Rajasthan Electricity Regulatory Commission, Jaipur

Petition No. 217/10 In the matter of adoption of tariff & approval of extended time line for procurement of 1000MW and additional 200MW of base load power discovered through the process of competitive bidding under Case-1 as per the guidelines for determination of tariff by competitive bidding process . ..

Coram:

Sh. D.C. Samant, Chairman Sh. K. L. Vyas, Member Sh. S.K. Mittal, Member : Rajasthan Rajya Vidyut Prasaran Nigam Ltd., Jaipur On behalf of: Jaipur Vidyut Vitran Nigam Ltd., Ajmer Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran Nigam Ltd. : 11.5.10, 8.4.10 & 19.3.10

Petitioners

Date of hearing

Presents: 1. Sh. B.K.Makhija, SE (NPP), RVPN, (on 19.03.10 & 08.04.10) 2. Sh. R.K. Kasliwal, CE (NPP&R), RVPN(on 19.03.10,08.04.10 & 11.05.10) 3. Sh. Sanjay Rai, Consultant of RVPN (on 19.03.10, 08.04.10 & 11.05.10) 4. Sh. R.K. Shahi, Consultant of RVPN (on 19.03.10 & 08.04.10 &11.05.10) 5. Sh. A.K. Sharma, SE (NPP&R), RVPN (on 19.03.10, 08.04.10 &11.05.10) 6. Sh. Bhavi Meena, SCO, Reliance (on 11.05.10) 7. Sh. Ritendra Bhattacherjee, Manager , Reliance Power(on 11.05.10) 8. Sh. Achintya Dvivedi, Advocate, M/s RKM Powergen (on 11.05.10) 9. Sh. J. Mohan, GM, M/s RKM Powergen (on 11.05.10) Date of Order : ORDER 1. M/s. Rajasthan Rajya Vidyut Prasaran Nigam Ltd., Jaipur (RVPN) through authorized representative Sh. R.K. Kasliwal, Dy. CE(NPP-R), submitted a petition on 25.2.10 on behalf of Jaipur Vidyut Vitran Nigam Ltd., Ajmer Vidyut Vitran Nigam Ltd. and Jodhpur Vidyut Vitran Nigam Ltd., hereinafter referred to as Discoms as non -applicant, 31.5.2010

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seeking approval of the Commission for adoption of tariff quoted by M/s Adani Power Rajasthan Ltd. (APRL) discovered through competitive bidding under Case-1 in terms of section 63 of the Electricity Act, 2003 (hereinafter referred as the Act). Petition was filed under clause 5.16 & 6.4 of the Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees (hereinafter referred to as Guidelines), issued by the Ministry of Power, Government of India, vide notification No. 23/11/2004-R&R (Vol. II) dated 19-01-2005 (including its amendments dated 30.03.2006, 18.08.2006, 27.09.2007 and 27.03.09), under section 63 of the Act with a prayer for: (a) Approval of deviations in respect of extended time line beyond 195 days as specified in clause 5.19. (b) Adoption of Tariff for purchase of long term Base Load power as quoted by the Successful Bidder (M/s Adani Power Rajasthan Limited) under Case-1 Bidding Process under Section 63 of the Act. (c) Approval for procurement of additional 200 MW of base load power offered by the Successful Bidder (M/s Adani Power Rajasthan Limited) at the quoted tariff on the same terms & conditions. 2. The petition has been filed under Section 63 of the Act. Section 63 envisages that the appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding, in accordance with the guidelines issued by the Central Government. The Central Government, Ministry of Power has issued the guidelines contemplated under Section 63 of the Act, titled Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees vide Resolution no. 23/11/2004-R&R Vol. II dated 19.01.2005 and amendments thereof. Bidding process shall be initiated in the Standard Bid Document (SBD) issued by the Central Govt. and after giving due intimation to the Commission and approval for such purchase. The salient features of the bidding process as laid down in the guidelines are discussed hereunder for convenience of reference: a) The guidelines are applicable for procurement of base-load, peakload and seasonal power requirements of distribution licensees through process of competitive bidding. The distribution licensees

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b)

c)

d)

e)

f)

