BIHAR ELECTRICITY REGULATORY COMMISSION 300 MW GMR...4 (vi) The petitioner issued the advertisement...

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BIHAR ELECTRICITY REGULATORY COMMISSIONVidyut Bhawan-II, Bailey Road, Patna – 800 021

Case No. 06/2012

IN THE MATTER OF :Petition under section 63 of the Electricity Act, 2003 forapproval and adoption of Tariff for procurement of Base LoadPower 560 MW (Essar-300 MW & GMR-260 MW) on Long TermBasis under case-1 route of Tariff based on Competitive BiddingGuidelines of Ministry of Power, Government of India.

And

Bihar State Electricity BoardVidyut Bhawan, Jawahar Lal Nehru Marg,Bailey Road, Patna-800021 …..………. Petitioner

Present:1. Sri U. N. Panjiar - Chairman

2. Sri S. C. Jha - Member

3. Sri K. P. Singh - Member

Appearance on behalf of Petitioner, BSEB1. Mr. Rakesh, EEE(Inter-state)

Bihar State Electricity Board

OrderDated 27.11.2012

1. It is a petition filed by the petitioner Bihar State Electricity Board

(hereinafter referred to as ‘BSEB’ or ‘petitioner’) under the provision

of section 63 of the Electricity Act,2003 (hereinafter referred to as

‘Act’) for approval and adoption of tariff for procurement of 560 MW

of power on tariff based competitive bidding in accordance with the

“Guidelines for Determination of Tariff by Bidding process for

Procurement of power by Distribution Licensees”(hereinafter

referred as ‘Competitive Bidding Guidelines’ or Guidelines) issued by

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the Central Government vide resolution no.23/11/2004 –R&R(vol.-

II) as amended from time to time.

2. Submission in the PetitionIn its petition dated 13.02.2012, the BSEB has made following

submissions :-

(i) The Bihar State Electricity Board (hereinafter referred to as ‘BSEB’

or ‘petitioner’), an autonomous body constituted under section 5 of

Electricity Supply Act, 1948 duly formed by Government of Bihar

under legislative decree having its head office at Vidyut Bhawan,

Jawaharlal Nehru Marg, Patna-800021.

(ii) The Bihar Electricity Regulatory Commission (hereinafter referred to

as Commission or BERC) vide its tariff order dated 06.12.2010

passed in Case no. TP-3 of 2010 pertaining to Determination of ARR

and Retail tariff for the financial year 2010-11 of BSEB had under

directive-25 (4) has directed BSEB to initiate bidding process for

1050 MW (1500 MW-450 MW) power without any delay. The issue

was also discussed in the review meeting taken up by the Chief

Minister, Bihar. In compliance of the directive of the BERC and

subsequent direction of Govt. of Bihar, BSEB initiated bidding

process for long term (25 years) under Case-I based on the standard

bidding documents and guidelines issued by Ministry of Power,

Govt. of India vide resolution dated 19th January, 2005 and its

amendment time to time without any deviation.

(iii) Earlier, the Commission vide its letter no. BERC-Misc-1/08-250

dated 21.07.2010 has noted that BSEB intend to procure 1500 MW

power under Case-I Standard bidding document based on the

guidelines issued by Ministry of Power, Govt. of India without any

deviation. BSEB also vide its letter no. 113 dated 14.01.2011 had

informed BERC under provision of Clause 3.1 (i) of the Guidelines

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for Determination of Tariff by Bidding process for procurement of

power by Distribution Licensees issued by Ministry of Power, Govt.

of India about the procurement of 1050 MW± 20% power at delivery

point through competitive bidding process under Case-I. BERC vide

its letter no. BERC-Misc.-1/08 (Part)-36 dated 21.01.2011 had

informed BSEB that Commission has no objection to the proposal of

BSEB to go ahead for procurement of 1050 MW± 20% power at

through competitive bidding process under Case-I. The procurement

process should be through transparent process of bidding and in

accordance with the guidelines issued by Ministry of Power, Govt. of

India as amended from time to time.

(iv) It is also essential to mention that procurement of 1050 MW± 20%

power by BSEB is part of the 1500 MW± 20% power for which BSEB

had initially issued NIT no. 212/PR/BSEB/2009 for procurement

wanted through tariff based bidding process under Case-I for long

term and Commission vide letter no. 250 dated 21.07.2010 had

already communicated to BSEB that procurement of 1500 MW

power by BSEB through tariff based bidding process under Case-I

for long term was noted by BERC. Further, it may not be out of

place to mention that BSEB against the tender notice NIT no.

212/PR/BSEB/2009 for procurement of 1500 MW± 20% power,

BSEB had contracted 450 MW power from Essar Power(Jharkhand)

Limited (L1 bidder). Hon’ble BERC vide its order dated 01.02.2012

passed in case no. 08/2011 had adopted the levellised tariff of Rs.

3.057 per KWh and also the year-wise tariff for which PPA has been

signed for procurement of 450 MW power.

(v) BERC vide para 12 of the tariff order dated 01.02.2012 passed in

Case no. 08/2011 had also noted the justification given by BSEB for

procurement of 1500 MW power through competitive bidding

process under Case-I for long term.

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(vi) The petitioner issued the advertisement “Notice Inviting Tender” NIT

No. 02/PR/BSEB/2011 on 14.01.2011 for the procurement of

balance 1050 MW± 20% power at delivery point through competitive

bidding process under Case-1 route of the ‘Guidelines for

Determination of Tariff by Bidding Process for procurement of power

by Distribution Licensees” as issued by Ministry of Power, Govt. of

India on 19.01.2005 and its amendments from time to time

(hereinafter referred to as the “Competitive Bidding Guidelines” or

“CBG”). The bid documents were made available for download on

BSEB website http://bseb.bih.nic.in from 20.01.2011 to

03.02.2011. The single stage bidding documents were prepared in

line with the Standard Bid Documents (Case 1) issued by Ministry of

Power, Govt. of India on 21st July 2010, without any deviation. The

pre-bid meeting for the clarification of the queries raised by the

bidders was held on 11.02.2011. The RfP documents, along with the

reply to the queries raised by the bidders, were uploaded on BSEB’s

website http://bseb.bih.nic.in on 22.02.2011, with submission of

bids being 04.04.2011 till 1:00 p.m., providing sufficient time of 45

days to all the bidders in compliance with Clause 5.5 of the tariff

based competitive bidding guidelines issued 21st July 2010.

(vii) The petitioner constituted a Bid Evaluation Committee (BEC) in

compliance with Clause 5.9 of CBG. The BEC comprised of the

following members with one independent/external member :

Sl.No. Name of the person Position1. Shri R. P. Choudhary

Chief Engineer ,Transmission (O & M), BSEBCoordinator

2. Shri Hemant KumarChief Manager, Rural ElectrificationCorporation, Patna

External Member

3. Shri A. K. SinhaBSE (Interstate), BSEB

Member

4. Shri P. R. Sinha Member

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ESE (APDRP), BSEB5. Shri Rakesh

Electrical Executive Engineer (Interstate),BSEB

Member

6. Shri N. K. JhaDirector (Expenditure), BSEB

Member

(viii) The petitioner submits that, Eight (8) bidders (i.e. twelve nos. of Non

Financial Bids as two trading licensees M/s PTC India Ltd. and M/s

National Energy & Trading Services Ltd. (NETS) has tied up four and

three developers respectively) have submitted their bids of varying

capacities against NIT No. 02/PR/BSEB/2011, dated 14.01.2011

and the Non-Financial-Bids were opened as per the schedule date

i.e. 04.04.2011 and time i.e. 1500 hrs (IST). The list of the bidders

and the capacity offered is listed below :Sl.No

Bidders name Nature ofthe bidder

Quantum ofpoweroffered

Fuel Location of PowerSource

1 GMR KamalangaEnergy

Biddingcompany

260 MW Coal 1050 MW ThermalPower Project,Village- Kamalanga,District-Dhenkanal,Orissa

2. Indiabulls Power Ltd. Biddingcompany

1050 MW Coal 1350 MW AmravatiThermal PowerProject (Phase II)Nandgaonpeth,District-Amravati,Maharastra

3. PTC India Ltd. Trading

CompanyThru:

1. Ind-BarathEnergy (Utkal)Ltd.

2. KVK NilanchalPower Pvt. Ltd.

3. DB Power Ltd.4. MB Power (MP)

Ltd.

Biddingcompany

650 MW Coal 1.2x350 MW ThermalPower Plant atSahajbhal, District-Jharsuguda, Orissa2. 2x350 MWThermal Power Plantat Kandarei,Athagarh, District-Cuttack, Orissa.3. 2x600 MWThermal Power Plantat Jangir, District-Champa, CG4. 2X600 MWThermal Power Plantat District Anupur,State-MP

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4. Essar Power Ltd. Biddingcompany

300 MW Coal Tehsil- Chandwa,District- Latehar,State- Jharkhand

5. Reliance Power Ltd. Biddingcompany

1050 MW NaturalGas

2400 MW SamalkotPower Project, atArea (IDA)Peddapuram,Industrial Estate,Mandal Samalkot,Dist. East Godwari,AP

6. National EnergyTrading & ServicesLtd. Trading CompanyThru:1. Lanco Vedarbha

Thermal powerLtd.

2. Lanco Power Ltd.3. Lanco Babandh

Power Ltd.

Biddingcompany

740MW Coal 1. 2x660 MWThermal Power Plantat Mandava, DistrictWardha,Maharashtra2. 4x660 MWThermal Power Plantat Village Pathadi,District Korba,Chattishgarh.3. 2x660 MWThermal Power Plantat Village Kurunti/Kharagprasad,District-Dhenkanal,Orissa

7. Jaypee powerVentures Ltd.

Biddingcompany

100 MW Coal 2x660 MW ThermalPlant at VillageNigrie, District-Singrauli, State MP.

8. Shapoorji PallonjiEnergy (Gujrat) Pvt.Ltd.

Biddingcompany

255 MW Coal 2x660 MW ThermalPlant at Village Kaj &Nanwada District-Junagadh, Gujrat

(ix) The evaluation of the Non financial Bids was carried out by M/s

Bihar Power Infrastructure Company Pvt. Ltd., the Bid Process

Management consultant (hereinafter referred to as ‘Consultant’)

engaged by the petitioner. During the bid evaluation process, BSEB

sent written requests to the select bidders to submit certain

clarifications in accordance with the Clause 2.5 (g) of the RfP. The

last date for the submission of responses to the clarifications sought

by BSEB was prescribed as 26.04.2011 which was further extended

till 29.04.2011. The responses to the queries from the bidders were

received by BSEB in due time. As it look considerable time, the date

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of opening of the financial bids was extended till 09.05.2011. The

bidders were accordingly informed on 16.04.2011 through email, fax

and (BSEB) website notice.

