1

Rajasthan Electricity Regulatory Commission

Petition No. RERC/255/11

RERC/256/11

In the matter of adoption of transmission charges, discovered through the

process of competitive bidding as per the guidelines for determination of

tariff by competitive bidding process, with respect to transmission system

being established by Aravali Transmission Service Company and Maru

Transmission Service Company.

Coram: Sh. D.C. Samant, Chairman

Sh. S.K. Mittal, Member

Petitioners : 1. Aravali Transmission Service Company Ltd.

(ATSCL)

2. Maru Transmission Service Company Ltd.

(MTSCL)

Respondents : 1. Rajasthan Rajya Vidyut Prasaran Nigam Ltd.,

2. Jaipur Vidyut Vitran Nigam Ltd.,

3. Ajmer Vidyut Vitran Nigam Ltd.,

4. Jodhpur Vidyut Vitran Nigam Ltd.

Date of hearing : 06.07.11

Presents:

1. Sh. S.N.Sunkari, General manager, Aravali TSCL & Maru TSCL

2. Sh. Gautam Sen, General manager, Aravali TSCL & Maru TSCL

3. Sh. M.K. Kasliwal, Advisor, GMR Energy

4. Sh. D.S. Sharma, S.E. (NPP&R), RVPN

5. Sh. R.P. Gupta, XEn (PMU), RVPN

6. Sh. J.K. Sharma, S.E.,AVVNL

7. Sh. Madan Rana, XEn, Jd. VVNL

8. Sh. G.L. Sharma, Individual

Date of Order: 30.09.2011

ORDER

1. M/s. Aravali Transmission Service Company Ltd. (ATSCL) and M/s Maru

Transmission Service Company Ltd.(MTSCL) filed petitions for adoption

of transmission charges, for the projects to be developed by them,

2

identified through competitive bidding process. Petitioners submitted

that M/s ATSCL and M/s MTSCL were incorporated by RVPN as its

wholly owned subsidiary to initiate the work on identified transmission

projects and subsequently to act as Transmission Service Provider (TSP)

after being acquired by successful bidder.

2. Petitioners submitted that M/s Rajasthan Rajya Vidyut Prasaran Nigam

Ltd.,(RVPN), authorized by the State Level Empowered Committee

(SLEC) functioned as Bid Process Coordinator (BPC) and prepared RFQ

& RFP documents in accordance with Standard Bid Documents (SBD)

issued by Ministry of Power, Government of India and invited Request

for Proposals (RFP) for selection of Transmission service Provider(TSP)

through competitive bidding process to establish transmission system,

as per guidelines issued by Ministry of Power, Government of India

(hereinafter referred as „GoI guidelines‟). Petitioners further submitted

that on evaluation of bids M/s GMR Energy Limited was declared

lowest bidder for Raj/PPP-2 : 400kV S/c Hindaun-Alwar line with

400/200kV GSS at Alwar and Raj/PPP-1 : 400kV S/c Bikaner-Deedwana-

Ajmer with 400/200kV GSS at Deedwana & associated works.

Subsequently GMR Energy Limited acquired M/s ATSCL & MTSCL after

execution of share purchase agreement. Both the petitioners signed

Transmission Service Agreement (TSA) with JVVNL, AVVNL & Jd. VVNL

and also filed petition for grant of licence. Petitioners prayed for

adoption of transmission charges identified through competitive

bidding process.

3. The Commission noted that the petitioner has been selected through

the process of bidding conducted by M/s RVPN working as Bid Process

Coordinator and the petitioner has not made RVPN respondent in the

matter. The Commission, therefore, impleaded RVPN as respondent in

the matter and directed it to file an affidavit detailing the complete

procedure adopted during bidding process so that bidding process

may be examined.

4. In response to this direction, S.E. (NPP&R), RVPN on behalf of CMD,

RVPN filed an affidavit detailing the bid process for selection of

petitioners. The salient points of affidavit submitted by RVPN are as

under:

3

(1) The Govt. of Rajasthan vide letter No. F.12(21)Energy/04/pt. dated 15.10.2008

constituted a State Level Empowered Committee (SLEC) with a view to

encourage competition in private sector participation for development of

transmission projects in State.

The Empowered Committee consists of the following:-

1. Member RERC Chairman

2. Secretary Energy Member

3. Secretary Plan Member

4. Chairman Discoms Member

5. Director (Tech.), RVPN Member Secretary

The function of the Committee would be as follows:

(i) To identify the projects to be developed by competitive bidding.

(ii) To facilitate preparation of bid documents and invitation of bids

through a suitable agency.

(iii) To facilitate evaluation of bids.

(iv) To facilitate finalisation and signing of TSA between developer and

concerned utilities.

(v) To facilitate development of projects by competitive bidding for

transmission.