(referred to as procurers for the purpose of competitive bidding) may adopt the guidelines for long-term procurement for a period of 7 years and above and medium term procurement for a period exceeding 1 year up to a period of seven years. Procurement by more than one distribution licensee through a combined bid process is permitted and in such a case, the procurer has the option of conducting the bid process through an authorized representative. The bid documentation is required to be prepared in accordance with the guidelines and the standard bid documents issued by the Central Government. In such cases, intimation shall be sent by the procurer to the appropriate Regulatory Commission about initiation of the bidding process. In the event of deviation from the bidding conditions contained in the guidelines, approval of the Appropriate Commission shall be sought by the procurers or their authorized representative. The procurer may, at his option, adopt a single stage tender process for long term or medium term procurement under Case-1, combining the RFP and RFQ processes. Procurer or authorized representative shall prepare bid documents including the RFQ and RFP (only RFP in single stage process) in line with these guidelines and standard bid documents. The procurer shall publish a RFQ (RFP in single stage process) notice in at least two national newspapers, company website and preferably in trade magazines also to accord it wide publicity. The bidding shall necessarily be by way of International Competitive Bidding (ICB). In case, the bidders seek any deviation and procurer finds that deviation is reasonable, the procurer shall obtain approval of the appropriate Commission before agreeing to such deviation. Procurer shall provide only written interpretation of the tender document to any bidder / participant and the same shall be made available to all other bidders. All parties shall rely solely on the written communication and acceptances from the bidders. The minimum number of qualified bidders should be at least two other than any affiliate company or companies of the procurer to ensure competitiveness. If the number of qualified bidders responding to the RFQ/RFP is less than two and the procurer still

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g)

h)

i)

j)

wants to continue with the bidding process, the same may be done with the consent of the Appropriate Commission. The procurer shall constitute a Committee for evaluation of the bids with at least one Member external to the procurer organization and affiliates. The external Member shall have expertise in financial matters/bid evaluation. The procurer shall reveal past association with the external Members directly or through its affiliates that could create potential conflict of interest. Eligible bidders shall be required to submit separate technical and price bids along with necessary bid-guarantee. The bid shall be opened in public and representatives of bidders desiring to participate shall be allowed to remain present. The bidder, who has quoted lowest levellised tariff as per evaluation procedure, shall be considered for award of the contract. The Power Purchase Agreements (PPAs) shall be signed by the procurers with the selected bidders consequent to the selection process in accordance with the terms and conditions as finalized in the bid document before the RFP stage. After signing of the PPAs, the Evaluation Committee shall provide appropriate certification on adherence to the guidelines and to the bid process established by the procurer. The procurer shall also make the evaluation of bid public by indicating terms of minimum bid and anonymous comparison of all other bids and also the contract signed with the successful bidder. The signed PPA along with the certification certificates provided by the evaluation committee and by the procurer as provided in clause 6.2 shall be forwarded to the Appropriate Commission for adoption of tariffs in terms of Section 63 of the Act.

3.

The petition was admitted by the Commission on 2.3.2010. The Commission sought some additional information to establish that tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government. The matter was heard on 19.3.2010 wherein the petitioner submitted the information sought by the Commission. The Commission vide order dated 9.4.2010 observed that petition is still deficient in some aspects. The Commission directed the petitioner to supplement the petition giving comparison of chronology of events actually occurring vis-a -vis as given in guidelines furnishing detailed reasons for delay in respect

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of each event and justification of additional 200MW of base load power proposed to be procured and complete bid evaluation report along with justification about reasonability of tariff. 4. The petitioner submitted supplementary petition containing the information desired by the Commission on 30.03.10 for further consideration. Based on the submissions made by the petitioner and subsequent submissions made in response to the information desired by the Commission it is observed that RVPN on behalf of Jaipur Vidyut Vitran Nigam Ltd., Ajmer Vidyut Vitran Nigam Ltd. and Jodhpur Vidyut Vitran Nigam Ltd., invited bid for procurement of power for long term under Case -1 bidding meeting the Base load power requirements of the procurers in accordance with the guidelines issued by the GoI. The petitioner obtained valid authorizations from the procurer i.e. three Discoms to undertake bid process. The Petitioner had earlier filed a petition before Commission praying to allow procurement of 1500 MW of power on long term basis for 25 years and to take note of initiation of bid process. The Commission vide its order dated 3.11.08 allowed petitioner to proceed with bid to procure 1000 MW of base load power (round the year) through CaseI. The allocation of the capacity among three Discoms was proposed as under: Jaipur VVNL Ajmer VVNL Jodhpur VVNL 6. 360 MW 360 MW 280 MW 36% 36% 28%

5.

The petitioner opted for single stage bid process. The Requests for Proposal (RFP) for selection of sellers in line with the Standard Bidding Document (SBD) approved by the Central Government were invited through the following news papers : S.No. (i) (ii) (iii) (iv) (v) Name of News Paper Financial Times London Dainik Bhaskar Rajasthan Patrika Economic Times Hindustan Times Date 26.2.2009 23.2.2009 23.2.2009 24.2.2009 24.2.2009

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7.