(x) Based on the submission of the bids by the Bidders, a detailed Non

financial Bid Evaluation report (Annexure I) was submitted to Bid

Evaluation Committee by the BSEB. There were certain minor

deficiencies and non compliances of the provisions of RfP in the

Non-financial bids of 6 bidders. A detailed agenda on the non-

financial bids evaluation was circulated to the members of the

Central Purchase Committee (CPC) of BSEB. The CPC, vide its

meeting no. 07/2011 dated 17.05.2011 recommended qualifying 7

bidders, except M/s Shapoorji Pallonji Energy (Gujrat) Pvt. Ltd.

Subsequently, the matter was placed before the BSEB Board. The

Board considered the recommendation of the CPC on approving the

minor deficiencies and non compliances and approved qualifying

seven (7) bidders, except M/s Shapoorji Pallonji Energy (Gujrat) Pvt.

Ltd. vide its resolution no. 8608 in the 540th Board meeting held on

16.06.2011 (Annexure-II), subject to submission of sworn in

affidavits to comply with the conditions imposed by BSEB.

(xi) Based on the submissions to queries, affidavits and original

document verification of the qualified bidders, the seven financial

bids of the qualifying bidders were opened on 28.06.2011 in the light

of the approval accorded in the Board and in presence of the

bidders’ authorized representatives. The summary of the levelized

tariff discovered in the financial bids so opened are as under :Rank Name of Bidder Quantum

of poweroffered

Details ofinjection point

QuotedLevelisedTariff(Rs./KWh)

Criteria for bidevaluation &payments

1. Essar Power Ltd. 300 MW CTU 400 KVline poolingstation atRanchi

3.690 Powergenerationsource withcaptive coalblock

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2. Jaypee powerVentures Ltd.

100 MW CTU-PGCILSatna

3.879 Powergenerationsource withcaptive coalblock

3. National EnergyTrading & ServicesLtd. (ProjectDeveloper-LancoBabandh PowerLtd.)

250 MW ER-CTU 3.902 Powergenerationsource linkagebased coal

4. GMR KamalangaEnergy Ltd.

260 MW Angul PoolingStation ofPowergrid,Orissa

4.030 Powergenerationsource linkagebased coal

5. PTC India Ltd.(Project Developer-KVK NilanchalPower Pvt. Ltd.)

200 MW 400 KV atBusbar locatedin Cuttackdistrict, Orissa


6. PTC India Ltd.(Project DeveloperDB Power Ltd.)

100 MW PGCIL Poolingstation Kotra,Chhattisgarh


7. PTC India Ltd.(Project Developer-MB Power (MP)Ltd.

200 MW CTU Anupur,MadhyaPradesh


8. Indiabulls PowerLtd.

1050 MW CTU PoolingStation nearNagpur


9. PTC India Ltd.(Project DeveloperInd –BarathEnergy (utkal)Ltd.)

150 MW CTU Poolingstation nearJarsugunda


10. National EnergyTrading & ServicesLtd. (ProjectDeveloper- LancoPower Ltd.)

120 MW Chhatishgarh 4.954 Powergenerationsource linkagebased coal

11. National EnergyTrading & ServicesLtd. (ProjectDeveloper- LancoVedarbha ThermalPower Ltd.)

370 MW CTUMaharastra


12. Reliance PowerLtd.

1050 MW VemagiriPooling Station(PGCIL)

12.445 Powergenerationsource withimported gas(RLNG)

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(xii) M/s Essar Power (Jharkhand) Ltd. (L1) has offered 300 MW capacity

having Captive Coal Mine (Pit head Plant) at Distt-Latehar,

Jharkhand with tariff of Rupees Three Point Six Nine only (Rs.

3.690) per unit at the BSEB delivery point. The tariff is firm and not

subject to escalation except for change on account of transmission

charges and losses of Eastern Region for power injected from the

injection point to delivery point.

(xiii) The outcomes of the financial bids evaluation were placed before the

CPC for its recommendation. Considering the meager generation

capacity, high dependence of State on central allocation and rise in

the cost of power procured even through the competitive bidding

route within a span of a year, the CPC vide its meeting no. 09/2011

dated 05.07.2011 recommended the procurement of power 910 MW

from L1, L2, L3 & L4 after apprising the state government in this

regard, and subject to approval of the Board.

(xiv) Meanwhile, considering the vailidity of the bids submitted by the

bidders till 2nd August 2011, the Petitioner vide its letter dated 30th

July 2011 requested the qualified bidders to extend the validity of

their bids for an additional period of 45 days i.e. till 16th September

2011. The following bidders extended the validity of their bids as

requested by BSEB:

a. GMR Kamalanga Energy Ltd.b. PTC India Ltdc. Essar Power Ltd.d. Reliance Power Ltd.e. Jaypee Power Ventures Ltd.

(xv) The petitioner also submits that M/s Indiabulls Power Ltd. had

extended its bid by a period of 15 days only, against the Petitioner’s

request for extension of 45 days. M/s National Energy Trading &

Services Ltd. (NETS) had extended the bid only for one generation

source- Lanco Power Ltd. In case of other two project developers of

NETS, it has regretted and not extended the validity of bids.

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(xvi) The outcomes of the financial bids and the recommendation of the

CPC were placed before the Board of BSEB for its consideration and

approval. The Board discussed the matter in detail and took

cognizance of the facts that:

a. During the last one year period i.e, the period between the

submission of the bids in current & previous Case 1 bidding

process, the tariff has substantially increased.

b. There is now acute shortage of coal linkages for all projects. Even

the prices of imported coal have risen sharply.

c. With the experience of two Case 1 bidding procedures, it also noted

that the entire bidding process takes more than 180 days.

(xvii) Thereafter, the Board of BSEB vide resolution no. 8619 in the 541st

Board meeting held on 04.08.2011 (Annexure-III) gave approval to

issue Lol to M/s Essar Power Ltd. (L1 bidder) for supply of 300 MW

power at the quoted levelised tariff of Rs. 3.690 per KWh and further

suggested that the L2, L4, L6, L7 may be offered an opportunity to

give their counter-offers equal to the levelized tariff of L1 bidder and

then the balance requisitioned contracted capacity may be split

among the bidders who match the levelized tariff of L1 bidder.

Accordingly, the petitioner sent letters to the bidders Jaiprakash

Ventures Pvt. Ltd., GMR Kamalanga Energy Ltd., PTC India Ltd. &

Indiabulls Power Ltd. to submit the counter-offers to match the

levelized tariff of L1. In response, M/s GMR kamalanga Energy Ltd.

submitted its counter-offer and match the levelized tariff of L1.

(xviii) Further, Board has directed that if the balance requisitioned

capacity of 960 MW is not met by the aforesaid bidder who accepts

the counter offer, the process will be repeated and counter offers will

be made to L9, L10 etc. bidders who have qualified in the evaluation

process.

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(xix) Subsequently, the Petitioner informed the Principal Secretary,

Department of Energy, Govt. of Bihar about its intent of procuring

560 MW power from the bidders M/s Essar Power (Jharkhand) Ltd.

(300MW) and M/s GMR Kamalanga Energy Ltd. (260 MW),

Thereafter, the Petitioner issued the Letter of Intent (LoI) No.

27/Misc/Com/IS/1214/2007/ (Part-V)/1430 dated 17.08.2011 to

the Bidder – M/s Essar Power Ltd. for supply of 300 MW with a

request to submit the Contract Performance Guarantee (CPG) and

sign the “RfP Document” within the stipulated time of 30 days, in

compliance with Clause 2.2.9 of RFP. The “ Unconditional

Acceptance” of LoI by Ms Essar Power (Jharkhand) Ltd. was received

on 20.08.2011 and is attached as Annesure IV. Also, the Petitioner

issued the Letter of Intent (LoI) No. 27/Misc/Com/IS/1214/2007/

(Part-V)/1569 dated 06.09.2011 to the Bidder- M/s GMR

Kamalanga Energy Ltd. for supply of 260 MW with a request to the

to submit the Contract Performance Guarantee (CPG) and sign the

“RfP Document” within the stipulated time of 30 days, in compliance

with Clause 2.2.9 of RFP. The “ Unconditional Acceptance” of LoI by

Ms GMR Kamalanga Energy Ltd. was received on 12.09.2011 and is

attached as Annesure V.

(xx) On submission of Contract Performance Guarantee (CPG) of the

required amount Rupees Ninety Crores only (Rs.90 Crores) in

compliance with Format 5.7 of the RFP and as part of Schedule-9 of

the PpA by M/s Essar Power (Jharkhand) Ltd. on 17th October 2011,

the “RfP Document” was signed with “M/s Essar Power (Jharkhand)

Ltd.” the Project company dully incorporated (on 19th October 2005)

by the successful bidder, M/s Essar Power Ltd. for supply of 300

MW power from its proposed 2x600 MW power project being

implemented at Tahsil; Chandwa, District: Latehar,

State:Jharkhand. The signed RfP Document is attached as Annexure

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VI. During the signing of the RfP documents, M/s Essar Power

(Jharkhand) Ltd. submitted to BSEB that the Project Company itself

houses the coal mining as well, hence referring to Article 4.2.1(i)

should include “if applicable”. The same aspect was considered by

BSEB at that moment, as it was not a material change, however,

subject to the approval of the Commission.

(xxi) Further, on submission of Contract Performance Guarantee (CPG) of

the required amount Rupees Seventy Eight Crores only (Rs. 78

Crores) in compliance with Formant 5.7 of the RFP and as part of

Schedule-9 of the PPA by M/s GMR Kamalanga Energy Ltd. on 9th

November 2011, the “RfP Document” was signed with “M/s GMR

Kamalanga Energy Ltd.” the Project company dully incorporated (on

28th December 2007) by the successful bidder, M/s GMR Kamalanga

Energy Ltd. for supply of 260 MW power from its proposed 3x350

MW power project being implemented at village Kamalanga, District-

Dhenkanal, State: Orissa. The signed RfP Document is attached as

Annexure VII.

