New Delhi: Audit and consulting firm Ernst and Young, an adviser to a government programme to set up large power plants, has become the first casualty of the controversy surrounding the first project to be awarded under this scheme.
State-owned Power Finance Corp. (PFC), the agency that awards contracts for these projects called the Ultra Mega Power Projects or UMPPs, is now shopping for a new consultant. A government official who did not wish to be identified confirmed that the search for a new consultant was on but said Ernst and Young, or E&Y, would remain as a consultant for the fourth power project under the scheme that will come up at Tilaya, Jharkhand.
Executives at E&Y declined comment.
The government has already awarded projects under the scheme at Sasan, Mundra and Krishnapattnam, and E&Y was the consultant for all three.
Awaiting green signal: A power plant in Uttar Pradesh. The government is yet to award projects under the UMPP scheme in Gujarat, Madhya Pradesh, Andhra Pradesh, Jharkhand, Tamil Nadu and Orissa.
“For every project we appoint a consultant. We have already awarded the projects at Sasan, Mundra and Krishnapattnam. The work is on for Tilaiaya to be awarded. The new consultant will be appointed for the new UMPPs,” said a PFC executive who did not wish to be identified.
The Sasan project was the first of the projects under the scheme that were to be set up between 2007 and 2017. A consortium comprising Hyderabad-based Lanco Infratech Ltd and Globeleq Singapore Pte, a subsidiary of Houston-based Globeleq Generation Ltd, 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 because the nature of the winning consortium had changed.
After the disqualification of Lanco, Reliance Power Ltd was asked to match the winning bid. India’s Central Vigilance Commission, a body that looks into the functioning of government departments and agencies, had looked into Lanco’s bid and asked the government “to review the role played by consultant (E&Y), various committees and the board of SPL”, referring to Sasan Power Ltd, a special purpose vehicle created by PFC for the project.
While the projects at Mundra in Gujarat, Sasan in Madhya Pradesh and Krishnapattnam in Andhra Pradesh have been awarded, those at Tilaiya, Cuddalore and Marakkanam in Tamil Nadu, and Jharsuguda in Orissa are yet to be assigned.
The government has abandoned plans to set up UMPPs at Girye in Maharashtra, Tadri in Karnataka and Akaltara in Chhattisgarh for reasons ranging from environmental concerns to differences with the state government. Though PFC is confident of awarding three more UMPPs during the current financial year (2008-09), senior power ministry officials do not share this optimism.