Further, in order to generate a better response, tariff bids were also advertised through electronic media by way of putting up details of the project on RVPN website. The commencement of sale of RFP document was from 25.2.2009 with the last date of submission of bid as 1.6.2009. The RFP document was revised in line with the SBD notified by Ministry of Power on 27.3.2009. The last date for submission was rescheduled to 21.7.2009. On request of the prospective bidders the bid submission date was further extended to 06.08.09 wherein it was ensured that the bidders are provided with at least 45 days for bid submission. As per RFP the bidders were to submit their bids for the requisitioned capacity of 1000 MW (+/- 20%) with a minimum bid capacity of 100 MW. Seven parties purchased RFP document of which the following six bidders submitted their bids by the due date i.e 6.8.09. S. No. 1 2 3 4 5 6 Name of Bidders Essar Power Limited Jindal India Thermal Power Limited Reliance Power Limited Adani Power Rajasthan Limited RKM Powergen Pvt. Ltd. Capacity Offered 510 MW 450 MW 1000 MW 1200 MW 300 MW

8.

PTC India Limited (Trading Licensee) through the following developers: GMR Kamalanga Energy Ltd. ("Developer-1") 100 MW Ind-Barath Energy (Utkal) Ltd. ("Developer-2") KVK Nilanchal Power Pvt. Ltd. 200 MW ("Developer-3") Monnet Power Co. Ltd. 150 MW ("Developer-4") 150 MW

9.

In accordance with clause 5.9 of the guidelines a Bid Evaluation

Committee(BEC), with one external member to the procurers organization was constituted for evaluation of bids. The petitioner has submitted that it has ensured that there is no past association with the

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external member, directly or indirectly that could create potential conflict of interest. The evaluation committee comprised of the following members : (i) (ii) (iii) (iv) (v) (vi) Sh. N. M. Mathur, CE(PPC&F) RVUN Jaipur. Sh. R.K.Jain, Zonal CE,(O&M) JVVNL Jaipur Sh. Deepak Srivastava, CCOA, RVPN Jaipur Sh. B. K. Makhija, Advisor Project RVPN Jaipur Sh. R. K. Kasliwal, Dy CE (NPP&R), RRVPNL Jaipur Sh. A. K. Khandelwal, CA External Member (Financial Expert)

10. Besides, constituting the aforementioned BEC the petitioner also appointed M/s Power Finance Corporation Consultancy Ltd. (PFCCL) as its consultants to evaluate the bids. BEC after serious deliberations in series of meetings held on 7.8.09, 28.8.09, 7.9.09, 25.9.09 & 30.9.09 considered the status of all firms regarding Qualification Requirements (QR) and opined as under :
It was stated by the consultants that based on the requirements of the RFP (Meeting all the QRs on the bid deadline i.e. 06.8.09) strictly, only one bidder i.e. M/s RKM Power Gen Pvt. Ltd. offering 300 MW power, meets QR. The committee is of the opinion that such a situation will lead to annulment of the bid process, which may not be in the interest of the State. In view of this it was considered appropriate to have some relaxations in few conditions of QR and other compliances. However, the relaxations in the terms of QR, which may affect the commissioning of the project/ availability of the power to the state, should not be considered.

11. The BEC therefore recommended that the price offers of following firms may be considered for opening: Sl.No. 1. 2. 3. 4. Name of the Bidder M/s RKM Powergen Private Limited M/s Jindal India Thermal Power Limited M/s Adani Power Rajasthan Limited M/s PTC India Power Limited (Trader), thru. (i) M/s GMR Kamalanga Energy Limited (ii) M/s Ind Barath Energy (Utkal) Limited

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12. The petitioner before accepting the recommendations of BEC considered in detail the provisions laid down in the guidelines, RFP document and decided that consultant should give their firm recommendation through the BEC on the deficiencies/deviations pointed out in the bids. The relevant extract of the meeting of the Board of Directors of petitioner held on 20.10.2009 are quoted below :
The Board discussed and deliberated on the issues and decided that consultants should give their recommendation through the BEC on the deficiencies/deviations pointed out in the bids received, clearly indicating there in the nature of deficiencies/deviations as major or minor, keeping in view their compatibility with the provisions in the tender documents and suggest the future course of action to ensure transparent bid process.

13. The BEC subsequently submitted following options and recommended the option (b)as below in tune with its earlier decision: a) Proceed further with the single bid which is meeting the qualifying requirement strictly as per RFP but for 300MW only. b) Consider the minor deficiencies/deviations as recommended by the consultant. c) Consider to drop the tender and re-invite. 14. The petitioner decided to accept the recommendations of BEC to ignore minor deficiencies in the Qualifying Requirements on the following grounds :
(i) The fresh bidding may delay the process of selection of the power plant developers and hence will delay in commissioning of the plant and supply of power to the State which may lead to persistent power shortage in the State. (ii) Others States have also initiated procurement of power through case1 bidding process. Further, the number of bidders/developers in the country are limited, therefore, if we annul the process, the capacity offered to us in the present bid will get unlocked, and may be offered to other bidding States. In the process, we may not got sufficient competitive bids against our fresh tender enquiry. (iii) If the selected developers fail to set up the plant there is no financial loss to the State as the Distribution Companies are not making any financial commitment towards setting up of power plant. (iv) If the selected developer(s) are unable to establish/delay the power plant, the Discoms would free to terminate the PPA, invoking the provisions of PPA for encashing the contract performance guarantee

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provided by the developer @ Rs. 30lacs per MW and initiate fresh bid process.