(xxii) The Petitioner, humbly submits before the Commission that the

Technical and Financial bids were received on the Scheduled date of

4th April 2011 and at time 1 PM and that the entire process was

concluded within 294 days. A petition was submitted by BSEB vide

letter no. 27/Misc/Com/IS/1214/2007/ (Part-V)/1319 dated

29.07.2011 before the Commission for approval of extension of time

period beyond 195 days i.e. upto 16.09.2011 to complete the bid

process. The actual time taken to complete the bid process under

Case-I was 294 days which is 79 days more than the time period of

195 days as per guidelines. The following table-VII captures the time

schedule as provided in the RFP versus actual time taken in

concluding the procurement process of 560 MW power initiated vide

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NIT No. 02/PR/BSEB/2011, dated 14.01.2011 under Case-I

Competitive Bidding Process for long term under is given below:

Table- VIIEvent Schedule as per

RfPActual-Essar

Actual-GMR

Date of Issue of RfP 20.01.2011 to03.02.2011

- -

Submission of writtenclarification/amendments ifany, on the RFP/RFPDocuments by the Bidders

07.02.2011 - -

Pre-Bid Meeting 11.02.2011 - -Revision of RfP and RfPdocuments (if required) andissuance of revised RfP and RfP

18.02.2011 - -

Event Schedule as perRfP

Actual-Essar Actual-GMR

DocumentBid submission and opening ofNon Financial Bid

04.04.2011 - -

Opening of Financial Bid ofQualified Bidders

19.04.2011 - -

Shortlisting of SuccessfulBidder(s) and issue of LOI

29.04.2011 17.09.2011 26.09.2011

Signing of RfP Documents 19.05.2011 17.10.2011 09.11.2011Total Days Taken 120 271 294

(xxiii) The petitioner successfully completed the activity of ‘Signing of RfP

documents’ with the successful bidders on 9th November 2011.

(xxiv) The petitioner issued the press note in daily newspaper (Annexure

VIII) informing public about the signing of the RfP Documents and

then made the evaluation public on the website

http://bseb.bih.nic.in as per the provision 6.3 of the competitive

bidding guideline issued by Ministry of Power, Govt. of India on 19th

January 2005.

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(xxv) The petitioner intends to procure only Five Hundred and Sixty

Megawatt (560 MW) power from M/s Essar Power (Jharkhand) Ltd.

and M/s GMR Kamalanga Energy Ltd. as the tariff offered by them

is competitive and firm. The tariff offered by other bidders was found

higher than the tariff discovered through the Case-I competitive

bidding in other states of India. The tariff discovered by other

Distribution Licensees through Case 1 bidding in tabulated in the

table below :Sl.No.

State Round Year Developer Capacity(MW)

Fuel LevelisedTariff(Rs/KWh)

1

Gujart

I 2006 Adani 1000 Coal linkage 2.892 I 2006 Adani 1000 Coal linkage 2.353 I 2006 Essar 1000 Imported Coal 2.254 I 2006 Aryan 200 Coal linkage 2.405 II 2010 KSK Energy 1010 Coal Block 2.356 II 2010 Essar 800 Imported coal 2.807 II 2010 Shapoorji

Pallonji800 Imported Coal 2.80

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Maharastra

I 2008 Adani 1320 Coal linkage 2.649 I 2008 Lanco 680 Coal linkage 2.7210 I 2009 JSW 300 Coal linkage 3.2111 II 2010 Adani 1320 Coal linkage 3.2812 II 2010 Indiabulls 1200 Coal linkage 3.2613 II 2010 Emco 300 Coal linkage 2.8814 Haryana I 2008 Adani 1424 Blended coal 2.9415 I 2008 PTC-GMR 300 Coal linkage 2.8616 Madhya

PradeshI 2007 Lanco 600 Coal linkage 2.34

17 I 2007 Reliance 1241 Coal linkage 2.4518 I 2007 Essar 300 NA 2.9519 Rajasthan I 2009 Adani 1000 Coal linkage 3.2520

BiharI 2010 Essar 450 Coal Block 3.06

21 II 2011 Essar 300 Coal Block 3.6922 II 2011 GMR 260 Coal linkage 3.6923

KarnatkaI 2010 Thermal

Powertech430 NA 3.77

24 I 2010 East CoastEnergy

400 NA 3.89

25 I 2010 NCC 400 NA 3.8926 Noida

powerIII 2011 Essar 200 Coal Block 4.08

27 Reliance Infra,Mumbai

2011 RPG-Dhariwal

200 Coal linkage 3.51

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(xxvi) The petitioner submits the Evaluation Committee Report (AnnexureIX) and certificate (Annexure X) abiding with the clause 6.4 of theGuideline.

(xxvii) The petitioner humbly submits this petition to the Commissionunder following provisions :

Section 63 of the Electricity Act 2003 that states :“Notwithstanding anything contained in section 62, theAppropriate Commission shall adopt the tariff if such tariff hasbeen determined through transparent process of bidding inaccordance with the guidelines issued by the CentralGovernment”

Clause 6.4 of the guidelines notified on 27th July 2007 states, that:

“The signed PPA along with the certificates provided by theevaluation committee and by the procurer as provided inclause 6.2 shall be forwarded to the Appropriate Commissionfor adoption of tariffs in terms of section 63 of the Act.”

(xxviii) The petitioner submits the following documents along with thepetition :

Annexure I : Non financial Bid Evaluation reportAnnexure II : Approval of the Board on the Recommendation of CPC

pertaining to the infirmities/non-compliance of theprovisions of RfP in the non financial bid vide resolutionno. 8608 dated 16.06.2011 and opening of the financialbids.

AnnexureIII

: Approval of the Board vide resolution no. 8619 dated04.08.2011 for issue of LoI to L1 Bidder and issue ofcounter-offers to L2, L4, L6, L7, L8 bidders and thereafterto L9 & L10 bidders to match L1 rate.

AnnexureIV

: “Unconditional Acceptance” of LoI by Ms Essar Power(Jharkhand) Ltd.

Annexure V : “Unconditional Acceptance” of LoI by Ms GMR KamalangaEnergy Ltd.

AnnexureVI

: Signed “RfP Document” with Ms Essar Power (Jharkhand)Ltd.

AnnexureVII

: Signed “RfP Document” with Ms GMR Kamalanga EnergyLtd.

AnnexureVIII

: Press note in daily newspaper informing public about thesigning of the RfP Document with M/s Essar Power

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(Jharkhand) Ltd. and Ms. GMR Kamalanga Energy Ltd.AnnexureIX

: Evaluation Committee Report

Annexure X : Certificate

(xxix) The petitioner humbly prays to the Commission :

(i) To approve/adopt procurement of Five Hundred Sixty Megawatt

(560MW) of power from M/s Essar Power (Jharkhand) Ltd. and

M/s GMR Kamalanga Energy Ltd. at the Levelised Tariff of Rupees

Three point Six Nine only (Rs. 3.690) per KWh as per the signed

“RfP Document” and under the provisions of the RfP.

(ii) Approval of the BERC of the time period 294 days i.e. delay of 79

(seventy nine) days beyond the 195 days, taken to complete the

bidding process under Case-I.

(iii) Condone any inadvertent omission/errors/shortcomings and

permit BSEB to add/change/modify/alter this filing and make

further submissions as may be required at the future date as per

the Commission’s Requirement.

(iv) To pass any other order as deemed appropriate for adoption of

tariff.

3. Chronology of Hearing3.1 The petition of BSEB was heard by the Commission on 28.03.2012.

An audio-visual presentation was made by BSEB through their

consultant (IL&FS). During the presentation, the commission

observed that :-

a. Earlier in 2009 bids were invited for procurement of 1500 MW of

power under case -1 of competitive bidding guidelines against which

PPA was signed for purchase of 450 MW from Essar Power Ltd. The

levelised tariff adopted and approved by the commission for the said

purchase was Rs.3.057 per kwh. The present agreed price with

Essar Power Ltd is Rs.3.69 per kwh. The reason for increase in the

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proposed procurement price for power from same project and same

supplier during short span of two years, could not be clarified by the

BSEB. Even the Bid Evaluation Committee has not made

clarification in their recommendation on this specific point.

b. In the case of GMR, the commission observed that land requirement,

fuel linkage are yet to be completed by the bidder. Even the

requirement of water for the proposed project of GMR is 37 million

cusec, whereas, the linkage available with them is only for 30 million

cusec.

c. It also appears that BSEB has taken deviations in the terms and

conditions of the bidding conditions approved by Government of

India for which prior approval of Commission has not been sought

by BSEB. The reasons leading to avoidance of prior approval from

the Commission by the BSEB may be obtained from BSEB.

Secretary, BERC was directed to take up the matter with BSEB for

early submission of the details and the requisite fee.

3.2 The Commission reviewed compliance of it’s directive on 22.05.2012

and directed BSEB vide letter no. BERC/Tariff-03/12-475 dated

24/05/2012 to submit by 6th June 2012 the

information/justification as observed by the Commission .The next

date for hearing was fixed on 13.06.2012 .

In compliance, the BSEB vide letter no.994 dated 23.5.2012

submitted the following documents:-

(i) Tariff rates of the case -1 bidding for long term power procurement

carried out in other states in near past.

(ii) The calculation of the average power purchase cost from NTPC power

stations in eastern region for the month of June and July

2011(annexure-II), indicative tariff offered by NTPC for supply of

additional 75 MW power from Farakka stage-III (annexure –II/A) and

tariff claimed by DVC as per petition filed before CERC for supply of 100

MW power from unit no.7 & 8 of Mejia TPS(2x500MW) annexure-II/B.

18

(iii) Copy of the presentation given before the Hon’ble Commission on

28.3.2012

The BSEB also submitted the justification for the deviations

considered by BSEB vide letter no.1239 dated 25.6.2012.

3.3 The matter was heard on 04.07.2012 by the Commission and BSEB

was directed to submit clarifications regarding the bidding

procedure followed by the BSEB in the present procurement,

compliance of the Competitive Bidding Guidelines issued by Govt. of

India in this regard and methodology for determination of levelised

tariff.

The BSEB submitted the following documents vide letter no.1374

dated 10.07.2012:-

a. Procedure followed by the BSEB in present procurement

b. Compliance of the Bidding Guidelines issued by Govt. of India

c. Methodology for determination of levelised tariff.

3.4 The matter was heard on 23.07.2012 and a presentation was made

by the BSEB indicating the deficiencies of the Non-financial bids of

all the bidders namely GMR Kamalanga Energy Ltd, Essar Power Ltd

and PTC India Ltd. It was also presented that the deficiencies were

considered not very substantial by BSEB and the Board in its

meeting held on 16.06.2011 resolved that the bidders may be asked

to give the affidavit/undertaking before opening of the financial bid

to the effect that they will comply with all the conditions of the non-

financial bids within one year. In case the successful bidder/bidder

with whom PPA is signed after the evaluation of the financial bid, are

not able to comply with the conditions as stipulated in the RfP, their

security/performance guarantee will be invoked/forfeited.

