Petition No. 9 of 2007
Date of hearing: 11.6.2007

This petition has been filed to seek approval of deviations from the “Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees”, issued by Ministry of Power, Govt. of India, in its notification dated 19.01.2005 (hereinafter referred to as the Guidelines). The petitioner has stated that there is a long term requirement of additional power in the State of Punjab and PSEB intends to procure power through the competitive bidding route in accordance with the provisions of Section 63 of the Electricity Act, 2003 and the Guidelines dated 19.1.2005. For this purpose, it is planned to set up two Thermal Power Plants (TPP) each of 1200 MW capacity at the following places by developers identified through international competitive bidding:

1. Coal based TPP at Talwandi Sabo (Banwala) in Mansa District.
2. Coal based TPP at Majhi near Nabha in Sangrur District.

The petitioner-company has been incorporated under the Companies Act, 1956 as a wholly owned company of PSEB to function as a Special Purpose Vehicle (SPV) for establishment of the 1200 MW (2x600) TPP at Majhi near Nabha, Distt. Sangrur.

It is stated in the petition that the petitioner wishes to undertake the process for selecting a developer following the said Guidelines. The petitioner has stated that if the activities mentioned in clause 3.2 of the Guidelines are to be completed before commencing the bid process, its finalization would itself take considerable time. On the other hand, the process can be significantly speeded up if it is taken up in parallel with completion of the said activities. The petitioner has prayed that the Commission may allow it to undertake the bid process for selection of a developer for the said project before completing the activities listed in Clause 3.2 of the Guidelines. The petitioner has undertaken that bid documentation would, however, be as per provisions contained in clauses 3.1(i), 3.1(ii), 5.1 and 5.5 and conforming with the overall provisions of the Guidelines and that the cost implications of all activities required to enable prospective bidders in determination/calculation of tariff will be made known to them at the RFP stage.

Submissions made on behalf of the petitioner have been considered. It is widely accepted that there is an acute shortage of power in Punjab and thus there is a long term requirement of additional power in the State. It is stated in Annexure 1 to the petition that the quantum of capacity/energy to be procured, will not exceed the projected additional demand forecast for the next three years. The National Electricity Policy aims to achieve the objective of fully meeting the demand for electricity by 2012 which would not be possible unless additional power is procured on a priority basis. Clause 5.16 of the Guidelines provides for approval of the Commission in case there is any deviation from the Guidelines. The Commission is of the view that in order to initiate and complete the bid process for selection of a developer in the shortest possible time frame, deviation from the application of the provisions of Clause 3.2 deserves to be allowed to the petitioner upto the stage of issuance of RFP. Further, in order to bring transparency and fairness in the procurement processes, it is necessary to comply with the provisions of Clause 3.2 of the Guidelines before the issue of RFP to ensure that bidders are in possession of all information necessary for the submission of a bid. The petitioner is, therefore, allowed to initiate the bid process for selection of a developer upto the stage of RFP. The RFQ notice will, however, explicitly indicate that the activities mentioned in Clause 3.2 of the Guidelines shall be completed before the RFP stage. The prayer of the petitioner is allowed accordingly.