15. Accordingly the financial bids of the aforementioned qualified bidders were opened on 1st December 2009 in the presence of qualified bidders. 16. Based on evaluation of the Financial Bids submitted by all the qualified bidders, the Bid Evaluation Committee on 3rd December 2009 recommended M/s Adani Power Rajasthan Limited as the lowest evaluated bidder at a levellised tariff of Rs. 3.2483 per kWh for procurement of total offered capacity of 1000 MW, as approved by the Commission, plus additional 200 MW (subject to approval of the Commission). 17. The recommendation of the Bid Evaluation Committee was considered by the petitioner and the representative of M/s Adani Power Rajasthan Limited was called to extend some commercial rebate in view of the support being extended to them by the Govt. of Rajasthan. M/s Adani Power Rajasthan Limited agreed to extend a rebate of one paise per kWh in the quoted non-escalable capacity charge for the entire term of the quoted term of 25 years. The levellised tariff on account of the discount offered works out to Rs. 3.2383 per kWh. The recommendation of the Bid Evaluation Committee, the negotiated offer of M/s Adani Power Rajasthan Limited the successful bidders and procurement of additional quantum of 200 MW, subject to approval of the Commission, was approved by the petitioner. 18. Accordingly, Letter of Intent (LoI) was issued to Adani Power Rajasthan Limited (Successful Bidder) on December 17, 2009 for supply of long term 1000 MW, which was approved by the Commission, plus additional 200 MW (subject to approval of the Commission although accepted by Adani Power Rajasthan Ltd.) of base load power to the Procurers. 19. In compliance of provisions of clause 6.1 of the Guidelines, the Power Purchase Agreement (PPA) was signed on 28.01.2010 between the Procurers and Adani Power Rajasthan Limited - Successful Bidder - as per provisions of the RFP Documents.

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20. In compliance to the provisions of clause 6.2 of the Guidelines, the petitioner has furnished necessary certification of BEC on conformity of the bid process evaluation according to the provisions of the RFP document and certification of procurer on conformity of the bid process with the Guidelines. 21. In compliance to the provisions of clause 6.3 of the Guidelines, for the purpose of transparency, the petitioner has made the bids public through public notice published in leading news papers i.e. Dainik Navjoyti on 24.2.10, Times of India & Hindustan Times on 25.2.10. The public notice mentioned that M/s Adani Power Rajasthan Limited has won the bid with the evaluated levelised tariff of Rs. 3.2383/kWh and an anonymous comparison of all other bids together with the details of PPA signed is available on the website of RVPN. 22. The bid process (From date of issue of RFP on 25.02.09 to signing of PPA & RFP documents on 28.01.10) has taken 337 days. Whereas as per guidelines the process should have been completed in 195 days. As per clause 5.19 of the Guidelines, approval of Honble Commission is required under clause 5.16 of the Guidelines, in case the bid process takes more than 195 days. 23. The list of events with their date of occurrence in the bidding process are as under: S.No. 1 2 3 4 5 6 7 8 9 10 Events Intimation of bid process to RERC Approval of Quantum Date of issue of RFP RFP bid submission Extension Extension Bid opened Financial bid opened Evaluation of bids LOI issued Acceptance of LOI PPA signed Dt. as per RFP Date (actual) 19.08.08 3.11.08 25.2.09 01.06.09 21.07.09 06.08.09 06.08.09 1.12.09 03.12.09 17.12.09 22.12.09 28.01.10

25.2.09 12.3.09 8.06.09 30.7.09 10.8.09 31.08.09

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11 12

13 14

Certificate by bid evaluation committee Certificate by procurers Jaipur Discom Ajmer Discom Jodhpur Discom Public notice in news papers & website Petition filed for adoption

11.2.10 22.2.10 11.2.10 15.2.10 25.02.10 25.02.10

24. The chronology of events as per guidelines with their scheduled dates / actual are as under: Event Date of issue of RFP RFP bid submission Bid evaluation & Issuance of LoI PPA becomes effective Time line as per guidelines Zero date 75 days 100 days Scheduled Actual Excess time taken -86 days 108 days

