Decision on UP power projects’ re-bidding today

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The final decision on the two mega power projects, Bara and Karchhana that are to be built in Allahabad, will be taken by the Energy Task Force (ETF) meeting here on Saturday.

The ETF, headed by the state chief secretary, will have to decide whether the bidding would be among the nine companies which had come forward to bid for the projects for the first time in April or whether a fresh bidding process would be better. It may be mentioned that there have already been two bids among the nine interested companies for the two projects.

The bid evaluation committee, headed by principal secretary energy VN Garg, on Thursday, evaluated all the bids that had come for the projects in the second round and came to the conclusion that since the lowest rate for per unit of power was found to be high in the first round, the government had called for a re-bidding among the same nine companies again. But as there wasn't any substantial difference in the lowest prices quoted in the re-bidding (the difference was one paisa only), the rates are still considered high and should be ideally lower for the consumers to get the benefit.

In order to facilitate private companies to post minimum bids, the state government is now looking at ways to make the prospect of setting up powerhouses and selling power at cheap rates to the state government appear lucrative. “While power is being sold at Rs 8 per unit in the open market, we consider even the Rs 2.89 per unit quoted by Lanco and Rs 2.88 quoted by Reliance Power as high rates. We further consider a lower rate of Rs 2 or roundabouts as a desirable one. But, by giving us power at such rates, the investors stand to make huge losses. In an effort to make good that loss and to make the projects look viable, the companies need certain facilities and sops, which we are considering”, said an official associated with the projects, adding that it is being contemplated as to how much risk the government can take and also how much enforceability should be attached with the investors.

“It is a very complicated, yet interesting process. While strict enforcements will force the bids to go up, being very liberal may land the projects in difficulties. It is a very difficult trade-off”, conceded the official.