19

BSEB was directed to provide the following information/documents

by 31st July 2012:-

(i) Copy of the resolution /decision of the Board dated 16.06.2011

(ii) Copy of the letter sent to the bidders in compliance of the Board’s

decision/resolution asking them to furnish the required

affidavit/undertaking.

(iii) Copy of the affidavit/undertaking submitted by the bidders.

(iv) The model blank Excel sheet provided to the bidders along with the

RfP indicating the formula used for evaluation of bid and

computation of levelised tariff.

(v) The escalation rates and discount factor notified by CERC which has

been used for the purpose of computation of levelised tariff and bid

evaluation.

In compliance of the direction of the Commission, the BSEB

submitted vide letter no.1539 dated 06.08.2012 the following

documents:-

(i) Copy of the letter sent to the bidders regarding submission of the

affidavit for meeting the non- compliances before opening of the

financial bids.

(ii) Copy of the affidavit submitted by the bidder before opening of the

financial bids.

(iii) Copy of financial bids of the bidders.

(iv) Copy of Board Resolution no.8608 for the Board meeting held on

16.06.2011.

(v) Soft copy CD of the illustration sheet and the calculation sheets of

the levelised tariff of bidders.

3.5 The matter was heard on 13.08.2012 and commission noted that the

BSEB has submitted the required information vide letter no.1539

20

dated 06.08.2012 except the relevant CERC notification of the

escalation rate and discount factor to be applied for evaluation of

levelised tariff and BSEB was directed to submit the required

notification of CERC.

3.6 The case was heard again on 11.09.2012 and in course of hearing

the BSEB was directed to submit the following at least 3 days before

the next date of hearing which was scheduled on 20.9.2012:-

(i) Copy of letter constituting Bid Evaluation committee with one

external member

(ii) Certificate of Bid Evaluation Committee and the procurer as per

clause 6.2 of guidelines

(iv) Paper cutting of RfP notice in two national newspapers as per 5.2 of

the guidelines.

(v) Atleast 45 days time period in case of single bid process for

submission of bids after issue of RfP documents is provided in

clause 5.5 of the guidelines. Date of uploading RfP documents

mentioned as 22.02.2011, needs to be clarified.

(vi) Copy of letter no.113 dated 14.01.2011 regarding intimation for

procurement of 1050 MW.

(vii) Copy of letter no.1319 dated 29.07.2011 seeking extension of time.

3.7 In compliance of order dated 11th September, 2012, BSEB

submitted following documents :

(i) A copy of the order of BSEB in its internal file constituting

a committee of officers for opening of Non-financial and

Financial bid for procurement of 1050 MW power under the

process of case-1 along with copy of the internal order of BSEB

in which Evaluation Committee has been reconstituted.

21

(ii) In compliance of clause 6.2 of the Competitive Bidding

Guidelines, a copy of the certificate of Bid Evaluation

Committee to the effect that the bid process evaluation has

been done in accordance with the provision of RfP document.

The procurer certificate on conformity of the bid process to the

guidelines has also been submitted.

(iii) Newspaper cuttings of two newspapers in which the bid

inviting RfP was published, in compliance of clause 5.2 of the

Competitive Bidding Guidelines.

(iv) Copy of letter no. 113 dated 14.01.2011 intimating the

Commission that BSEB has initiated process of procurement of

1050 MW ±20% power at delivery point through competitive

bidding process under Case-1.

(v) A copy of letter no. 1319 dated 29.07.2011 along with the

petition to approve the deviation for extension of bid process

completion time by another 46 days leading to entire bid

process for a period of 236 days.

3.8 The matter was heard on 20.9.2012 when the commission

acknowledged the documents/information submitted by BSEB

and observed that there were some discrepancies in the papers

submitted by BSEB in compliance of the order dated

11.09.2012. Moreover, some more clarifications were required

on certain issues which are summarised below :-

(i) BSEB has submitted only a copy of order in the

internal file of BSEB regarding constitution of

committee for opening of the Non-financial and

Financial bids. In addition BSEB has also submitted a

copy of the order in the internal file of BSEB in which

one Member of the Committee has been substituted.

BSEB has not revealed past association with the

external member, directly or through its affiliates - that

22

could create potential conflict of interest, as required

under clause 5.9 of the Competitive Bidding

Guidelines. The Board is also required to clarify

whether any formal order constituting the Bid

Evaluation Committee has been issued.

(ii) As per clause 5.5 of the Competitive Bidding

Guidelines, wherever revised bidding

documents/amendments are issued, the procurer shall

provide bidders at least forty-five (45) days in case of a

single stage bidding process after issue of such

documents for submission of bids. The BSEB uploaded

RfP documents along with replies on 22.02.2011. Thus

the bidders were not given 45 days for submission of

bids. BSEB is required to clarify whether any

modification/amendment in RfP was issued along with

clarification.

(iii) As per clause 5.19 of the Competitive Bidding

Guidelines, the procurer may extend timeframe

indicated in the Annexure-II. However, if the bidding

process is likely to take more than 195 days, approval

of the Appropriate Commission shall be obtained in

accordance with the Clause 5.16 which requires that

any deviation from these Guidelines shall be with the

prior approval of the Appropriate Commission.

In the present case the BSEB vide its petition dated

29.07.2011 prayed for extension of time only upto 12th

September, 2011 i.e. for a total period of 236 days for

completing the bid process but the last RfP document

signed was with GMR on 09.11.2011. However the

petition filed under Section 63 of the Act indicates that

the total period of 294 days has been taken for

23

completion of the bid process for which no prior

approval of the Commission was obtained. This lapse

on the part of BSEB needs to be explained.

(iv)As per Clause 4.11 (ii) of Competitive Bidding

Guidelines, the ratio of minimum and maximum energy

charges (including both the non-escalable component

and escalable component incorporating escalation as

per index being used for evaluation) over the term of

PPA shall not be less than 0.5 to avoid excessive

frontloading or backloading. However this ratio in case

of the tariff quoted by M/s Essar Power Limited is less

than 0.5 resulting in excessive backloading of tariff.

(v) Two bidders with whom BSEB has signed PPA, do not

fully meet the qualifying requirement mentioned in the

RfP particularly in respect of availability of land and

fuel. Deficiencies are as follows:-

(a) M/s GMR Kamalanga Energy Limited.

Land requirement for the project is 1050 acres as

per MOEF environment clearance and bidder is

already in possession of 861.22 acres of land.

Further lease for 138 acres of government land

shall be executed shortly. The Bidder has not

provided any document in support for balance

50.78 acres land. The bidder has submitted only

a certificate from Owner's Engineer certifying

that 999.22 acres of land is sufficient for the

commissioning of the project.

Normative fuel requirement for GMR Kamalange

Energy Limited is 5.39 MMTPA and the bidder

has a tie up of 4.52 MMTPA. Thus, there is a

shortfall of 0.886 MMTPA.

24

Estimated requirement of water for the project is

37 Cusecs but the bidder has got water linkage

of 30 Cusecs only. The bidder has a certificate

from Owner's Engineer certifying sufficiency of

water for operation of the project.

(b) M/s Essar Power Limited

Requirement of land for the project is 1210

acres. The bidder has indicated availability of

only 760.84 acres of land. The bidder has

clarified that the land requirement for the project

has been reduced from 1210 acres to 750 acres

with certain modification in some components of

the project. The normative fuel requirement for

the project is 6.06 MMTPA and the bidder has a

tie up of 5.5 MMTPA leaving a shortfall of 0.56

MMTPA.

The Board considered these deficiencies as minor

and condoned these without taking prior

approval from the Commission. The Board

resolved that keeping in view the larger interest

of the State the minor deficiencies are condoned

and the bidders shall submit

affidavit/documentary evidence/ confirmation

before the opening of the financial bids to comply

with the conditions imposed by the BSEB in the

communications to the aforesaid bidders.

In compliance of the Board's decision M/s GMR

Kamalanga Energy Limited has given affidavit

that it is in possession of 1038.625 acres of land.

This land is sufficient for the power plant. It has

25

also given the affidavit that the coal requirement

for the entire capacity has been tied up.

M/s Essar Power Limited has given the affidavit

that 750 acres of land is sufficient for the project.

It has further given the affidavit confirming

reserve of the coal block allotted to them are

sufficient for 2x600 MW project.

BSEB may submit the copy of study, if any, of

Central Electricity Authority (CEA) regarding the

requirement of land and fuel for such projects.

Alternatively, comments of CEA on the

requirement of land and fuel may be procured. A

copy of the letter of allotment of coal blocks to

M/s Essar Power Limited by the Ministry of Coal

which may indicate whether M/s Essar Power

Limited is authorised to extract more coal than

indicated in the allotment order.

(vi) BSEB may also indicate the status of commissioning

of these projects.

The Commission directed BSEB to submit the following:-

(i) Clarification on constitution of Bid Evaluation

Committee as per para 3.8(i).

(ii) Clarification on whether any

modification/amendment in RfP was made and

issued and if so minimum 45 day time was given

for submitting bid as required in Clause 5.5 of the

Guidelines.

(iii) Clarification for not obtaining prior approval of the

Commission for extension of time upto 294 days for

completion of bid process as required under Clause

5.19 of the Guidelines.

26

(iv) Clarification regarding less than 0.5 ratio of

minimum and maximum energy charges as

required under Clause 4.11(ii) of the Guidelines

(v) Clarification on giving relaxation in minimum

qualifying requirement in non-financial bid without

prior approval of the Commission.

(vi) A copy of the coal block allotment order of Ministry

of Coal to M/s Essar Power Limited indicating that

they are authorised to extract more coal than

stipulated in the allotment order/mining licence.

(vii) Copy of norms/comments of CEA regarding


(viii) Status of commissioning of the two projects.

The aforesaid information was required to be submitted by

7th of October, 2012 and the matter was scheduled for hearing

on 17.10.2012.

3.9 As scheduled, the matter was heard on 17.10.2012. BSEB was

represented by Shri Rakesh, EEE (Inter-state). In compliance

of order dated 20.09.2012, BSEB vide letter no. 2035 dated

17.10.2012 submitted the following :-

(i) Clarification on constitution of Bid Evaluation

Committee.

A certificate dated 17.10.2012 has been submitted by

BSEB which certifies that Shri Hemant Kumar, Chief Manager,

Rural Electrification Corporation, Patna was the external

member of the Bid Evaluation Committee for evaluation of the

bids for procurement of 1050 MW ±20% through tariff based

competitive bidding under case-1. The Certificate also

mentions that Shri Hemant Kumar has expertise in financial

27

matters/bid evaluation and BSEB does not have any past

associations with him directly or through its affiliates which

could create a potential conflict of interest in this bid

evaluation process. Thus it is as per the provisions of clause

5.9 of the guidelines.