25.2.09 (Zero 25.2.09 date) 10.5.09 6.8.09 4.6.09 17.12.09

120 days

24.6.09

28.1.10

22 days 216 days

Filing of Petition for approval of Bid Price and related issues:

25. The petitioner filed a petition before the Commission to approve the bid price as required in section 63 of the Act. 26. Even before the petition was filed, Commission received a copy of a letter addressed to the Chief Minister, Rajasthan dated 21.12.2009 supposedly written by Shri Sita Ram Yechuri, MP, on his letter head complaining about the bid process adopted by the petitioner. Soon after, the Commission again received by Fax a copy of a letter dated 29.12.2009 addressed by Shri Sita Ram Yechuri in his own hand to the C.M. Rajasthan clarifying that the earlier letter dated 21.12.2009 was a

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forged one and that a report has been filed at the local police station in that respect. He requested to ignore that letter. 27. The Commission had pointed out to the petitioner certain gaps of information in the petition and non availability of supporting documents with the petition and to explain the facts through a representative. Meanwhile it received a letter dated 14.3.2010 from M/s Reliance Power Ltd. which was also a bidder representing that large scale discrepancies/deviations are evident from the evaluation report of the bid evaluation committee wherein the qualification requirement with respect to land has only been considered as a critical factor for commissioning of any power project. The Company further alleged that the procurer has favoured the successful bidder M/s Adani Power Ltd. by way of qualifying it on the basis of imported Coal where as the tariff submitted by the party is based on domestic Coal. 28. Similarly another bidder M/s R.K.M. Power Gen Pvt. Ltd. represented before the Commission that their firm has been deprived of the contract even though they were the only bidder meeting all the qualifying requirements. 29. The Commission in order to ensure the transparency in the process, invited comments of the petitioner on the representation of M/s Reliance Power Ltd., and allowed both the representatives of M/s Reliance Power Ltd. and M/s R.K.M. Power Gen Pvt. Ltd. to participate in the hearing of the petition on 11.5.2010. During the hearing M/s Reliance Power Ltd. stated that they have nothing more to submit while RKM Power Gen Ltd. stated that they were deprived of the contract even though they were the only qualifying bidder meeting the requirement of guidelines strictly. The learned counsel of M/s RKM Powergen Ltd. during the hearing said that relaxation cannot be granted by the procurer on its own and that could be given only by the Commission.

Analysis of issues and decisions thereon:

30. Before dealing with the representations and issues, the Commission would like to discuss the role of the Commission in adoption of tariff under Sec. 63 as distinct from determination of tariff under Sec. 62 of the Act. It is so because this is the first case before the Commission

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regarding adoption of tariff which has also been the first bidding process completed by or on behalf of distribution entities under the guidelines of GoI issued on 27.3.2009 for Case-I bidding. 31. For understanding the role as well as approach to be followed in such a matter, the Commission has also considered the following observations in decisions of APTEL and CERC: (i) The APTEL in Appeal No.109/2009 held that: 20. While the bidding guidelines allow the role of the State Commission to be only ministerial for the adoption of tariff when there is more than one bidder, there is a specific reference to the consent in case of single bid. This variation denotes that adoption is routine and consent is the outcome of the proactive consideration. (ii) The CERC in petition 18/2007 has held that : 15. It is evident from the guidelines that in contrast to the elaborate role of the Commission in the tariff determination under Section 62 of the Act, its role in case of tariff discovery through the competitive bidding process undertaken under Section 63 is essentially confined to adoption of tariff, on being satisfied that transparent process of bidding in accordance with the guidelines have been followed in determination of such tariff. While adopting the tariff discovered through the competitive bidding process, the Commission is not required to go into the merits or analysis of the tariff so discovered. Neither is it possible for the Commission to do so as not supporting details are required to be submitted by the bidders. 32. Obviously the role of the Commission is essentially of being satisfied that transparent process of bidding in accordance with guidelines has been followed in tariff discovery. The Commission has, accordingly, decided to follow the principle laid down in the above referred orders to the effect that adoption is a routine exercise to arrive at satisfaction about transparency in the bidding process and adherence to guidelines of Govt. of India. 33. In the light of above discussed position, the Commission has taken note of representations received by it and they have been examined to the extent relevant in arriving at the said satisfaction. The Commission, therefore, doesnt propose to deal with in elaborate manner each issue mentioned in the representation while at the same

