SCO 220-221, SECTOR-34-A,
Petition
No. 20 of 2008
Date
of Hearing: 6.1.2009
Date of Order: 14.1.2009
In the matter of: Petition under Section 63 of the Electricity Act,
2003 for adoption of tariff for the Talwandi Sabo Thermal Power Project at
village Banawala, District Mansa, Punjab.
AND
In the matter of: Punjab State
Electricity Board
Present: Shri
Jai Singh Gill, Chairman
Smt.
Baljit Bains, Member
Shri
Satpal Singh Pall, Member
For PSEB: Shri
Anurag Agarwal, Member/F&A
Shri
K.B. Kansal, Chief Engineer
ORDER
This
petition has been filed by Punjab State Electricity Board (PSEB) under Section
63 of the Electricity Act, 2003 (hereinafter referred to as ‘the Act’) for
adoption of tariff determined through international competitive bidding process
for supply of electricity from Talwandi
Sabo Thermal Power Project (TSTPP).
2. Section
63 of the Act envisages that the Appropriate Commission shall adopt the tariff
if such tariff has been determined through a transparent process of bidding in
accordance with the Guidelines issued by the Central Government. The Central
Government in the Ministry of Power has issued the Guidelines contemplated
under Section 63 of the Act, titled ‘Guidelines for Determination of Tariff by
Bidding Process for Procurement of Power by Distribution Licensees’ (hereinafter
referred to as ‘the Guidelines’) through Resolution No. 23/11/2004 - R&R ( Vol.II
) dated 19.1.2005 which have been further modified on 30.3.2006, 18.8.2006 and
27.9.2007.
3. The
petitioner (procurer) has submitted that
a wholly owned Special Purpose Vehicle
(SPV) company in the name of Talwandi
Sabo Power Limited (TSPL) with
its registered office at PSEB Building, The Mall, Patiala, was incorporated on
5.4.2007 under the provisions of the Companies Act, 1956 to develop Talwandi Sabo
Thermal Power Project(TSTPP) with a contracted capacity of
1800 MW+10% on build, own and
operate (BOO) basis through
international tariff based
competitive bidding as
per the Guidelines. It has
been further submitted that the SPV completed various preliminary project
development activities and carried out the bid process in the capacity of the
authorized representative of the procurer as per the said Guidelines. The
petitioner has in addition stated that the competitive bidding process was
followed to select the successful bidder [M/s Sterlite Energy Limited, Mumbai, (Developer)]
for the development of TSTPP.
4. The
petitioner has also informed that the evaluation process of RFP bids was
carried out by their consultant, PFC Consulting Limited, a wholly owned
subsidiary of Power Finance Corporation, appointed as management consultant for
the purpose of overseeing the bid process. The consultant submitted their
suggestions to the Evaluation Committee who after consideration thereof
referred the matter to the TSPL Board for approval. The petitioner has further indicated
that the financial bids of all the four bidders were opened on 30.06.2008 and on
the basis of recommendations of the Evaluation Committee, the board of
directors of the TSPL in its 18th meeting held on 01.07.2008
declared M/s Sterlite Energy Limited, Mumbai (SEL) as the successful bidder. Accordingly, Letter of Intent (LoI)
was stated to have been issued to SEL on 4.7.2008 for setting up three thermal
units of 660MW each and supply of 1841.4MW contracted capacity to the
petitioner, which was duly accepted by SEL in their letter dated 17.07.2008. As
per terms of the Request for Proposal (RFP) document, the power purchase
agreement (PPA) has been signed on 1.9.2008 to procure the entire power
generated from this project on long term basis. The petitioner has further informed
that as per the financial bid of SEL, the evaluated levelised tariff is Rs.2.8643
per Kwh. The petitioner has finally prayed that the tariff quoted by M/s
Sterlite Energy Limited in respect of Talwandi Sabo Thermal Power Project
(TSTPP) be adopted by the Commission under Section 63 of the Act.
