The controversy surrounding India’s first 4,000MW ultra-mega-power project in Sasan, Madhya Pradesh, has taken yet another curious turn with senior Congress MP Gurudas Kamat petitioning the power minister, who belongs to the same party, to review the bid.
The power project was bagged last December by a combine of Hyderabad-based Lanco and Globeleq Singapore Pte, a subsidiary of Houstonbased Globeleq. It is expected to commission its first unit by 2012. Power minister Sushil Kumar Shinde confirmed receipt of the letter and said, “I have forwarded the letter to the Power Finance Corporation (PFC). We are awaiting a reply from them.”
Ever since the Rs18,000 crore project was bagged by the consortium led by Globeleq and Lanco, controversy has dogged it. It began when, earlier this year, the consortium began to undergo change after the parent firm that owns Globeleq decided to undertake restructuring of some of the global assets. This drew criticism from some quarters, who argued that such a change would alter the basic conditions on which the project was originally awarded to the consortium. PFC, the nodal agency developing mega-power projects in the country, is still awaiting response on a legal opinion sought by it.
Now, the issue has acquired political overtones with Kamat, who is also the chairman on the Parliamentary Standing Committee on Energy, questioning Shinde why the project was awarded to the consortium. The existing promoters of Sasan too have their political affiliations to the Congress—Naveen Jindal of Jindal Steel and Power Ltd is an MP from Kurukshetra and L. Rajagopal, brother of the Lanco group chairman L. Madhusudhan Rao, is elected from Vijaywada. It is not clear how the two politicians would weigh in after the sharp letter from Kamat.
In his letter dated 22 February to Shinde, Kamat said, “I am sure that any trading of the project by its lead developer would not be permitted and would automatically lead to the disqualification of the bid.” He also asked Shinde to examine the legality of the project remaining with Lanco when its promoter Globeleq’s stake was being bought by Lanco and Jindal Steel and Power Ltd.
Lanco Infratech alongwith Globeleq Singapore Pte Ltd. as the lead partner—a subsidiary of Globeleq had put in a bid of Rs 1.19 per unit for the coal pit-head project and had edged out competition from several power generation companies including NTPC Ltd, Tata Power and Reliance Energy Ltd.
Globeleq Singapore Pte. Ltd as the lead partner for the project, held a 70% stake in the project and the balance was held by Lanco Infratech, a Lanco Group company. After the project was awarded, Globeleq started hiving off its global operations and Globeleq Singapore’s stake in the Sasan project was acquired by Lanco Infratech Ltd, the flagship company of Lanco Group by teaming up with Jindal Steel and Power Ltd (JSPL) — a Naveen Jindal company.
Consequently, Lanco Infratech now holds a 72% stake in the Sasan project with JSPL holding the balance 28% stake. However, Globeleq Singapore Pte Ltd as an entity remains in existence and according to the terms of the project is the lead promoter of the Sasan project. “We have taken the legal opinion and there is no change in the bidding consortium,” Rajeev Aggarwal, assistant vice president, JSPL had earlier told Mint.
Kamat has questioned the legal validity of allowing Globeleq Singapore Pte (which has been acquired by Jindal Steel and Lanco Infratech), a shell company for the Houston parent, to be part of the project in the first place and alleged that the bid conditions have been violated — hence making a case for their disqualification.
L Madhusudhan Rao, chairman Lanco Group, seemed unfazed by the controversy and told Mint, “I am 100% confident that as per the bidding criteria laid down in the bid document we will build the project. There is nothing to be worried about as no one can take back the project from us. In fact, we are ready from our side to sign the power purchase agreement (PPA) and have shown the bank guarantees and completed all the formalities. If PFC wants to take a legal opinion and take some time for it we are fine with it as we have already been awarded the project. We are ready to wait,” Rao added.