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time the issues relevant to transparency of the process and adherence to guidelines by the procurer have been given due consideration. 34. As far as representation of M/s. Reliance Power Ltd. is concerned, the main issue, which emerges relates to the alleged deviation, which has been ignored by the procurer in qualifying some bidders for opening of price bid. In the representation filed by the party it has been argued that procurer should have either sought approval of the Commission under clause 3.4.1 of RFP or else cancelled the bid. 35. It may be mentioned that Bid Evaluation Committee based on facts and circumstances, as narrated in para 10 came to the conclusion that some of the deviations, being of minor nature and not likely to affect commissioning of projects, need to be ignored, as otherwise only one bidder would qualify for opening of price bids and that too for 300 MW as against 1000 MW indicated in the bid document. They came to the conclusion that to avoid re-bidding, which would result in loss of time, minor deviation could be ignored for getting power in time. 36. They accordingly opined that the price bids of the parties mentioned in para 11 meeting by and large the major qualification requirements with minor deviations may be opened. When confronted with the situation as emerged in the instant case, Bid Evaluation Committee while finalising its first recommendation visualised two options i.e. the annulment of the bid process, which they thought would not be in the interest of the State and the other option being some relaxations in few conditions of qualifying requirements without affecting the timely commissioning of project and availability of power, which they considered appropriate. 37. Since Bid Evaluation Committee decided to recommend for opening of bids of four parties, clause 3.4.1 of the RFP referred to in the representation discussed in para 34 was not attracted, as this clause read with para 5.7 of guidelines stipulates prior approval of the Commission before opening of price bid only if there are less than two qualified bids i.e. when there is lack of competition and procurer decides to proceed further even with a single bid. Assuming that relaxations were not granted and there was, therefore, a single

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qualified bid; even in that situation permission of Commission under clause 3.5.1 of RFP read with para 5.7 of guidelines is required only if the procurer still wants to proceed with a single bid. BEC considered only two options i.e. relaxation in some deviations considered minor or cancellation of the process, which in their opinion was within ambit of the guidelines.The other issue of the said party regarding cancellation of the process at that stage and invitation of fresh bid has been dealt with later in this order while arriving at the final view on the matter. 38. It may be mentioned that there is no provision in the guidelines or in the RFP document for the Commission to grant mid-course approval on any deviation except in the single bid situation and prior approval of the Commission envisaged in the guidelines in respect of deviations is required before documents are issued for inviting offers. This observation is being made with reference to the point raised by the learned counsel of M/s RKM Powergen Pvt. Ltd., that the relaxation could be granted only by the Commission. 39. The other important point raised by the party relates to relaxing the qualifying requirements for the fuel in case of M/s. Adani Power Rajasthan Limited. This matter has been elaborately dealt with in the first report of the Bid Evaluation Committee, who found the party to be qualified as far as requirement for fuel is concerned based on tie-up for imported coal and at the same time found the option of use of domestic coal worth consideration on account of likely advantage of lower escalation in tariff for domestic fuel than that of imported coal. The procurer has subsequently taken undertaking from the bidder that lower escalation in two situations i.e. domestic coal or imported coal would be applied in tariff and by this they have tried to derive advantage of incurring lower fuel escalation cost. It may be mentioned that neither the guidelines of GoI nor the bid documents anticipate such a situation wherein imported coal and domestic coal both could be used by a developer and obviously in such a situation the Bid Evaluation Committee and procurer are required to take a decision, which is in their best interest. 40. As regards the issue raised by M/s RKM Powergen Pvt. Ltd. saying that they have been deprived of the contract, being the only bidder meeting the qualifying requirements, appears hypothetical. It seems that the party is under the belief that procurer is bound to seek

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approval of the Commission in a single qualified bid situation and that the Commission would have necessarily accorded permission to the procurer to proceed further on single bid and also that the quoted rate would have been accepted without judging the reasonability and market rate. It may be mentioned that the need for Commissions approval in such a situation arises only when procurer decides to proceed further on a single bid. The price bid of the party was in any case opened with their quoted rate, when levelised, being Rs. 4.3043/kWh as against the rate of Rs. 3.2483/kWh of M/s Adani Power Rajasthan Ltd., accepted by the Procurer. 41. The Commission would now like to deal with the main issue, which has arisen in the matter through the representations or otherwise i.e. the so-called deviations and its implications on transparency and compliance of guidelines of GoI. 42. As has been mentioned earlier, when the technical bid was opened, it transpired that only one bidder was fully compliant if the qualifying criteria was applied strictly and that too for a capacity of 300 MW as against a tender enquiry of 1000 MW. Based on the facts and circumstances the evaluation committee came to the conclusion that some relaxations, which may not affect commissioning of projects of bidder may be considered and accordingly they found following parties meeting the major qualifying requirements and opined that their price bid could be opened: 1. M/s RKM Powergen Private Limited 2. M/s Jindal India Thermal Power Limited 3. M/s Adani Power Rajasthan Limited 4. M/s PTC India Power Limited (Trader), thru. (i) M/s GMR Kamalanga Energy Limited (ii) M/s Ind Barath Energy (Utkal) Limited 43. The matter was considered by the Board of RVPN in its meeting held on 20th October, 2009 and they referred the matter back to the consultant for a firm recommendation through Bid Evaluation Committee as regards, the deviations proposed to be relaxed/ignored for opening of price bids and its implication on adherence to guidelines of GoI.