5. In addition to the prayer for adoption of tariff, the
petitioner has also submitted that the Commission had in
its Orders dated 17.4.2008 and 22.4.2008
(wrongly mentioned as 23.4.2008 in the petition) passed in respect of
petition no. 7 of 2008 allowed
early commissioning incentive
thereby permitting the selected
bidder to commission the first unit prior to
the scheduled COD of 48
months. It is also stated that Article 4.1.1 (b) of the
standard PPA appended to the Standard
Bid Documents enjoins that COD will under no event be earlier than 42 months
from Notice to Proceed which restricts
the seller in the commissioning
of the
unit earlier. The petitioner has
dwelled upon the need to remove this
anomaly and bring the
provisions of Article
4.1.1(b) of the
PPA in accordance with
aforesaid Orders of the
Commission. Accordingly, the provision
of 42 months has been changed
to 36 months which may also result in the
date of synchronization as
mentioned in the PPA being
advanced. The petitioner has accordingly
sought approval of changes on these lines which have been incorporated in the
PPA signed on 1.9.2008 between the developer and the procurer including a
clarificatory note added below Article 4.1.1(b). The effective date as
mentioned in PPA would, however, remain unaltered.
6. The
Commission after perusing the petition and other relevant documents submitted
alongwith finds that primarily the prayer of the petitioner is for adoption of
Tariff under section 63 of the Act. It observes that in case of tariff
discovery through a competitive bidding process undertaken under Section 63,
the Commission is essentially to adopt the tariff, on being satisfied that a transparent
process of bidding in accordance with the Guidelines has been followed in
determination of such tariff. The Commission takes note that the petitioner has
in compliance of Para 6.1 of the Guidelines, signed the PPA with Talwandi Sabo
Power Limited on 1.9.2008, after acquisition of 100% shares of PSEB by the
developer, as per provision of RFP documents thereby transferring TSPL on that date to the successful bidder.
The petitioner has further confirmed compliance of Para 6.2 of the Guidelines
by the Evaluation Committee constituted by the petitioner and TSPL for
evaluation of bids which has provided appropriate certification that the
evaluation is in accordance with the provisions of the bid documents. A certificate
from the procurer that the bid process is in conformity with the Guidelines
also stands submitted. As per the
requirements of Para 6.3 of the Guidelines, the evaluation of bids was also made
public through an advertisement in The Tribune, Economics Times and The Times
of India on 12.9.2008. Further in pursuance of
7. Based
on the submissions in the petition, the documents submitted alongwith and
discussion in
8. As regards the other issue regarding advancement of date of
synchronization referred to in
9. The
Commission notes that the procurer had in an earlier letter dated 18.1.2008,
informed as per clause 3.1(i) of the Guidelines that the RFP documents of which
PPA is part, have been issued to the qualified bidders in line with the
Guidelines. Subsequently, the procurer petitioned for introduction of an
incentive clause in the RFP documents which was allowed by the Commission in
Orders dated 17.4.2008 and 22.4.2008 and consequent amendments were carried out
in the RFP documents, by the petitioner. The petitioner has now submitted a
letter from CEA informing that supplementary PPAs have been executed in the
case of Sasan and Mundra UMPPs which provide for a revised commissioning
schedule and advancement in commissioning date without seeking approval of the
CERC as such provisions existed in the PPAs.
10. The
Commission has carefully gone through all the relevant documents and is of the
considered view that the prayer of the petitioner primarily, is for adoption of
tariff under Section 63 of the Act which aspect has been dealt with above. From
the clarification provided by the petitioner, it is evident that the procurers
and developers have effected changes to advance the commissioning dates of
UMPPs apparently as such changes were covered either under specific provisions
of the RFP or the PPA annexed thereto. On that analogy, the Commission does not
deem it appropriate at this stage to address the issue of further amendments
sought in the PPA by the petitioner.
The petition is disposed of, accordingly.
Sd/- Sd/- Sd/-
(Satpal Singh Pall) (Baljit Bains) (Jai Singh Gill)
Member Member Chairman