(ii) Clarification on whether any modification /

amendment in RfP was made and issued and if so

minimum 45 days time was given for submitting bid

as required in clause 5.5 of the guidelines

It has been informed by BSEB that there was no

modification / amendment in the RfP document and only

responses / clarifications to the queries received from

prospective bidders were furnished and uploaded on website.

Since no revision of the bid documents/amendments were

issued, provision of minimum 45 days time for submission of

the bids thereafter is not applicable.

(iii) Clarification for not obtaining prior approval of the

Commission for extension of time upto 294 days for

completion of bid process as required under clause

5.19 of the Guidelines.

BSEB has mentioned that since the tentative date for

signing of the RfP was not known to BSEB, a petition for

approval of the period beyond 236 days was not filed. The RfP

documents with Essar Power Limited and GMR Kamalanga

Energy Limited were signed on 17.10.2011 and 9.11.2011

respectively. Earlier a petition dated 29.07.2011 praying

extension of time upto 12th September, 2011 for a total period

of 236 days was submitted by BSEB for completing the bid

process. Since, the total time taken for completion of the bid

28

process is 294 days, approval for extension of time period

beyond 195 days is required as per clause 5.19 of the

Guidelines.

(iv) Clarification regarding less than 0.5 ratio of

minimum and maximum energy charges as required

under clause 4.11(ii) of the Guidelines.

The above provision is applicable where the procurer

offers a captive fuel source (such as a captive coal mine) for

concurrent development and production of power. In the

present case, no captive fuel source has been offered by the

procurer. This provision of the Guidelines is not applicable.

(v) Clarification on giving relaxation in minimum

qualifying requirement in non-financial bid without

approval of the Commission

BSEB has clarified that minimum qualifying requirement

for the non-financial bid as mentioned in the RfP document

were strictly as per the Standard Bid Document issued by

Ministry of Power for procurement under Case-1 tariff based

competitive bidding process for long term procurement.

The Board of BSEB decided to approve the minor

deficiencies and non compliances in a conscious and

considered decision based on the following reasons:-

(a) The number of bidders/developers in the country is

limited and mostly, these bidders participate in the bid

processes carried out all over the country. In case the

minor deficiencies and non compliances which have

no impact on the project execution/plant operation

are not relaxed in the above cases, then the

participation of bidders at the financial bid evaluation

stage shall be very limited which may deprive the state

29

from getting requisite quantum of power at reasonable

tariff rates.

(b) In case the Board decides to rebid due to requisite

quantum of power, not materialising at the reasonable

tariff, the capacity offered to the State in the present

bid may get unlocked, and may be offered to other

bidding States. In the process, the state may not get

sufficient competitive bids against the fresh tender

enquiry.

(c) The projects from which power is offered are under

advanced stages and the minor deficiencies and non

compliances may not affect the commissioning of the

projects/plant operation.

A copy of Board resolution no. 8608 dated 16.06.2011

is enclosed as annexure-III

(vi) The copies of coal block allotment order of Ministry

of Coal for Chakla Coal block and Ashok karkata

Central Coal block to M/s Essar Power Limited have

been submitted as annexure-IV indicating mine

capacity of 2.0 MMTPA and 3.5 MMTPA respectively.

Approved mining plan / revised bank guarantee

submitted may clarify rated mines capacity. BSEB

has made a reference of clause 1(iv) of the coal block

allotment order issued by Ministry of Coal in this

respect.

(vii) The copy of norms/comments of CEA regarding the


BSEB has submitted in annexure (V) 'Review of land

requirement for thermal power stations' issued by CEA in

September, 2010. The report recommends 1090 acres of land

30

for 2x500MW pit head/load center, indigenous coal based

project and 1520 acres for 2x660MW project. Earlier as per

CEA report - 2007, the land requirement for above referred

capacity had been 1420 acres and 2050 acres respectively.

BSEB has submitted a copy of letter dated 21.04.2011 of

Essar Power reducing land requirement from 1210 acres to

750 acres. A copy of letter dated 9th Feb. 2011 written to CEA

by Essar Power Ltd. has also been enclosed by BSEB.

Regarding fuel requirement, in case of Essar Power

Limited, as per coal block allotment order, 5.5 MMTPA is the

mines capacity of the two coal blocks against normative

requirement of 6.06 MMTPA for the power plant. Approved

mining plan/revised bank guarantee submitted may clarify

the mines rated capacity.

A copy of mines development schedule as per letter of

allotment – status report as on 31.12.2010 indicate mines

capacity of 4.5 MMTPA in each of the mines (Peak rated

capacity)

(viii) Status of commissioning of two projects.

The commissioning schedule as per 'status of coal

block allocated' submitted in respect of Essar Power

limited indicates as under :-

Unit – I 600 MW - September, 2013

Unit – II 600 MW -January, 2014

Status of commissioning in case of GMR Kamalanga

Energy Limited has not been submitted.

The BSEB was directed to submit the following :-

31

(i) Approved mining plan for both coal blocks

allotted to Essar Power and revised bank

guarantee submitted by Essar Power Limited.

(ii) Letter of approval/comments of CEA

regarding reduction in land requirement from

1210 acres to 750 acres for the 2x600 MW

power plant of Essar Power Ltd.

3.10. The matter was heard on 7.11.2012. In compliance of

Commission’s order dated 17.10.2012, the petitioner Bihar

State Power (Holding) Company Ltd. which is a successor

company of erstwhile BSEB has submitted written response.

The petitioner has not submitted the approval/comments of

CEA regarding reduction in land requirement in the project.

But it has submitted a report from M/S Essar power in which

it has been mentioned that environment clearance given by

Ministry of Environment and Forests stipulated that the land

requirement will not exceed the limit of 1210 acres and that

the mining plan of Chakla Coal Block has been approved by

the Coal Controller, Ministry Coal in which annual coal

production of 4.5 MMTPA has been approved.

In the earlier submission, the petitioner submitted that M/s

GMR kamalanga Energy Limited has replied that balance

quantity of Coal will be procured through E-auction .

In the meanwhile, petitioner is directed to submit a copy of the

environment clearance given by the Ministry of Environment

and Forests indicating the approval of land requirement not

exceeding the limit of 1210 acres. The petitioner will also

submit the latest progress report of the project of M/s Essar

Power who will supply electricity to the petitioner.

32

The case was scheduled for orders on 27.11.2012.

In compliance of the order dated 07.11.2012, the Bihar State

Power (Holding) Company Limited, erstwhile BSEB vide letter

no.2197 dated 12.11.2012 submitted the following:

A.GMR Kamalanga Energy Ltd

1. Clarification from M/s GMR to the queries raised by

BSEB, as submitted by them vide para-2 of the GMR

letter dated21.04.2011,related with arrangement of

balance coal (0.886 MMTPA) for the thermal project and

affidavit of GMR on Coal tie up(Appendix-B)

B. Essar Power Ltd

1. Letter F, no.3-13011/63/2008 IA.II(T) dated 8th May 2009

of MoEF, Govt.of India – Related with requirement of land

under para 3(i).

Further, the Bihar State Power(Holding) Company Limited,

erstwhile BSEB vide letter no 2256 dated 22.11.2012

submitted a copy of Progress Report of Essar power Limited

for the month of October 2012. A copy of Project Progress

Report of M/s GMR kamalanga Energy Ltd for the month of

September2012 has also been submitted on 26.11.2012.

4.0 Commission’s observation on procedure followed by BSEB andcompliance of the Guidelines.

The Commission observes that BSEB initiated single stage

bidding process for procurement of 1050MW (± 20%) through

tariff based competitive bidding for long term (25 years) under

case-1 based on the guidelines and standard bid documents

issued by Ministry of Power, Government of India without any

deviation. The NIT was issued vide no.02/PR/BSEB/2011 on

33

14.01.2011. Eight nos. of bidders submitted their bids for

varying capacities. The Bid Evaluation Committee constituted by

BSEB with one external member evaluated the non-financial

bids. As per the Bid Evaluation Committee report, only two bids

met the qualifying requirement of the RfP and deficiencies and

non-compliances were observed in case of other five bidders.

One bid of M/s Shapoorji Pallonji Energy (Gujrat) Ltd failed to

qualify. The Board of the BSEB in it’s 540th meeting held on

16.06.2011 approved opening of financial bids of seven bidders

and passed following resolutions:

“Resolved that keeping in view of the larger interest of the state

the minor deficiencies and non-compliances to the qualifying

requirement in the case of GMR Kamalanga Energy Ltd.; PTC

India Ltd, Essar power Ltd, Reliance Power Ltd and National

Energy Trading & services Ltd are hereby approved, with the

condition that these bidders shall submit the sworn in

affidavit/documentary evidence/confirmations before opening of

the financial bids, to comply with the conditions imposed by

BSEB in the communications to the aforesaid five bidders. These

are pre-conditions to the opening of their financial bids. In case

they do not meet the targets/conditions, the BSEB may

terminate the PPA, invoking the provisions of PPA for encashing

the contract performance guarantee provided by the developer@

Rs.30 lakhs per MW and initiate fresh bid process.”

After submission affidavits by five bidders, financial bids of seven

qualifying bidders were opened on 28.06.2011.

During opening of financial bids, it was noted that the financial bid of

GMR did not contain a part of the format, the envelope contained only

the tariff sheet in the specified format of 4.10. At the instant, as per

clause 2.2.2 of the RfP, the bid was not considered for evaluation.

34

GMR vide their letter dated 28.08.2011mentioned that the part of

format 4.10 not submitted with financial bid had no financial

implication and inadvertently, it was placed in the envelope along with

non-financial bid. Considering the fact that it has no financial

implication, the financial bid of GMR was considered for evaluation .

It was found that the levelised tariff of bidder M/s Essar power Ltd

offering 300MW was the lowest at Rs3.69 per kwh at delivery point of

BSEB. The Board in it’s 541stBoard meeting dated 04.08.2011 gave

approval to issue LoI to M/s Essar power Ltd and further suggested

that the L2.L4,L6, L7and L8 may be offered an opportunity to give

their counter-offers equal to the levelised tariff of L1 bidder and then

the balance requisitioned contracted capacity may be split among the

bidders who match the levelised tariff of L1 bidder. In response M/s

GMR kamalanga Energy Ltd submitted it’s counter-offer and matched

the levelised Tariff of L1. The PPA was signed with M/s Essar power

Ltd on 17.10.2011 for 300 MW and with M/s GMR kamalanga Ltd on

09.11.2011 for 260 MW.