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44. Bid Evaluation Committee again gave its report and pointed out that there are following three options in the matter and they again reiterated their opinion in favour of option-(b) given below: a) Proceed further with the single bid which is meeting the qualifying requirement strictly as per RFP but for 300MW only. b) Consider the minor deficiencies/deviations as recommended by the consultant. c) Consider to drop the tender and re-invite. 45. The matter was again considered by the Board of RVPN in the meeting held on 3rd December, 2009 and the Board decided to ignore minor deficiencies in the qualifying requirements on the grounds given in para 14 of this order. 46. It is apparent that Bid Evaluation Committee consistently held the view that some deviations being of minor nature need to be ignored in the larger interest of getting power. The same was carefully considered by the Board in two meetings and finally accepted. The Board in its decision has also given justification and reasons for ignoring minor deficiencies/deviations in consideration of the objectives of the guidelines. 47. Based on the said decision the price bids were opened and M/s. Adani Power Rajasthan Limited was declared as successful bidder. The rates quoted by various parties whose price bids were opened are as under: 1. 2. M/s Adani Power Rajasthan Limited M/s PTC India Power Limited (Trader), thru. Rs. 3.2483/kWh L-1

(i) M/s GMR Kamalanga Energy Limited (ii) M/s Ind Barath Energy (Utkal) Limited
3. 4. M/s RKM Powergen Private Limited M/s Jindal India Thermal Power Limited

Rs. 3.8107/kWh Rs. 3.9520/kWh Rs. 4.3043/kWh Rs. 4.3810/kWh

L-2 L-3 L-4 L-5

48. The rate quoted by L-1 is much lower than that of others. The procurer submitted before the Commission during hearing on the petition that the tariff is also comparable to levelised tariff of State owned Chabra project of 2X660 MW being executed by RVUN, which is Rs. 3.488/kWh.

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49. The petitioner also submitted that Maharashtra has recently finalized the bid received on 7.8.2009 as under: Bidder Power Offered Levelised Tariff 1. EMCO 200 MW Rs.2.88 2. India Bulls 450 MW Rs.3.26 3. Adani Power 1200 MW Rs.3.28 50. In view of the above facts, the lowest quoted tariff accepted by the procurer is quite competitive when compared with prevailing rates and more so with cost of power landed in the State. 51. The Bid Evaluation Committee have given the certificate, as required in the guidelines that bid evaluation process has been carried out in conformity with the provisions of RFP document. Similarly certificates have been furnished to the Commission by the Chairman of three Discoms as well as Managing Directors to the effect that bid process has been carried out in conformity with guidelines issued by GoI. The Commission has noted that this is the first case of bidding process under Case-1for which no past experience is available for which the petitioner has utilised the consultancy services of a central public sector financial institution i.e. Power Finance Corporation (PFC). The petitioner took the decision after detailed deliberation in the Boards meeting with due consideration on recommendations/views of PFC and the Bid Evaluation Committee. 52. The Commission after careful consideration of the facts and circumstances of the case; the reasons recorded by both Evaluation Committee as well as Board of RVPN for coming to the conclusion that deviations are minor and should be relaxed/ignored, which in their view, did not amount to non-adherence to guidelines and they have so certified before the Commission and considering that the rate arrived at is highly competitive and reasonable; is satisfied about the process being transparent as well as in accordance with guidelines of GoI. 53. In view of the above satisfaction, the issue raised by one of the objector that re-bidding should have been taken recourse to also stands addressed.

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54. Based on the forgoing consideration and facts produced, we are satisfied that the tariff discovery under Case-1 bidding process is transparent and is in adherence with the guidelines of GoI. Accordingly the tariff quoted by the lowest bidder by M/s Adani Power Rajasthan Ltd. And given at the annexure-I, levelisied Rs. 3.2483/kWh with reduction of 1p/kWh as finally agreed is hereby adopted u/s 63 of the Act for supply to procurer Discoms in the share on percentage basis as at para 5 above and shall be charged as per PPA executed on 28.1.10.

Quantum of Power:
55. The petitioners prayer is for allowing 200 MW additional power over and above 1000 MW approved by the Commission. It was submitted by the petitioner that the standard bid documents has the standard stipulation of + 20% power and hence additional 200MW can be procured. The procurer Discoms have already given their consent for procurement of this additional power. In support of its justification the petitioner submitted that firstly the tariff discovered is reasonable. Secondly, there are slippages in the availability of power from various Central Sector Power Stations envisaged in XI plan and have slipped to XII plan period. The Commission had earlier considered the availability of power from these Central Power Stations while arriving at the quantum of power to be procured as 1000MW. The total slippages being to the extent of 1395 MW of which 220 MW capacity has gone out to private sector from which availability is uncertain. 56. Looking the submissions made as above, the additional purchase of 200 MW power being permissible under the standard bidding RFP document, is approved.