Further, the Empowered Committee will also take care of the functions of

the BPC till a Bid Process Coordinator (BPC) is set up.

(2) The State Level Empowered Committee (SLEC) in its first meeting held on

16.1.2009 decided the following schemes to be implemented through

competitive bidding process and authorized Rajasthan Rajya Vidyut Prasaran

Nigam Limited to act as Bid Process Coordinator (BPC) for the purpose of

selection of Bidder as Transmission Service Provider (TSP).

Project No. Project Details

RAJ/PPP-1 400 kV S/C Bikaner- Deedwana- Ajmer Line with 400

kV/220 kV GSS at Deedwana and associated works.

RAJ/PPP-2 400 kV S/C Hindaun-Alwar Line with 400/220 kV GSS at

Alwar and associated works.

RAJ/PPP-3 220 kV S/C Sikar (400 kV) - Nawalgarh-Jhunjhunu Line

with 220/132 kV GSS at Nawalgarh and associated

works.

(3) Second meeting of SLEC was held on 26.2.2009 where it was decided that :-

4

(i) Bidding documents approved by MoP, GoI be adopted and RVPN may

go ahead with publication of RFP in newspapers taking 01.03.2009 as

zero date.

(ii) For speedy completion of the bidding process, single stage two

envelope bid process be adopted.

(iii) Cost of the document be fixed as Rs. 10,000 / US$200 and

(iv) Bids be invited on Built, Own and Operate basis.

(4) In pursuance to decisions of SLEC‟s first and second meetings, Notice inviting

Bids were published in two State level newspaper (all editions), two National

level newspapers (all editions), Indian Trade Journal and The Financial Times,

London, worldwide for aforesaid projects.

(5) The Single stage two envelope bidding process was adopted for all the three

projects. Accordingly, the bidding documents {i.e. Request for Qualification

(RFQ), Request for proposal (RFP) and Transmission Service Agreement (TSA)}

based on Standard Bidding Documents (SBDs) of MoP, GoI, were issued on

1.3.2009 for selection of Transmission Service Provider through competitive

bidding process on Build, Own, Operate and Maintenance basis. The Pre-bid

conference was held on 31.3.2009. The revised RFP project documents were

issued on 15.4.09. The Pre-signed bidding documents were issued on 10.6.2009.

Draft of Share Purchase Agreement was issued on 1.7.2009.

(6) As per Bidding Documents/guidelines, the SPVs which would eventually be

taken over by the successful bidder after payment of all the costs incurred by

RVPN for the selection of the service provider and other associated

clearances etc. were registered with the Registrar of Companies as under:

Project Name of SPV

Raj/PPP-1 Maru Transmission Service Company Limited

Raj/PPP-2 Aravali Transmission Service Company Limited

Raj/PPP-3 Shekhawati Transmission Service Company Limited

(7) The last date of receipt of RFP including RFQ bids was 04.11.2009 and the RFQ

of bids for the Transmission Projects were opened on same date i.e. 4.11.09.

The following ten bids were received for Raj/PPP-1 and Raj/PPP-2 :

SNo Bidder/Consortium

1. M/s. EMCO Ltd

2. M/s. GMR Energy Ltd.

3. M/s. Jyoti Energy Ltd.

5

4. M/s. ABL-AMR-SREI-ITL Consortium

5. M/s. L&T Transco Pvt. Ltd

6. M/s. Hecate Power Transmission Ltd.-

7. M/s. GPEC Gammon Consortium

8. M/s. Lanco Infratech Ltd.

9. M/s. Kalpataru Power Transmission Ltd.- Techno Electric &

Engineering Co. Ltd. Consortium

10. M/s. Sterlite Technologies Ltd.

(8) RVPN having being designated as BPC by the State Level Empowered

Committee (SLEC) constituted by GoR, had to carry out the function of BPC

as per Clause 3.1 of Guidelines. Accordingly, Bid Evaluation Committee,

which was required to be formed by RVPN as BPC as per Clause 9.8 of of

Guidelines, was constituted vide order No. RVPN/ AAO/ Admn-Store/F.