4.2 Having scrutinised the petition and chronology of different steps

taken by the Petitioner BSEB since the initiation of bid process for

procurement of power on tariff based competitive bidding in

accordance with Competitive Bidding Guidelines, the submissions

made by petitioner BSEB and additional information/documents

submitted by BSEB, now the Commission proceeds to examine

whether in accordance with section 63 of Act, the tariff has been

determined by Petitioner BSEB for procurement of (i)300 MW of

power from M/s Essar Power Limited(ii)260 MW of power from M/s

GMR Kamalanga Energy Ltd through transparent process of bidding

as per provisions of the Competitive Bidding Guidelines issued by the

Central Government.

35

4.3 The Bihar State Electricity Board (hereinafter referred to as ‘BSEB’ or

‘Petitioner’) an autonomous body constituted under section 5 of

Electricity Supply Act, 1948 duly formed by Govt. of Bihar under

legislative decree vide Bihar Govt.’s notification no. 2884-A/A1-

121/57 dated 25th March, 1958 w.e.f. 1st April, 1958. BSEB is a

deemed licensee as per section 14 of the Electricity Act, 2003

(hereinafter referred to as ‘Act’) and is an integrated utility engaged in

the business of Generation, Transmission and Distribution of

electricity in the State of Bihar. In terms of section 172 of the Act, the

BSEB constituted under the repealed law shall be deemed to be the

State Transmission Utility (STU) and a licensee under the provisions

of the Act for a period of one year from 10th June, 2003 i.e. appointed

date. On the request of Govt. of Bihar from time to time, Central Govt.

has agreed to extend the time to continue the BSEB to function as an

STU and distribution licensee and last extension granted to BSEB is

up to 31.12.2012.

4.4 Section 63 of the Electricity Act, 2003 (the Act) states that –

“Notwithstanding anything contained in section 62, the

Appropriate Commission shall adopt the tariff if such tariff

has been determined through transparent process of bidding

in accordance with the guidelines issued by the Central

Government.”

Ministry of Power, Govt. of India has issued guidelines for

“determination of tariff by bidding process for procurement of power

by distribution licensees” (Competitive Bidding Guidelines) vide

resolution no. 23/11/2004-R&R (Vol.-II) dated 19th January, 2005

and amended the guidelines on 30.03.2006, 18.08.2006, 27.09.2007,

27.03.2009 and 21.07.2010.

36

4.5. These guidelines have been issued for long-term procurement of

electricity for a period of seven years and above and medium term

procurement for a period of up to seven years but exceeding one year.

These guidelines are also applicable for procurement of electricity

through competitive bidding in cases where the location, technology,

or fuel is not specified by the procurer.

In the present case in conformity with clause 2.1(a) of Competitive

Bidding Guidelines the Petitioner BSEB which is the procurer has

initiated the process for long-term procurement of electricity for a

period of 25 years under Case-1 in which the location, technology or

fuel has not been specified by the Petitioner for base load of 1050 MW

(±20%) which is in conformity with clause 2.2(i) of the Guidelines.

4.6. As per clause 3.1(i) of the guidelines, the bid documents have to be

prepared in accordance with these guidelines and the approval of the

appropriate Regulatory Commission (BERC in the present case) is to

be obtained unless the bid documents are as per the Standard Bid

Documents issued by the Central Government. In such cases, an

intimation shall be sent by the procurer to the Commission about

initiation of the bid process.

In the present case, the Commission vide it’s letter no.BERC.Misc-

1/08-250 dated 21.07.2009 has noted that BSEB intends to procure

1500 MW of power under case -1 standard bidding document based

on guidelines issued by Ministry of Power, Govt. of India without any

deviation . As per tariff order dated 06.12.2010 ( case no.TP-3 of

2010) for determination of ARR and retail tariff for the FY2010-11,the

commission under directive 25(4), has directed BSEB to initiate

bidding process for (1500 – 450)1050 MW of power. Earlier BSEB has

signed PPA for 450 MW Power with Essar Power Ltd in 2010. The

BSEB vide it’s letter no.113 dated 14.01.2011 has informed the

Commission under provision of clause 3.1(i) of the guidelines about

37

the procurement of 1050 MW±20% power at delivery point through

competitive bidding process under case -1. The commission has also

informed BSEB vide it’s letter no.BERC/misc-1/08 (part)-36 dated

21.01.2011 that the Commission has no objection to the proposal of

BSEB to go ahead for procurement of 1050 MW±20% power through

competitive bidding under case-1. From the above, it is evident that

the Petitioner complied with the provision of clause 3.1(i) of the

Competitive Bidding Guidelines.

4.7. As per clause 3.1(iii)(a), approval of the Commission is to be sought

before initiating the bidding process for the quantum of

capacity/energy to be procured in case the same is exceeding the

projected additional demand forecast for the next three years following

the year of expected commencement of supply proposed to be

procured. Such demand forecast shall be based on the latest available

Electric Power Survey (EPS) published by the Central Electricity

Authority.

In the present case, the commencement of supply is expected after 4

years from the date of signing of the PPA i.e by FY2015-16. As per

18th Electric Power survey published by the Central Electricity

Authority, the projected peak demand for state in 2012-13 will be

2642 MW which may go up to 5660 MW in 2017-18. The projection of

requirement of energy for the FY2015 -16, 2016 -17and 2017-18 are

25489MU, 29447MU and 32964MU respectively. Whereas availability

of power as per current Tariff Order for FY2012-13 is 14142 MU and

the proposed procurement of additional 560MW would mean

increased availability by 4169 MU per annum. Another 450 MW long

term PPA signed with M/s Essar Power Ltd will fetch 3351 MU per

annum. The total availability including the proposed procurement will

be 21662 MU by FY2015-16. Thus, the proposed procurement of 560

MW will be well within the projection made by the 18th EPS. Therefore,

38

prior permission of the commission was not required as per clause

3.1(iii)(a) of the Competitive bidding Guidelines and only intimation

was required to be given by the Petitioner.

4.8 The clause3.2(II) of the guidelines is applicable in case -1

procurement to ensure serious participation in the bid process and

timely commencement of supply of power, the bidder, in case the

supply is proposed from a station to be set up, should be required to

submit along with it’s bid, documents in support of having

undertaken specific actions for project preparatory activities in

respect of matters relating to land ,fuel, water ,environmental

clearance and forest clearance etc.

In present case, there were deficiencies and non- compliances in case

of five bidders . The Board of the BSEB accorded approval for opening

of the financial bids after getting sworn in affidavits to comply fully

with the qualification requirements as per the RfP. The issues

relating to deficiencies have been examined in para 5.2.12 dealing

with compliance of clause 5.11.

4.9 The clause 2.3 and 3.1(ii) states that approval of the Appropriate

Commission shall be sought in the event of deviations from the bid

conditions contained in these guidelines, following the process

described in para 5.16 of the Guidelines.

The deficiencies and non-compliances in the non-financial bids as

mentioned above in para 4.8 have been examined in Para 5.2.12

dealing with compliances of clause 5.11 of the guidelines. Although,

these minor deviations do not have any appreciable effect on

competitiveness and transparency in bid process and in case, minor

deficiencies which hardly have impact on the project

execution/operation are not relaxed, the participation of bidders at

financial evaluation stage shall be very limited and may deprive the

39

state of required quantum of power at reasonable and competitive

tariff rates. However, BSEB should have taken prior approval of the

Commission before opening of financial bids.

5.0 Compliance of clause 4(Tariff Structure) of the guidelines

5.1.1 In compliance of clause 4.1 of the guidelines, provision for monthly

billing has been made in article 8.2 of the PPA and various

parameters of multi-part tariff have been included in the format 4.10

for financial bids in the RfP.

5.1.2 In compliance of clause 4.3, para 8 of the notice inviting RfP provides

that tariff shall be payable by the procurer in Indian rupee as per

provisions of the PPA. The section 1.3.1.11 of RfP also provides that

the transmission charges, for transmission of power from injection

point to delivery point, will initially be paid by the seller and will be

reimbursed by the procurer.

5.1.3 In compliance of clause 4.4 of the guidelines, the clause 2.4.1.1(B)(vii)

of RfP provides that the quoted escalable capacity charges and quoted

non-escalable capacity charges shall be based on normative

availability . In case of availability being lower, the capacity charges

shall be payable on proportionate basis as mentioned in 4.1(iv) of

Schedule4 of the PPA

5.1.4 In compliance of clause 4.5, the clause 4.2.4 of schedule 4 of the PPA

provides for incentive for availability higher than normative

availability. The clause 4.2.5 of Schedule 4 of the PPA also provides

for penalty in case availability during a year is less than 80%.

5.1.5 In compliance of clause 4.6 of the Guidelines, Schedule 3.1 of the PPA

provides for scheduling, dispatch and grid code and article 4.5.3 of

the PPA provides that the seller shall be entitled to sell such available

capacity not scheduled by the procurer to any person without losing

40

the right to receive the capacity charges from the procurer for such

unscheduled capacity. In such a case, the sale realization in excess of

variable charges, shall be equally shared with the procurer.

5.1.6 The articles 10.1.1 and 10.2.1 of the PPA also provides in compliance

of clause 4.7 of the guidelines that any change in tax or introduction

of any tax made applicable for supply of power by the seller as per the

terms of the agreement shall be passed on to the monthly tariff.

5.1.7 Clause 4.8 of the Guidelines is complied through appropriate

provision in clause 2.4.1.1(B)(x) of RfP.

5.1.8 The provision of payment security mechanism as per clause 4.10 of

the Guidelines has been included in article 8.4 of the PPA.

5.1.9 In compliance of clause 4.11, Section 2.4.1.1(B)(viii) &(ix) and format

4.10 of the RfP provides for option to the bidder to either quote firm

capacity and energy charges or both non-escalable and escalable

energy charges.

5.1.10 Clause 4.14 of the Guidelines has been complied in art. 4.4.1 and

4.3.1 of schedule 4 of the PPA regarding payable energy charges .

5.2 Compliance of clause 5 (Bidding Process) of the guidelines

5.2.1 As per clause 5.1 of the Competitive Bidding Guidelines, the procurer

may, at his option, adopt a single stage tender process for long-term

or medium term procurement under Case-1 combining the RfP and

RfQ processes. Accordingly the Petitioner BSEB has adopted single

stage tender process in the present case for procurement of 1050

MW±20% of power under Case-1 of the Competitive Bidding

Guidelines on long-term basis for a period of 25 years. The BSEB

issued a ‘Notice inviting tender ‘ no.02/PR/BSEB/2011 for

procurement of 1050 MW(±20%)power under case-1 route based on

the standard bidding document without any deviation.

