PFC: consider Sasan omissions & commissions sympathetically

PFC: consider Sasan omissions & commissions sympathetically
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First Published: Tue, Mar 18 2008. 01 23 AM IST

Fused out: The site for the Rs20,000 crore, 4,000MW Sasan ultra mega power project that was re-awarded to Anil Ambani’s Reliance Power, after the original winning bidder, Lanco Infratech, was disquali
Fused out: The site for the Rs20,000 crore, 4,000MW Sasan ultra mega power project that was re-awarded to Anil Ambani’s Reliance Power, after the original winning bidder, Lanco Infratech, was disquali
Updated: Tue, Mar 18 2008. 01 23 AM IST
New Delhi: State-run Power Finance Corp. Ltd (PFC), the nodal agency for all ultra mega power projects (UMPPs) in India, has made a pitch for lenient treatment in the Sasan UMPP case even before the committee looking into the controversial bidding process has submitted its report.
The power ministry had started examining the bidding for the power project after the Central Vigilance Commission (CVC) raised questions about the process. Lanco Infratech Ltd, the original winning bidder for the Rs20,000 crore, 4,000MW power project, had been disqualified, after which Anil Ambani’s Reliance Power Ltd was given a second chance to match the winning bid, as reported by Mint on 25 July.
Fused out: The site for the Rs20,000 crore, 4,000MW Sasan ultra mega power project that was re-awarded to Anil Ambani’s Reliance Power, after the original winning bidder, Lanco Infratech, was disqualified.
In a reply to the power ministry after PFC, a financial institution for the energy sector, was asked to review the bid process, V.K. Garg, PFC chairman and managing director, said: “The trying circumstances under which the PFC team performed and commendations which have been received from various quarters regarding the successful bidding out of three UMPPs in the country. Under such circumstances, the omissions and commissions may be considered sympathetically.”
Government officials, who asked not to be named, termed the response as “lame”. Garg declined to comment when Mint called him on his mobile phone, and a power ministry official merely said, “We have received the reply from PFC and are examining the matter.”
CVC had also specifically asked “to review the role played by consultant (Ernst and Young), various committees and the board of SPL”, referring to Sasan Power Ltd, a special purpose vehicle of PFC floated for the project. E&Y executives declined to comment.
A consortium comprising Hyderabad-based Lanco and Globeleq Singapore Pte, a subsidiary of Houston-based Globeleq, had initially won the bid to develop the project. Lanco’s woes started when the parent of its partner Globeleq sold its stake in the consortium back to Lanco and another losing bidder, Jindal Steel and Power Ltd. Led by Reliance, several losing bidders quickly mounted an aggressive campaign to try and disqualify Lanco.
The Sasan project was the first in a series of 12 UMPPs that were to be set up during the 11th and 12th Plan periods.
Interestingly, the SPL board had refunded Rs119 crore out of the Rs120 crore bid bond submitted by Lanco Infratech and Globeleq Singapore.
“Managing bids is an evolutionary process. If there are some issues, they should be corrected. The process should be modified going further. If there are certain things that have been wrong, we should learn from them,” said Arvind Mahajan, executive director at audit and consulting firm KPMG.
As a result of the Sasan bidding fiasco, the government had also constituted a committee, headed by power secretary A.K. Razdan and with representation from the ministries of law and justice, and corporate affairs, to try and improve the bidding process.
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First Published: Tue, Mar 18 2008. 01 23 AM IST