/D.328 dated 29.12.2009 issued by Secretary (Admn.), RVPN for

evaluation/short listing of Bidders/ TSP through Tariff Based Competitive

Bidding process. It was later re-constituted vide order dated 08.1.2010 and

the re-constituted committee consists of the following :

(i) Shri B.N. Saini, Chief Engineer (PPM), RVPN

(ii) Shri Deepak Srivastava, CCOA, RVPN

(iii) Shri N.M. Agarwal, Dy. Chief Engineer (MM), RVPN

(iv) Shri R.K. Kasliwal, Dy. Chief Engineer (NPP-R), RVPN

(v) Shri B.K. Makhija, Retd. C.E. (RPPC), Project Consultant, RVPN

(vi) Shri Bharat Bhushan Gupta, C.A, Financial Expert

(9) The committee was framed taking into consideration the provision Clause

9.8 and implicit provisions of Clause 3.1 & 3.3 of Guidelines being intra-state

transmission projects and decision of Empowered Committee to authorise

RVPN to act as BPC, Shri Bharat Bhushan Gupta, C.A. was taken as

independent Member having expertise in financial matter. Sh. B.K. Makhija,

an Ex. Chief Engineer, who has headed the RPPC and was associated as

Chief Engineer with all the PPP projects including these transmission projects,

was also included in the committee.

(10) The recommendations of the Bid Evaluation Committee regarding

evaluation of RFQ and declaring all the bidders who had submitted the bids

as qualified was approved by the Board of Directors of RVPN in its 176th

meeting held on 23.2.2010. BoD further authorised the bid evaluation

committee for opening of envelope of RFP bids containing non-financial

and financial bids and further opening of non-financial bids.

(11) The bids for non-financial part of RFP were opened on 3.3.2010 in presence

of bidders and the recommendations of the Bid Evaluation Committee

regarding these were approved by BoD in its 181th meeting held on

26.4.2010 and accorded its approval for opening of financial bids.

6

(12) The financial bids of all above bidders/consortiums were opened on

13.5.2010 in presence of bidders who wished to be present. The levelised

transmission charges for the above projects were compared .

(13) The Bid Evaluation Committee in its meeting on 18.6.2010 recommended M/s

GMR Energy Ltd. for Letter of Intent (LoI) for both the transmission projects

being the lowest among quoted and also found to be reasonable.

Accordingly, BoD in 187th meeting held on 28.9.2010 decided to issue LoI in

favour of M/s. GMR Energy Ltd. for transmission projects Raj/PPP-1: 400 kV S/C

Bikaner- Deedwana- Ajmer Line with 400 kV/220 kV GSS at Deedwana and

associated works and Raj/PPP-2 : 400 kV S/C Hindaun-Alwar Line with

400/220 kV GSS at Alwar and associated works. These were issued on

30.9.2010.

(14) BoD in its 189th meeting held on 15.12.2010 approved transfer of 100%

shareholding of RVPN and its nominee in Aravali Transmission Service

Company Limited and Maru Transmission Service Company Limited to M/s.

GMR Energy Ltd., the successful bidder.

(15) The Share Purchase Agreement (SPA) for transfer SPV - Aravali Transmission

Service Company Limited was signed on 19.1.2011 among Rajasthan Rajya

Vidyut Prasaran Nigam Limited, Aravali Transmission Service Company

Limited and GMR Energy Ltd. The Transmission Service Agreement (TSA) was

also signed on same day i.e. 19.1.2011 among M/s Aravali Transmission

Service Company Limited and Long Term Transmission Customers (LTTCs)

namely Jaipur Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran Nigam Ltd.

and Ajmer Vidyut Vitran Nigam Ltd.

(16) The Share Purchase Agreement (SPA) for transfer of SPV - Maru Transmission

Service Company Limited was signed on 15.2.2011 among Rajasthan Rajya

Vidyut Prasaran Nigam Limited, Maru Transmission Service Company Limited

and GMR Energy Ltd. The Transmission Service Agreement (TSA) was also

signed on same day i.e. 15.2.2011 among M/s Maru Transmission Service

Company Limited and Long Term Transmission Customers (LTTCs) namely

Jaipur Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran Nigam Ltd. and Ajmer

Vidyut Vitran Nigam Ltd.

5. The matter was heard on 06.07.11. Sh. S.N. Sunkari, on behalf of

petitioners submitted that they have been selected through the

transparent process of bidding and prayed for adoption of tariff

discovered through the bidding. He also submitted that as a bidder

they do not have any control on the methodology and process

adopted by the RVPN or State Govt.

6. During hearing the Commission raised doubts that the process followed

was not strictly as per guidelines issued by central government. Sh. D.S.

7

Sharma, on behalf of RVPN submitted that the process followed was

transparent and as per guidelines. He further submitted that the

guidelines issued by GoI are not very clear and being first case of its

kind they tried to infer the guidelines as per State government orders.

He submitted that State government order dated 15.10.08 read with

Empowered committee minutes dated 16.1.09 empowers RVPN to

evaluate the bids. He submitted that the minor lapses should be

allowed by Commission considering as deviation in guidelines.

Competitive-bidding Guidelines issued by Central Government

7. We find that the petitions has been filed for adoption of tariff, which is

covered under section 63 of the Act which provides:

“63. Notwithstanding anything contained in section 62, the

Appropriate Commission shall adopt the tariff if such tariff has been

determined through transparent process of bidding in accordance

with the guidelines issued by the Central Government.”

