Anil Ambani's Reliance Power set to bag mega thermal projects in UP

Lucknow, June 13 (UNI) Lanco Kundapalli, the Hyderabad-based power infrastructure giant which was already facing problems with Anpara C power project, today received yet another jolt after its rates in the second bid for Bara and Karchana mega thermal power projects in Allahabad district were rejected losing out to Reliance Power.

Anil Ambani's Reliance Power has quoted the lowest rate in the second bid after the Lanco's rate was rejected by the state government here.

The fresh bid which was called by the UP Power Corporation Ltd (UPPCL) with the approval of the UP State Electricity Regulatory Commission (UPSERC) was opened here today in which Reliance Power had quoted Rs 2.64 for the Bara thermal power station and Rs 2.60 for the Karchana unit.

In the first bid opened on April 11, Lanco had quoted the rate of Rs 2.88 for the Bara and Rs 2.83 for the Karchana power project.

Principal Secretary Energy V N Garg has confirmed about the lowest bid by the Reliance Power.

He said it was only a tendering process completed today but the projects would only be awarded after evaluation by the consultant and then step by step approval by the UPPCL board, Energy Task Force headed by the Chief Secretary and the state cabinet.

Later the Letter of Intent for the award would only be issued with the approval of the UPSERC.

Earlier UP government citing high tariff quoted by Lanco had rejected its bids for the Bara and Karchana thermal power stations on May 26 when they moved an application before the power regulator UPSERC seeking re-bidding for the award of the two projects to the private sector through International Competitive Bidding (ICB).

This would be the second time that Lanco had found itself in controversy after the power regulator on May 16 had issued notice to the Lanco Anpara Power Ltd, against the increase in capacity of Anpara C from 1000 mw to 1,200 MW, against the regulatory approval for 1,000 MW. The Anpara C through tariff based bidding was awarded to Lanco in September 2006.

Lanco on April 11, had won both coal based thermal power, Rs 9,000 crore Bara thermal power project of 1980 MW (660X3) and Rs 6,500 crore, karchana thermal power project (660X2)s on levelised tariff based International Competitive Bidding (ICB).

The nine Companies which had bid for the two projects were Lanco Infratech, Torrent Power, Reliance Power, Larsen and Toubro, GMR Energy, Jindal Steel and Power, JSW Energy, CESC and the NTPC.

The Lanco's price of Rs 2.88 per unit for the Bara and Rs 2.83 for the Karchana was found to be the lowest. Accordingly the bids evaluation committee recommended that both the projects to be awarded to Lanco.

UPSERC had directed the UPPCL to complete the process of rebidding within two weeks where only the companies which had earlier participated in the ICB would be eligible to quote the fresh price.

The UPPCL sources said the Energy Task Force(ETF) had found the tariff of Rs 2.88 per unit for Bara and Rs 2.83 per unit for Karchana to be too high and unsustainable in the long run.

It also questioned the rationale of the price quoted by the Lanco as the same company which was awarded contract for Anpara C in 2006, had won the bid on the basis of quoting lowest price of Rs 1.91 per unit.

The ETF rejected the arguments of the consultant which defended the difference of close to 54 per cent between the price for Anpara C and the Bara and Karchana.

They also claimed that the freight cost of the coal was higher for Bara and Karchana as compared to Anpara C.

Lanco also argued that since the fixed charges for the Bara and Karchana quoted by the company were also lowest so it will be able to supply power at much cheaper rates.

It may be recalled that for the Bara project, Lanco had earlier quoted Rs 1.93 per unit for the first year and Rs 2.88 variable rate thereafter. For Karchana, the first year's rate was Rs 1.74 and the variable rate thereafter Rs 2.83. The two units have a combined thermal capacity of 3,300 MW.

Four companies Jindal Steel and Power, NTPC, Lanco Infratech and Reliance Power had submitted their bids for the Bara project.

The Karchana project had Calcutta Electric Supply Co, Jindal Steel and Power, JSW Energy, Reliance Power and Lanco Infratech as bidders.

UNI MB/SB MP CS1825