R-Power's bid for plants in UP rejected

The curtain has finally come down on Reliance Power's (R-Power)bid to set up two power plants with a collective capacity of 3,300 mw in Uttar Pradesh with the Energy Task Force concurred with the evaluation committee's report, which said the tariffs were high.

In a meeting chaired by state chief secretary Atul Kumar Gupta yesterday, the ETF recommended invitation of fresh bids for setting up the power plants at Bara and Karchhna in the Allahabad district. However, this has to be ratified by the state Cabinet first to take effect.

This would be the third time that the state government would invite bids for the two power plants, which have failed to take off in spite of much fanfare with which they were initially announced.

On July 17, the evaluation committee discussed the financial and legal aspects of the bid and reached the conclusion that the bids could be much lower, enabling the provision of cheaper power.

Reliance had quoted Rs 2.64 and Rs 2.60 per unit for the 1,980 mw Bara and 1,320 mw Karchchna plants, respectively. The bids were only a paisa lower than the previous winner Lanco Infratech's bids.

"A mere one paisa below the previous lowest bid makes no sense, neither does it amount to any substantial savings to the state government and power consumers," Principal Secretary (Energy) V N Garg told Business Standard.

According to official sources, the state government was of the view that the price quoted should be around Rs 2 for supplying per unit of power.

However, rebidding is a time consuming process and it will take at least six months to invite fresh expression of interests from private parties and seriously jeopardise the state government's plan to ramp up its power generation capacity by 10,000 mw in the current five-year plan.

Lanco had quoted the lowest tariff in the first bidding. However, the UP Power Corporation Limited called for fresh bids from the bidding companies to bring down tariff.

In the revised financial bids last month, Anil Ambani-controlled Reliance Power had emerged as the lowest tariff bidder vis-a-vis Lanco, National Thermal Power Corporation, Jindal Steel and Power Limited and Calcutta Electric Supply Company.

The proposed Bara and Karchhna projects are based on the super critical technology, and the required coal would be ferried from Singrauli, which is situated at a distance of about 600 km.