8. Section 63 of the Act casts a mandate on this Commission to adopt

the tariff if such tariff is determined through transparent process of

bidding in accordance with the Guidelines. Thus the Commission is

required to scrutinize the entire process of selection through

competitive bidding as per guidelines issued by GoI.

9. The Ministry of Power, Government of India under section 63 of the Act

has issued “Tariff based Competitive-bidding Guidelines for

Transmission service” vide Resolution No.11/5/2005-PG(i) dated

17.4.2006 and amendments thereof. The salient features of the bidding

process as laid down in the guidelines, as amended, are discussed

hereunder for convenience of reference:

a) The Guidelines are applicable for procurement of transmission

services for transmission of electricity through tariff based

competitive bidding and for selection of transmission service

provider for new transmission lines and to build, own, maintain and

operate the specified transmission system elements.

b) A Bid Process Coordinator, herein after referred to as BPC, would be

responsible for coordinating the bid process for procurement of

required transmission services for each inter-state Transmission Project

to be implemented under tariff-based competitive bidding in

accordance with these guidelines.

8

c) For procurement of transmission services, for intra-state transmission,

the appropriate State Government may notify any Organization/

State Public Sector Undertaking especially engaged for this purpose

by the appropriate state government or BPC notified by the Central

Government to be the BPC for the state.

d) The BPC shall prepare the bid documentation in accordance with

the Guidelines and obtain approval of the Appropriate Commission

or alternatively, the BPC can use the standard bid documents

notified by the Ministry of Power. Approval of the Appropriate

Commission would be necessary if any material deviation is

proposed to be made in the Standard Bid Documents. Intimation

about the initiation of the bid process shall be sent by the BPC to the

Appropriate Commission.

e) For procurement of transmission services under the Guidelines, the

BPC may adopt at its option either a two-stage process featuring

separate Request for Qualifications (RFQ) and Request for

Proposal(RFP) or adopt a single stage two envelope tender process

combining both RFQ and RFP processes.

f) RFQ or combined RFQ and RFP notice shall be issued in at least two

national newspapers, website of the BPC and the appropriate

Government and preferably in the trade magazines also to provide

wide publicity. For the purpose of issue of RFQ minimum conditions to

be met by the bidder shall be specified in the RFQ notice. The

bidding shall be by way of International Competitive Bidding.

g) Standard documentation to be provided in the RFQ stage shall

include definitions of requirements including the details of location

and technical qualifications for each component of the transmission

lines, construction milestones, and financial requirements to be met

by the bidders; proposed Transmission Service Agreement; period of

validity of offer of bidder; conditions as specified by the Appropriate

Commission for being eligible to obtain a transmission licence; and

other technical and safety criteria to be met by the bidder/TSP

including the provisions of IEGC.

h) Standard documentations to be provided by the BPC in the RFP shall

include specified target dates/months for commissioning and

commercial operations and start of providing transmission services;

TSA proposed to be entered with the selected bidder; bid evaluation

methodology to be adopted by the BPC; Discount Factor to be used

for evaluation of the bids; specification regarding the bid bond and

9

project completion guarantee to be furnished by the bidders;

proposed indemnification agreement between the TSP and the

utilities; amount of contract performance guarantee as percentage

of the project cost; and the liquidated damages that would apply in

the case of delay in start of providing the transmission services.

i) To ensure competitiveness, the minimum number of qualified bidders

will be two. The Empowered Committee shall constitute a

committee for evaluation of the bids with at least one member from

Central Electricity Authority (CEA) and not less than two

representatives from the concerned Regional Power Committees

with at least one representative from every concerned RPC and one

independent member. The independent member shall have

expertise in financial matter/bid evaluation. The bids shall be

opened in public and the representative of the bidders shall be

allowed to remain present. The technical bids shall be scored to

ensure that only the bids that meet the minimum technical criteria

set out in the RFQ shall be considered for further evaluation on the

transmission charge bids. The transmission charge bid shall be

rejected if it contains any deviation from the tender conditions for

submission of the same. The bidder who has quoted the lowest

levelised transmission charge as per the evaluation procedure shall

be considered for the award.

j) The Guidelines provide for suggested time tables for the bid process.

The timeline suggested for a two stage bid process is 240 days and

single stage two envelope bid process is 180 days. The procurer may

give extended time-frame based on the prevailing circumstances

and such alterations shall not be construed as the deviation from the

Guidelines.

k) After selection and issue of LOI from the BPC, the selected bidder

shall acquire the SPV created for the Project to become TSP and sign

the TSA, if not already signed by the SPV, in accordance with the

terms and conditions as finalized in the bid document.

l) The BPC shall make the final result of evaluation of all bids public. The

final TSA alongwith the certification of BEC shall be forwarded to the

Appropriate Commission for adoption of tariff in terms of section 63

of the Act.

