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Home >Companies >EESL’s reverse auction for 5 million smart meters under a cloud

Mumbai: State-owned Energy Efficiency Services Ltd’s (EESL) decision to conduct a reverse auction for procuring 5 million smart meters, after announcing that Larsen & Toubro Ltd (L&T) had emerged as the lowest bidder in the regular tender by bidding 40% below prevalent market prices, has raised eyebrows.

The reverse auction has led to state-owned ITI Ltd and Karnataka State Electronics Development Corp. Ltd (KEONICS)—two companies with no past experience of manufacturing such meters—emerging as L1 and L3 bidders, two people aware of the development said. Genus Power Infrastructures Ltd emerged as the L2 bidder in the reverse auction.

“It is surprising that L1 and L3 in the largest tender in the world are companies that have—forget smart meters—never manufactured any kind of meters in the past," one of the two persons said. He added that 60-70% of the total order size has subsequently been issued to the two companies. 

The second person mentioned above said the conditions under which EESL could have gone for a reverse auction were not transparent. The whole process of first finalizing a tender and getting the best prices, and then going for a reverse auction isn’t right, particularly since EESL seemed very happy with the bid prices in the original tender. “The price quoted by L&T is 40-50% lower than the current market rates," a ministry of power press release on 9 October stated. 

EESL, however, defended its decision. “Reverse auction was carried out strictly as per the provision of the smart meter tender. It may be noted that the reverse auction has actually helped in further bringing down the prices of smart meters by close to 8%," it said in response to Mint’s queries. 

The second person mentioned above said that while the reverse auction has led to prices falling further, it will lead to compromise on quality. “These meters have to be supplied starting March-April, and the order is with three companies, two out of which have no facilities to make meters. I hope they don’t end up importing the meters from China," he said. 

EESL, though, is confident that ITI and KEONICS will ensure that the meters adhere to all quality standards. “Before the delivery, all the smart meters will be type-tested for IS 16444 in NABL accredited test labs. Failing in test, they are liable for rejection. We are confident that quality standards and IS 16444 compliance will be adhered to and the provision for the same has been made in the RFP," it said in a written response. 

Emails sent to KEONICS went unanswered till press time. ITI could not be reached for comments. L&T declined to comment.

The smart meter tenders are part of the government’s Advanced Metering Infrastructure solutions aimed at better demand response designed to reduce energy consumption during peak hours.

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