Approval of Delay:
57. The petitioner submitted that the bid process was initiated through issuance of RFP on 25.2.2009 and completed on 28.1.2010 by signing of PPA. Activity wise dates of events scheduled and actually occurred are shown in para 23 above. The petitioner submitted that the total bid process has taken 335 days against 120 days of normal time permissible under Case-1. In case bidding process is likely to go beyond 195 days, prior approval of the Commission need to be obtained. Accordingly, the prayer is to approve 142 days taken extra

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in the bidding process. It has been brought out by the petitioner that revised escalation factors were notified by CERC finally on 29.7.2009 hence the date of issue of RFP though was 25.2.2009, the bid submission date had to be extended upto 6.8.2009. Thus this delay of 86 day, if ignored, leads to a delay of 55 days primarily on account of the case being first of its kind requiring various clarifications by the bidders and review of evaluation report before finalization. 58. The petitioner further submitted that since the likely schedule for the completion of bid process as per the RFP document was of 187 days, as could be seen from the table below, which is well within the limit stipulated in the guidelines, hence the advance approval of the Commission to meet the requirement of para 5.16 of the bidding guidelines was not sought: 1 2. 3. 4. 5. 6. 7. 8. Date of issue of RFP Clarification by bidders Pre bid meeting of required Revision in RFP Non Financial bid opening Financial Bid Opening Issue of LOI Signing of RFP 25.2.2009 12.3.2009 23.3.2009 15.4.2009 8.6.2009 30.7.2009 10.8.2009 31.8.2009

59. Looking to the facts and circumstances submitted by the petitioners the effective delay of 55 day has in no way affected the tariff discovery though transparent process. In view of the above, the total delay of 142 days in the bidding process is being allowed.

Conclusion
60. In the light of the position discussed in the preceding paragraph the decisions of the Commission are summarised as under: (a) Approves the deviations in respect of extended time line beyond 195 days. (b) Adopts the Tariff as quoted by the selected bidder M/s Adani Power Rajasthan Limited for supply of power to the procurer as per their respective share as indicated at para 5 above. The year wise tariff for 25 years is enclosed at annexure-1 to this order. The

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(c)

adopted tariff shall be charged in accordance with PPA signed on 28.1.2010. Approves the procurement of additional 200 MW of base load power offered by the Successful Bidder (M/s Adani Power Rajasthan Limited) at the adopted tariff on the same terms & conditions.

61. The petition is disposed of accordingly. The copy of the order may be sent to State Govt., CEA, petitioner and Discoms and parties who have represented before the Commission.

(S.K.Mittal) Member

(K.L.Vyas) Member

(D.C. Samant) Chairman

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Annexure -I RERC/217/10

Yearwise Tarif of Adani Power Rajasthan Ltd. Adopted by the Commission under Case -I competitive Bidding
Contract Year Number Financial Year Commencement Date of Contract Year End Date of Contract Year Quoted NonEscalable Capacity Charges (Rs./kwh) Quoted Escalable Capacity Charges (Rs./kwh) 6 0.000 Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Quoted Non Escalable Energy Charge (Rs./kwh) 7 Quoted Escalable Energy Charge (Rs./kwh) Quoted Non Escalable Inland Transportation Charges (Rs./kwh) 11 Quoted Escalable Inland Transportation Charges (Rs./kwh) 12 Quoted STU Transmission Loss

2 2013-14

1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20 2020-21 2021-22 2022-23 2023-24 2024-25 2025-26 2026-27 2027-28 2028-29 2029-30 2030-31 2031-32 2032-33 2033-34 2034-35 2035-36 2036-37 2037-38 2038-39

3 Scheduled Commencement of Supply 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr 1-Apr

4 31-Mar

8 0.432 Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above

1.340
31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 31-Mar 25th anniversary of the Scheduled COD of first Unit

0.700 0.670 0.640 0.610 0.580 0.550 0.520 0.490 0.460 0.430 0.400 0.370 0.340 0.310 0.280 0.250 0.220 0.190 0.160 0.130 0.100 0.070 0.000 0.000 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.430
Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above Same as Above

0.00%

1.430 1.410 1.390 1.370 1.350 1.330 1.310 1.290 1.270 1.054 1.074 1.094 1.104 1.114 1.124 1.134 1.144 1.154 1.164 1.174 1.184 1.194 1.204 1.214 1.200

Same as Above

Same as Above

Same as Above

26

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