10

Adoption of Transmission charges and related issues:

10. In the light of the above provisions of the Guidelines, we have

examined in the succeeding paragraphs the process of international

competitive bidding adopted in the present case for selection of the

successful bidder on the basis of the lowest levelised transmission

charges.

11. The petition was admitted by the Commission on 12.5.2011. The

Commission sought affidavit from RVPN to establish that transmission

charges has been determined through transparent process of bidding

in accordance with the „guidelines‟ issued by the Central

Government. The affidavit was submitted on 17.6.11 and the matter

was heard on 06.07.2011 wherein the RVPN submitted further

clarification on the process as sought by the Commission.

12. Based on the submissions made by the petitioner, RVPN and

subsequent submissions made during hearing by the RVPN it is

observed that RVPN on behalf of SLEC acted as BPC and invited bid

for selection of TSP in accordance with the guidelines issued by the

GoI.

13. We find that it is not only the question of transparency of the selection

of the GMR as the successful bidder but also the selection process of

bidding being as per the Guidelines would have to be scrutinized by

the Commission for adoption of tariff to meet the requirements of

Section 63 of the Act and the Guidelines.

14. The Commission, on scrutiny of affidavit and submissions made by

RVPN, found following main issues which had arisen in the matter :

(i) The appointment of RVPN as BPC;

(ii) Constitution of Bid Evaluation Committee by RVPN;

Analysis of issues and decisions thereon:

15. There being difference in views amongst the member and chairman

on some important issues; the analysis of the issues and conclusion

thereon is being dealt with in two parts, one incorporating the views of

Mr. S.K.Mittal, Member, and the views of Mr. D.C.Samant, Chairman

followed by decision of the Commission.

11

Views of Sh. S.K. Mittal, Member

16. During hearing certain variations were pointed out from the bidding

guidelines, therefore, it would be appropriate to first see what the

variations are and how they are affecting the transparency of Bidding

Process. In the following matrix the procedure adopted vis-a-vis the

guidelines prescribed by the Ministry has been analysed.

17. Compliance of Guidelines

Clause Guideline Compliance

3.2

Government shall notify any

Central Govt. Organisation/

Central Public Sector

undertaking or its wholly

owned subsidiary (SPV) to be

the BPC. It will be open for

MoP to review the nomination

of BPC at any time. For

immediate implementation of

these guidelines the

Empowered Committee

constituted as per provisions

of the Guidelines for

encouraging competition in

development of Transmission

Projects will be the BPC till any

other organisation is

nominated as BPC by the

Ministry/GoR.

In the instant case Energy

Department, Govt. of Rajasthan

constituted an Empowered

Committee by order dated

13/15.10.2008. It was also

mentioned in the order that

Empowered Committee will also

take care of the functions of the

BPC till a Bid Process Co-

0rdinator(BPC) is set up.

As per Bidding Documents/

Guidelines, there is need to

create SPV under the Companies

Act 1956. The SPV would perform

the role that is envisaged for

Transmission Service Provider

under the tariff based bidding

guidelines. The SPV would

eventually be taken over by the

successful bidder after payment

of all the costs incurred by RVPN

for selection of the provider and

other associated clearances etc.

The following SPVs were

registered with the Registrar of

Companies:

Raj/PPP-1: Maru Transmission

Service Company Ltd. for 400 kV

S/C Bikaner-Deedwana-Ajmer line

with 400 kV/220 kV GSS at

Deedwana and associated

works.

Raj/PPP-2: Aravali Transmission

Service Co. Ltd. for 400 kV S/C

Hindaun-Alwar line with 400/220

12

3.3

4.1

9.1

For procurement of

transmission services required

for intra-State Transmission,

the appropriate State Govt.

may notify any organisation/

State Public Sector

undertaking especially

engaged for this purpose by

the appropriate State Govt.

or BPC notified by the Central

Govt. to be the BPC for the

State.

The BPC shall prepare the bid

documentation in

accordance with these

guidelines and obtain

approval of the appropriate

Commission. If standard bid

documents notified by the

Ministry are used then

approval of appropriate

Commission is not required.

For the procurement of

transmission services under

these guidelines, BPC may at

kV GSS at Alwar and associated

works.

Here, the Govt. of Rajasthan

appointed empowered

Committee as detailed above.

The Empowered Committee in its

first meeting held on 16.1.2009

constituted the BPC, the relevant

para reads as under:

The State Transmission Utility (STU)

i.e. RVPN shall be a nodal agency

on behalf of the Committee to

act a Bid Process Co-

ordinator(BPC) for procurement

of required transmission services

as per GOI guidelines till a

separate BPC is constituted by

the GoR.

