State-owned Power Grid Corp. of India Ltd (PGCIL) has invited bids from potential aspirants for the role of a a consultant in firming up its growth strategy.
The two-stage tender involves a reverse e-auction wherein the lowest bidder will be appointed consultant—the first time the public sector unit is taking recourse to such a process, employed by the government in coal block auctions.
Also, the tender is limited in nature, which means only a few consulting firms such as PricewaterhouseCoopers have been invited to bid by India’s central transmission utility to help it keep pace with a fast-changing electricity sector.
The tender, titled ‘Preparation of business plan of Power Grid including strategy and diversification/business prospects’, would work like this. Once the invited consulting firms place their bids, the lowest three bids will be shortlisted on the basis of their evaluated proposal price, which will also be the applicable ceiling price. These shortlisted bidders will participate in a reverse auction process on the electronic platform of an application service provider, wherein the consultancy work will be awarded to the lowest bidder.
“This is a very unique tender as it is a limited one with selected consultants being called for and also involves a reverse bid process," said a person aware of the development, requesting anonymity.
A senior PGCIL executive confirmed the development and said, “A limited tender has been called where we have invited consultants who are placed at the same footing. Post their participation, whoever quotes the lowest will win the consulting contract."
The reverse bid auctions gained traction after the National Democratic Alliance (NDA) government offered coal blocks for power generation firms through reverse bidding in early 2015 to prevent an increase in electricity tariffs due to coal block auctions.
This led to aggressive bids and, for a lot of blocks reserved for the power sector, companies quoted zero price.
Bangalore-based KIOCL Ltd, earlier known as Kudremukh Iron Ore Co. Ltd, had called for tenders for bid advisers employing the reverse bidding process, leaving many consultants bemused, Mint reported on 7 May 2015.
Experts say Power Grid’s model for appointing consultants is novel.
“I have never comes across a reverse bid model to appoint a consultant in my years of consulting," said a Delhi-based power sector consultant, requesting anonymity.
The development also assumes significance for PGCIL, given an evolving energy landscape marked by regulatory changes and an increasing government focus on renewable sources of power.
Enthused by the market potential for electric vehicles (EV) in India, PGCIL is considering setting up charging stations for EVs and also exploring commercially viable energy storage solutions such as batteries that would help with grid stability, Mint reported on 6 April.
This comes in the backdrop of an uncertain outlook for the power sector, with India’s current installed capacity of 330,261MW and projects under construction expected to meet the country’s electricity demand till 2026.
Queries emailed to the spokespersons for PGCIL and PricewaterhouseCoopers remained unanswered.
With 134,750 circuit kilometres and 217 substations, Power Grid caters to national grid’s inter-regional electricity transmission capacity of 75,000MW. Power Grid also owns and operates around 36,500km of telecom network.