41

5.2.2 As per clause 5.2 ,the procurer shall publish RfQ (RfP in single stage

bid process)notice in at least two national newspapers, company

website and preferably in trade magazines also to accord it wide

publicity. The bidding shall necessarily be by way of International

Competitive bidding .For the purpose of issue of RfQ (RfP in single

stage process) minimum conditions to be met by the bidder shall be

specified by the procurer in the notice.

In compliance of clause 5.2 of the guidelines, petitioner BSEB

published the RfP notice (international competitive bidding) in two

national newspapers on 16.01.2011 and RfP was also uploaded on

BSEB’s website and made available for downloads from 20.01.2011 to

03.02.2011.

Clause 2.1 of the RfP specifies the qualification requirements which

was based on standard bid documents issued by Ministry of Power.

5.2.3 As per clause5.3, Procurer shall provide only written interpretation of

the tender document to any bidder/participant and the same shall be

made available to all other bidders All parties shall rely solely on the

written communication and acceptances from bidders.

In compliance of clause 5.3 of the Guidelines, BSEB has mentioned to

have provided only written interpretation of the tender document at

all points of time during the bid process to all the bidders.

5.2.4 In compliance of clause 5.4(i), BSEB has specified 1050 MW as

quantum of electricity proposed to be procured in clause1.3.1.2 of the

RfP, the minimum bid capacity of 100 MW has been specified in

clause 1.3.1.3 of the RfP. Clause 1.3.1.4 of the RfP specifies that

proposal is for procurement of base load requirement and the period

of contract has been specified as 25 years in clause 1.3.1.1. Further

in compliance of clause 5.4(i), the normative availability has been

specified as 85% in article 1.1 of the PPA signed with M/s Essar

42

Power Limited and M/s GMR kamalanga Energy Ltd. The Delivery

Date has been specified in clause 1.3.1.5 of the RfP as 4 years from

the date of signing of the PPA. BSEB has also specified in clause

1.3.1.8 of the RfP that the bidder shall provide the point of injection in

its bid. The networh criteria to be fulfilled by all the bidders has been

specified in clause 2.1.2.1 of the RfP. Thus, BSEB has complied with

clause 5.4(i) of the guidelines.

5.2.5 In compliance of clause 5.4(iii) of the guidelines, clause 2.9 of the RfP

specifies that period of validity of the bid is 120 days after the bid

deadline.

5.2.6 In compliance of clause 5.4(vi) of the guidelines, BSEB has provided

in clause 2.5(i) of the RfP for verification of financial data by checking

with bidder’s, lender’s/banker’s/financing institutions/any other

persons as necessary.

5.2.7 In compliance of clause 5.5 of the guidelines, the RfP documents,

along with reply to queries raised by the bidders were uploaded on

BSEB’s website on 22.02.2011, with 4th April, 2011 as the last date of

submission of bids. As per guidelines, wherever revised bidding

documents/amendments are issued, the procurer has to provide at

least 45 days time in case of single stage bidding process for

submission of bids .BSEB has clarified that there was no

modification/amendment in the RfP documents and only

responses/clarifications to the queries received from prospective

bidders were furnished and uploaded on website on 22.02.2011and

therefore, minimum period of 45 days time thereafter for submission

of bids was not applicable.

5.2.8 In compliance of clause 5.6(v), BSEB has specified in the clause 1.3.1.

5 of the RfP that scheduled delivery date will be 4 years from the date

of signing of RfP documents and as per provisions of art.4.1 of the

43

PPA. The liquidated damage that would apply in event of delay in

supply is provided in art.4.8 of the PPA.

5.2.9 In compliance of clause 5.6(vi) of the guidelines, BSEB has mentioned

that escalation rates notified by CERC to be utilised for bid evaluation

purpose as per provision in clause no.3.4.4 of RfP.

5.2.10 In compliance of clause 5.7 of the guidelines, the number of qualified

bidders after completion of evaluation of the non-financial bids were

seven, out of which one bidder M/s PTC India Ltd, an inter-state

trading licensee, offered power from four different generating stations

and M/s NET&SL, an inter-state Trading licensee, offered power from

three different generating stations. Hence, in all there were 12 price

bids from different generating stations.

5.2.11 In compliance of clause 5.9 of the guidelines, the Bid Evaluation

Committee constituted by BSEB included one external member Shri

Hemant Kumar from Rural Electrification Corporation Ltd. As per

guidelines, the external member shall have expertise in financial

matters/bid evaluation. The procurer shall reveal past associations

with external member directly or through it’s affiliates that could

create potential conflict of interest. BSEB has submitted a certificate

dated 17.10.2012 in compliance of the aforesaid provisions of the

guide line.

5.2.12 In compliance of clause 5.11 of the Guidelines, Bid Evaluation

Committee reported that only two bidders had fully complied with the

stipulation in clause 2.1.2.2 of the RfP in respect of various project

preparatory activities. However the Board of Petitioner BSEB vide its

Resolution No. 8608 in the 540th Board meeting held on 16.06.2011

accorded approval for opening of financial bids of seven bidders with

the condition that the five bidders, with minor deficiencies and non-

44

compliances, should submit sworn in affidavits to comply fully with

qualifying requirement of the RfP . After verifying the submission to

queries, affidavits and original documents of the bidders, the financial

bids were opened on 28.06.2011. The Commission observes that prior

approval of the Commission was required in respect of deviations from

the qualification requirement of the RfP.

5.2.13 In compliance of clause 5.12 of the guidelines BSEB has reported that

there was no deviations from the tender conditions in the price bid

submitted by any bidder.

5.2.14 In compliance of clause 5.14(i) of the guidelines, BSEB has reported

that in compliance of clause 3.4.5, 3.4.6, 3.4.7 and 3.4.8 of RfP, the

bids submitted by bidders developing generating stations outside the

state of Bihar were evaluated after loading with the applicable inter-

state transmission charges and making adjustments for transmission

losses.

5.2.15 In compliance of clause 5.15 of the guidelines, the bidder who has

quoted the lowest levelised tariff was declared successful bidder.

Clause 3.5.2 of the RfP, also mentions that all financial bids of

qualified bidders shall be ranked from lowest to the highest .BSEB

declared Essar Power Ltd, the bidder, who has quoted the lowest

levelised tariff as the ‘successful bidder’.

The BSEB Board vide the resolution number 8619 in the 541st Board

meeting held on 4.08.2011 gave approval to issue LOI to M/s Essar

Power Ltd(L1) bidder for supply of 300 MW power at the quoted

levelised tariff of Rs3.69 per kwh and further suggested that the

L2,L4,L6,L7 may be offered an opportunity to give their counter-offers

equal to the levelised tariff of L1 bidder. In response, M/s GMR

45

kamalanga energy Ltd submitted it’s counter offer and matched the

levelised tariff of L1.

5.2.16 In compliance of clause 5.16 of the guidelines, BSEB has reported

that the Case-1 bid process was initiated without any deviation from

the guidelines.

5.2.17 In compliance of clause 5.19 of the guidelines, The BSEB has

mentioned that the last date for submission of bid was 04.04.2011,

while the date of issue of RfP was 14.01.2011, thus allowing more

than 75 days for submission of the bid. Further, the Case-1 bid

process was completed with the signing of the RfP on 09.11.2011

with GMR Kamalanga Energy Ltd. BSEB has further reported that

the bid process and signing of the RfP documents completed in 294

days i.e 99 days more than the maximum allowed time period of 195

days as per guidelines.

It has been clarified that since the tentative date for signing of RfP

documents were not known, the petitioner BSEB had earlier

submitted an application vide letter no.1319 dated 29.7.2011 for

approval of extension of time for anticipated total period of 236 days

to complete the bidding process.

5.3 Compliance of clause 6 of guidelines

5.3.1 The clause 6.2 of the guidelines stipulates that after the completion of

bid process , the Bid Evaluation Committee shall give a certificate on

conformity of the bid process evaluation according to the provisions of

RfP document and the procurer shall provide a certificate on

conformity of the bid process to these guidelines. The certificate

given by the Bid evaluation committee was not in conformity with the

guidelines. In course of hearing on 11.09.2012, BSEB was directed to

furnish the required certificates of the bid evaluation committee and

46

the procurer as per provisions of the guidelines . The certificates of

Bid Evaluation Committee and the procurer, submitted by BSEB on

20.09.2012 , are in conformity with the guidelines.

5.3.2 In compliance of the clause 6.3 of the guidelines, the BSEB issued

press note in daily newspapers informing the public about signing of

the PPA and other RfP documents, accessibility to download the

signed PPA and other RfP documents from its website. The

information about the name of the successful bidder and details of

tariff quoted by all the bidders were also given, keeping all other

bidders anonymous.

5.3.3 In compliance of clause 6.4 of the Guidelines, BSEB has submitted

the petition along with the signed PPA and certification/certificates

provided by the Evaluation Committee and by the procurer as

provided in clause6.2 of the guidelines.

6.0 Commission findings and views6.1.1 The Bid Evaluation Committee constituted by BSEB in accordance

with the provisions of clause 5.9 of the Guidelines included one

external member Shri Hemant Kumar, Chief Manager, Rural

Electrification Corporation, Patna. The Bid Evaluation Committee in

its report on the evaluation of non-financial bids observed that there

were infirmities in the non-financial bids of six bidders with respect

to provision of RfP. The committee mentioned that two bidders met

the qualifying requirement strictly as per the RfP document namely:-

(i) India bulls Power Ltd (ii) Jaypee power ventures Ltd. Further, there

were minor deficiencies and non-compliances of the qualifying

requirement as set out in the RfP document in case of the following

five bidders:(a) GMR Kamalanga Energy Ltd (b) PTC India Ltd (c)

47

Essar Power Ltd (d) Reliance Power Ltd (e) National energy trading &

services Ltd

The report further mentions that the bid of M/s shapoorji Pallonji

Energy (Gujrat) pvt. Ltd does not meet the qualification requirements

as per RfP document.

6.1.2 The matter was placed before the Board of Petitioner BSEB. The

deficiencies and non-compliances in respect of qualification

requirements as per clause 2.1.2.2 of the RfP regarding availability of

land, fuel, water and forest/environment clearance, etc. were

considered and the Board approved opening of the financial bids in

it’s 540th Board meeting held on 16.06.2011and passed the following

resolution:-

“Resolved that keeping in view of the larger interest of the

state the minor deficiencies and non-compliances of the

qualifying requirement in the case of GMR Kamalanga Energy

Ltd.; PTC India Ltd, Essar power Ltd, Reliance Power Ltd and

National Energy Trading & services Ltd are hereby approved,

with the condition that these bidders shall submit the sworn

in affidavit/documentary evidence/confirmations before

opening of the financial bids, to comply with the conditions

imposed by BSEB in the communications to the aforesaid five

bidders. These are pre-conditions to the opening of their

financial bids. In case they do not meet the

targets/conditions, the BSEB may terminate the PPA,

invoking the provisions of PPA for encashing the contract

performance guarantee provided by the developer@ Rs.30

lakhs per MW and initiate fresh bid process.”