Here RVPN i.e. the Rajasthan

Vidyut Prasaran Nigam is the

State Public Sector undertaking

engaged in the business of

transmission of electricity. Hence,

there is a deviation that the BPC

has been nominated/constituted

by a Committee (Empowered

Committee) constituted by the

GoR and not directly by the GoR.

(emphasis supplied)

COMMON ANSWER TO PARA 4.1,

9.1, 9.2 AND 9.5

In pursuance to decisions of

SLEC‟s first and second meetings,

Notice Inviting Bids was published

in Two State level newspapers (all

editions), Two National level

Newspaper (all editions), Indian

Trade Journal and the Financial

Times, London, Worldwide; for

following projects:

RAJ/PPP-1: 400 kV S/C Bikaner-

Deedwana-Ajmer line with 400

kV/220 kV GSS at Deedwana and

13

9.2

9.5

its option either adopt a two

stage process featuring

separate Request for

Qualification (RFQ) and

Request for Proposal (RFP) or

adopt a single stage two

envelope tender process

combining the RFP and RFQ

processes. The bid documents

shall be prepared in

accordance with para 4.1 of

these guidelines.

RFQ or combined RFQ and

RFP notice should be

published in at least two

national newspapers, website

of the BPC and the

appropriate Government and

preferably in trade magazines

also, so as to accord it wide

publicity. The bidding shall

necessarily be by way of

International Competitive

Bidding(ICB). For the purpose

of issue of RFQ minimum

conditions to be met by th

bidder shall be specified in he

RFQ notice.

RFP shall be issued to all

bidders who have qualified at

the RFQ stage. BPC may call

a pre bid conference with all

the developers who have

sought documents for RFP

stage. In case the bidders

seek any deviations and BPC

finds those deviations are

reasonable, the BPC may

agree to such deviations. The

clarification/revised-bidding

document shall be given to all

who had sought the RFP

document informing about

associated works.

RAJ/PPP-2: 400 kV S/C Hindaun-

Alwar line with 400/220 kV GSS at

Alwar and associated works.

The Single stage two envelope

bidding process was adopted for

both the projects.

Accordingly, the bidding

documents (i.e. Request for

Qualification (RFQ), Request for

proposal (REP) and Transmission

Service Agreement(TSA) based

on Standard Bidding Documents

(SBDs) of Ministry of Power (MoP),

Government of India (GoI), were

issued on 1.3.2009 for selection of

Transmission Service Provider

through competitive bidding

process on Build, Own, Operate

and Maintenance basis.

The Pre-bid conference was held

on 31.3.2009. The revised RFP

project documents were issued

on 15.4.2009. The pre-signed

bidding documents (i.e. Request

for Qualification (RFQ), Request

for Proposal (RFP) and

Transmission Service Agreement

(TSA) were issued on 10.6.2009.

Draft of Share Purchase

Agreement was issued on

1.7.2009.

14

4.2

9.8

the deviations and

clarifications. Wherever

revised bidding documents

are issued, the BPC shall

provide bidders at least two

months after issue of such

documents for submission of

bids.

Intimation shall be sent by the

BPC to the appropriate

Commission about initiations

of the bidding process.

Bid evaluation committee:

The Empowered Committee

shall constitute a committee

for evaluation of the bids with

at least one representative

from CEA and not less than

two representatives from the

concerned Regional Power

Committees with at least one

representative from every

concerned RPC and one

independent member. The

independent member shall

have expertise in financial

matter/bid evaluation.

RVPN vide letter No.

RVPN/SE(NPP)PMU/D/2006 dated

27.2.2009 forwarded to Secretary,

RERC a copy of the Notice

Inviting Bid in respect of projects

mentioned at para 4(2) above.

Similarly RVPN vide reference No.

2110 dated 13.3.2009 sent to

Secretary, RERC a copy of Project

Estimate Report of these projects.

This implies that Commission was

informed about the initiation of

the biding process

In this context, respondent RVPN

has categorically replied as

follows:

“In view of clause 9.8, the RVPN

having being designated as BPC

by the State Level Empowered

Committee(SLEC) constituted by

GoR, had to carry out the

function of BPC as per Clause 3.1

Tariff based Competitive Bidding

Guidelines for Transmission

Service. Accordingly, Bid

Evaluation Committee was

required to be formed by RVPN

as BPC as per Clause 9.8 of Tariff

based Competitive Bidding

Guidelines for Transmission

Service. Accordingly, a

Committee was constituted vide

Secretary (ADmn.)RVPN Order

No. RVPN/AAO/Admn-Store/F. /D.

328 dated 29.12.2009 (Exhitit-6)

15

which was re-constituted vide No.

