On 6 February 2007, the Advocate General, the top law officer
of the Gujarat government, appeared for GUVNL and made a written
submission before the court that in case the final outcome of the case
went in Jindal Power’s favour, the GUVNL would sign the agreement with
Jindal on same tems as it had offered Adani. On this, the court vacated
the stay.
Within a few hours of the court order, the GUVNL signed the contract with Adani group.
There was a sinister design behind this mad rush to sign the contract with Adani, as subsequent court proceedings revealed.
Four days before signing the Rs 2.89 PPA, on 2.2.2007, the GUVNL
entered into another agreement with Adani for supply of 1000MW power at
the rate of Rs 2.35 per unit. This fact was hidden from both public and
other power producers.
The question is why did the Modi regime sign a contract at Rs 2.89
when only four days earlier it had signed a similar contract with Adani
at Rs 2.35 per unit. A difference of even one paisa per unit balloons
into an extra burden of hundreds of crores every year. After all it’s
the people of Gujarat who are going to foot the bill for expensive
electricity. (Subsequently, Adani reneged on the Rs 2.35 contract on
various dubious grounds, only honouring the more expensive Rs 2.89
contract)
Coming back to the fight put up by PTC and Jindal against
favouristism shown towards Adani, the PTC too filed a separate case in
the HC on February 22, 2007 challenging the cancellation of its Letter
of Intent. The GUVNL again submitted in the court that in case PTC went
on to win the case it too would be accommodated in the bid and allowed
to supply 440MW power at the same terms as Adani.
Subsequently, Jindal Power opted out of the race and its application was disposed of.
But PTC continued its fight. Finally, the HC allowed PTC to enter
into an agreement with GUVNL to sign a PPA to supply 440MW power for 25
years at the rate of Rs 2.89 per unit, the same as was signed with Adani
on 6 February 2007. But the GUVNL was so intent on muscling out PTC and
allowing only Adani to reap the benefits that it filed a Special Leave
Petition in the SC challenging the directions of the HC. The SC threw
out the application.
But still the Modi regime refused to sign the contract with PTC. The
GUVNL now rejected PTC’s bid on the pretext that the company had now
offered to give all of 440 MW from just one source that is Chitrapur
Power Ltd.
(By
rajeev.kumar@gulail.com )
Original
http://gulail.com/how-adani-got-contracts-for-supplying-power-despite-being-the-most-expensive/