48

6.1.3 The two bidders with whom BSEB has signed PPA do not fully meet

the qualification requirement mentioned in the RfP. The deficiencies,

as per non-financial bid evaluation report, are as follows:-

i. GMR Kamalanga Energy Ltd: Land requirement for the Project is 1050

acres as per MOEF environmental clearance and the bidder is already

in possession of 861.22 acres of land. Further lease for 138 acres of

government land shall be executed shortly. The bidder has not

provided any document in support of balance 50.78 acres of land.

The fuel requirement is 5.39 MMTPA and the bidder has tied up for

4.52 MMTPA. Thus, there is a shortfall of 0.886 MMTPA..The available

water linkage is also less by 7cusec.Against estimated requirement of

37 cusec, water availability is for 30 cusec.

ii Essar Power Ltd:- The requirement of land for the project is 1210

acres whereas bidder has indicated availability of only 760.84 acres of

land. They have clarified that the land requirement for the project has

been reduced from 1210 acres to 750 acres by modifications in the

switchyard, colony, cooling and ash disposal systems besides shifting

coal crushing system to the captive coal mines area.

The fuel requirement for the project is 6.06 MMTPA and the bidder

has indicated availability of 5.5MMTPA leaving a short fall of 0.56

MMTPA.

The Commission observes that the BSEB should have taken prior

permission of the Commission before opening of their financial bids.

6.1.4 In compliance of the Board's decision M/s GMR Kamalanga Energy

Limited has given affidavit that it is in possession of 1038.625 acres of

land. This land is sufficient for the power plant. It has also given the

affidavit that the coal requirement for the entire capacity has been

tied up. Against Coal linkage available with them for 4.52 MMTPA,

49

reassessed coal requirement at normative availability is 4.62 MMTPA.

The above has been detailed in coal computation sheet of appendix-B,

letter dated 21.04.2011 of M/s GMR kamalanga Energy Limited.

M/s Essar Power Limited has given the affidavit that 750 acres of land

is sufficient for the project. It has further given the affidavit

confirming reserve of the coal blocks allotted to them are sufficient

for 2x600 MW project.

As per annexure-v of letter no. 2035 dated 17.10.2012 submitted by

BSEB in compliance of order of the Commission dated

25.09.2012,’Review of land requirement for thermal power stations’

issued by CEA in September 2010 recommends 1090 acres of land

for 2x500MW pit head/load center, indigenous coal based project and

1520 acres for 2x660 MW project .Earlier it was 1420 acres and 2050

acres respectively .Thus the land requirement has been reduced by

23% and 26% respectively for the above mentioned capacity by the

CEA.

As directed by the Commission in course of hearing on 7.11.2012,the

BSEB has submitted a copy of environment clearance accorded to

M/s Essar Power Ltd dated 8th May 2009 which mentions that total

land requirement for 2x600 MW proposed project shall not exceed

1210 acres.

The petitioner has submitted a copy of letter dated 5.11.2012 from

M/s Essar power Ltd mentioning major factors leading to reduced

land requirement of 750 acres only as detailed below:-

(i) Use of Gas insulated substation

(ii) Use of air cooled condenser instead of conventional cooling system

(iii) Plan for multi-storied building for colony

(iv) Use of High concentration slurry disposal system for ash

50

(v) Coal crushing and storage facility shifted to captive coal mines

area.

As annex.-VI of letter no.2035 dated 17.10.2012, BSEB has submitted

a copy of letter dated 21.4.2011 of Essar power Ltd indicating section-

wise details of reduction in land requirement. A copy of letter

ref.no.Tori/phase-1/CEA/001 dated 9.02.2011 written to CEA by the

developer has also been enclosed by BSEB as annex.-1 mentioning

reduction in land requirement from 1210 acres to 750 acres .They

have also mentioned that 760 acres of land has been acquired by

them.

Regarding status of Coal blocks ,the copy of approved Mining Plan for

Chakla coal block of Essar Power Ltd submitted by BSEB as

annexure-2 indicate targeted coal production of 4.5 MMTPA. The copy

of Status report as on 31.09.2012 for Ashok Karkata coal block

submitted to Coal controller ,MOC, Govt.of India mentions 4.5

MMTPA as coal production. A copy of Coal block allotment order

dated 6th November 2007 by Ministry of Coal ,Govt of India has also

been enclosed wherein assessed mine capacity of 3.5 MMTPA by

CMPDIL has been mentioned.

The mines capacity of both Chakla and Ashok Karkata blocks are

sufficient to meet the requirement of 2x600 MW project has been

mentioned in the affidavit submitted by M/s Essar Power limited .

As mentioned in the financial bids, the expected date of

commissioning for Essar Power is in 2014 and for GMR ,it is in the

middle of 2012.

The copy of progress report of Essar power Limited for the month of

October 2012, submitted on 22.2.2012 by BSEB, mentions date of

synchronization in 2014.In case of GMR Kamalanga Energy Limited

,the copy of Project Progress Report for the month of September 2012

51

mentions commissioning of Unit-1 by December 2012 and other

units are scheduled to follow by 2 months and 4 months respectively.

6.2 As per para 5.15 of the Guidelines, the Bid evaluation committee shall

have right to reject all price bids if rates quoted are not aligned to the

prevailing market price. It is provided in art.3.5.12 of the RfP also.

In the present case, a glance over the tariff rates submitted by BSEB

in annex-1,letter no.994 dated 23.05.2012 indicate that during 2009

to 2011 in case of long term power procurement ( case -1),the power

procurement rates varied between Rs2.35 to Rs. 4.08 per kwh in other

states of the country.

The petitioner has also furnished the average power purchase cost

from NTPC power stations in Eastern Region for the months of June &

July 2011.The mentioned cost are Rs.4.26 and Rs4.10 per unit

respectively.

The indicative tariff based on March 2012 fuel cost for Farakka-III

STPS of NTPC, as per copy of letter dated 23.04.2012 submitted by

BSEB, is Rs4.50 per kwh.

In the discussion note of 541st Board meeting of the BSEB dated

4.08.2011, para 8, it has been mentioned that present average

landed rate of supply of power by NTPC to the state under central

sector allocation is Rs.4.53 per unit. In May2010, when 450 MW

power was tied up with M/s Essar power Ltd at the levelised tariff of

Rs.3.057 per kwh, the average rate of power supply by CPSU was

Rs2.46 per kwh .In the present case, L1 rate of Rs.3.69 per kwh is

from the same power station of M/s Essar power Ltd. In short span of

14 months there have been a steep rise in the power supply rates.

However, the average rates of power supply to the state from Farakka,

Kahalgaon and Talchar stations of NTPC submitted by BSEB as per

directive of the Commission on 17.10.2012 for FY2011-12 and

52

FY2012-13(till September 2012) are Rs3.22 per unit and Rs.3.33 per

unit respectively.

6.3 BSEB after signing of the PPA has made the PPA public through

advertisement in the newspapers. The PPA and other signed RfP

documents were also placed on the website of the BSEB. The

information about the name of the successful bidder and details of

tariff quoted by all the bidders were also given, keeping all other

bidders anonymous.

7.0 Conclusion:

The Commission observes that the petitioner issued “Notice Inviting

Tender” NIT no.02/PR/BSEB/2011 on 14.01.2011 for procurement of

1050MW±20% power through tariff based competitive bidding for

long term procurement under case-1, based on the guidelines and

Standard Bid Document issued by Ministry of Power ,Govt. of India

without any deviation.

The Commission further observes that as per Bid Evaluation

Committee report, only two bids fully met the qualification

requirement of the RfP and minor deficiencies and non-compliances

were observed in case of other five bidders in the non –financial bids.

However, the Board of BSEB in their 540th Board meeting vide

resolution no. 8608 accorded approval for opening of financial bids of

seven bidders with the condition that five bidders with minor

deficiencies should submit affidavits to comply with qualifying

requirement of the RfP. After submission of required affidavits by

these five bidders, the financial bids of seven bidders were opened.

These minor deviations do not have any appreciable effect on

competitiveness and transparency in bid process and in case ,minor

deficiencies and non-compliances which hardly have impact on the

53

project execution/operation are not relaxed, the participation of

bidders at financial bid evaluation stage shall be very limited and may

deprive the state of required quantum of power at reasonable and

competitive tariff rates.

With the experience of case -1bidding, it is also noted that entire

bidding process takes more than 180 days. In case fresh bid is

invited, it will take another 180 days to finalise the bid process

without any certainty of tariff which may be arrived.

As per details submitted by the licensee, the commission observes

that in the states like UP and Karnataka, the tariff approved in

2010/2011 for long term power procurement under case -1 bid

process have been higher than the tariff of Rs3.69/kwh offered by

M/s Essar power Limited and GMR kamlanga Energy Limited in the

present case. In UP tariff of Rs4.08/kwh has been approved in case of

Noida power and in Karnatka approved tariff rates were Rs3.77/kwh

and Rs3.89/kwh.

Thus, the Commission is of the view that the tariff arrived by BSEB

after following the bid process in accordance with the guidelines is

quite competitive and reasonable compared to prevailing scenario of

availability and rate of power in the market. The Petitioner has

followed a transparent process in procurement of this power on tariff

based competitive bidding.

Therefore, the commission adopts the levelised tariff of Rs.3.69/kwh

and also the year- wise tariff for which PPAs has been signed for

procurement of 560 MW of Power to meet its base load requirement

for a period of 25 years .

54

In Case No.7/2012,BSEB(now substituted by BSPHCL),has submitted

a proposal for approval and adoption of tariff for procurement of

additional 75MW base load power offered by Essar Power Limited on

long term basis on the same terms and conditions as agreed in PPA

executed on 17.10.2012 at levelised tariff of Rs.3.69/kwh. The

Commission will issue order separately in that Case no.7/2012.

Sd/-(K.P.singh)

Member

Sd/-(S. C. Jha)

Member

Sd/-(U.N. Panjiar)

Chairman

BIHAR ELECTRICITY REGULATORY COMMISSION 300 MW GMR...4 (vi) The petitioner issued the advertisement...

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