RVPN/AAO/Admn-Store/F./D. 346

dated 8.1.2010 for evaluation/

short listing of Bidders

/Transmission Service Provider(TSP)

through Tariff Based Competitive

Bidding process by way of

including Shri B.K. Makhija, Retd.

CE(RPPC), Project Consultant,

RVPN. The re-constituted

committee consists of the

following:

1.Sh. B.N. Saini, CE(Project

Planning and Management),

RVPN

2. Sh. Deepak Srivastava, Chief

Controller of Accounts, RVPN

3. Shri N.M. Agarwal, Dy.

CE(Material Management), RVPN

4. Shri R.K. Kasliwal, Dy. CE(New

Power Projects – Regulations),

RVPN

5. Shri B.K. Makhija, Retd.

CE(Rajasthan Power Procurement

Cell), Project Consultant, RVPN

6. Shri Bharat Bhushan Gupta,

C.A. Financial Expert

This being intra-state transmission

projects, the committee was

framed taking into consideration

the provisions of Clause 9.8 and

implicit provisions of Clause 1 and

3.3 of Tariff based Competitive

Bidding Guidelines for

Transmission Service and decision

of Empowered Committee to

authorise RVPN to act as BPC, the

CE(Project Planning and

Monitoring), RVPN, the CE(MM),

RVPN were taken as Members of

the Committee and Shri Bharat

Bhushan Gupta, C.A. was taken

as independent Member having

expertise in financial matter. Shri

B.K. Makhija, is an Ex. Chief

16

Engineer who has headed the

RPPC and was associated as

Chief Engineer with all the PPP

projects including these

transmission projects, under

reference undertaken by RVPN as

BPC. He was associated with the

projects since inception but

retired before completion of the

bidding process. He was retained

as Project Consultant.”

18. Selection of bidder:

(i) The Board of Directors (BoD) of RVPN in 187th meeting held on

28.9.2010 decided to issue LoI in favour of M/s GMR Energy Ltd.

and LoI were issued on 30.9.2010 for transmission projects Raj/PPP-

1: 400 kV S/C Bikaner-Deedwana-Ajmer Line with 400 kV/220 kV

GSS at Deedwana and associated works and Raj/PPP-2: 400 kV

S/C Hindaun-Alwar Line with 400/220 kV GSS at Alwar and

associated works.

(ii) The BoD in its 189th meeting held on 15.12.2010 decided for

transfer of 100% shareholding of RVPN and its nominee in Aravali

Transmission Service Company Limited and Maru Transmission

Service Company Limited. (The SPVs)

(iii) The statutory Audit of Aravali Transmission Service Company

Limited was done by 16.12.2010. As per the requirement of the

guidelines, the Share Purchase Agreement (SPA) for transfer of

TSP i.e. SPV – Aravali Transmission Service Company Limited was

signed on 19.1.2011 among Rajasthan Rajya Vidyut Prasaran

Nigam Limited, Aravali Transmission Service Company Limited

and GMR Energy Ltd. The Transmission Service Agreement (TSA)

was also signed on same day i.e. 19.1.2011 among M/s Aravali

Transmission Service Company Limited and Long Term

Transmission Customers (LTTCs) namely Jaipur Vidyut Vitran Nigam

Limited, Jodhpur Vidyut Vitran Nigam Ltd. and Ajmer Vidyut

Vitran Nigam Limited.

(iv) The statutory Audit of Maru Transmission Service Company Limited

was done by 1.2.2011. As per the requirement of the guidelines

the Share Purchase Agreement (SPA) for transfer of TSP i.e. SPV –

Maru Transmission Service Company Limited was signed on

17

15.2.2011 among Rajasthan Rajya Vidyut Prasaran Nigam Limited,

Maru Transmission Service Company Limited and GMR Energy Ltd.

The Transmission Service Agreement (TSA) was also signed on

same day i.e. 15.2.2011 among M/s Maru Transmission Service

Company Limited and Long Term Transmission Customers (LTTCs)

namely Jaipu Vidyut Vitran Nigam Ltd., Jodhpur Vidyut Vitran

Nigam Ltd. and Ajmer Vidyut Vitran Nigam Ltd.

(v) The Bid Evaluation Committee issued certificates on 17.5.2011

certifying that work has been carried out in conformity to the

provisions of the Ministry of Power, Government of India guidelines

for Tariff Based Competitive Bidding and M/s GMR Energy Ltd.

with the lowest levelised transmission charges over a period of

23.5 years, of Rs. 203.97 million for project RAJ/PPP-2: 400 KV S/C

Hindaun-Alwar Line and of Rs. 327.84 million for project RAJ/PPP-1:

400 KV S/C Bikaner-Deedwana-Ajmer Line is successful bidder.

19. From the analysis given in above matrix one can infer that there may

be two deviations from the guidelines:

i. The Bidding Process Co-ordinator (BPC) was constituted by a

Committee (Empowered Committee) instead being appointed

by the Government of Rajasthan. However, the Empowered

Committee was constituted by the Government of Rajasthan.

Therefore, it cannot be treated as a major deviation.

ii. The Bid Evaluation Committee was constituted by the Rajasthan

Vidyut Prasaran Nigam Limited i.e. the Organisation which was

acting as BPC and not by the Empowered Committee. However,

RVPN being the State Organisation, which is engaged in the

business of transmission of electricity and therefore, was

competent enough to deal with the subject matter. The details of

members of Bidding Evaluation Committee have been given in

the above matrix with reference to the guideline 9.8. The detail of

the members of the Bidding Evaluation Committee has similarity

with the details given in the guidelines.

20. In sum total, it can be safely inferred that there is a variance in the

precise adoption of the guidelines to the extent as discussed in para

19 above. The adoption of guidelines may vary to some extent

according to the organizational structure available in the State. It

would be observed that the spirit of the guidelines has been followed.

18

21. From the above discussion a view may be taken that instead of

summarily rejecting the adoption on the basis of mechanical

application of guidelines, it would perhaps be prudent to assess

whether the price was discovered in a transparent manner and is

reasonable. In this context, it can be observed that the guidelines are

not absolutely binding and deviations can be accepted if in a

specific case the object of transparency and competitiveness has

been followed.

22. In search of this objective reference to judgment pronounced by the

Appellate Tribunal of Electricity on 4th Sept., 2009 in Appeal No.

109/2009 would be appropriate. In para 20 of the said judgment

Hon‟ble Tribunal has observed as under:

“While the bidding Guidelines allow the role of the State Commission to be

only the ministerial for the adoption of Tariff when there is more than one

bidder, there is a specific reference to the consent in the case of a single

bid. This variation denotes that „adoption‟ is routine and the „consent‟ is the

outcome of the proactive consideration.” In the instant case there were

10 bidders.

23. Similarly the Central Electricity Regulatory Commission while

discharging the petition No. 18/2007 filed by Coastal Gujarat Power

Limited has observed at para 15 of its Order dated 19th Sept., 2007 as

under:

“15. It is evident from the guidelines that in contrast to the elaborate role

of the Commission in the tariff determination under Section 62 of the Act, its

role in case of tariff discovery through the competitive bidding process

undertaken under Section 63 is essentially confined to adoption of tariff, on

being satisfied that transparent process of bidding in accordance with the

guidelines have been followed in determination of such tariff. While

adopting the tariff discovered through the competitive bidding process, the

Commission is not required to go into the merits or analysis of the tariff so

discovered. Neither is it possible for the Commission to do so as no

supporting details are required to be submitted by the bidders.”

24. Besides above, the rejection on the basis of mechanical application

of guidelines would result in zeroing the efforts made in past 2-3 years

and the expenditure incurred. Further delay in implementation of the

project for another 2-3 years will result in cascading effect of cost

19

overruns. This should also be avoided when the objectivity of

transparency and competitiveness is not lost sight of.

25. In the light of foregoing discussions, it can be concluded that

selection of the successful bidder and the process of arriving at the

levelised tariff of the project mentioned in para 1 has been carried out

by the Bid Process Coordinator through a transparent process

competitive bidding following the spirit of the Guidelines and

Standard Bid Documents.

Views of Sh. D.C. Samant, Chairman

26. Before dealing with the petition and issues, it may be mentioned that

the role of the Commission in „adoption‟ of tariff under Sec. 63 is

distinct from determination of tariff under Sec. 62 of the Act. The role

of the Commission under Sec. 63 is essentially of being satisfied that

transparent process of bidding in accordance with guidelines has

been followed in tariff discovery.

27. The APTEL in its judgment in Appeal No. 109 of 2009 dated 4th

September, 2009 has clearly spelt out the functions of Commission in

adoption of tariff the relevant part is quoted as under :

“15. As referred to above, Section 63 has got two ingredients:

(1) There shall be a transparent process of bidding.

(2) The price is fixed in accordance with the Guidelines of the

Central Government.

Unless these two ingredients are satisfied, the Commission cannot

blindly adopt and accept the tariff determined. It is not correct on the

part of the Appellant to contend that when there is a transparent

bidding process, it is sufficient to adopt the price determined by the

authorities. It is to be stated that for invoking Section 63 of the Act not

only the transparent bidding process has to be followed but also has

to be verified as to whether the bidding Guidelines issued by the

Central Government have been followed. In other words, Section 63

of the Act provides that there shall be not only a transparent bidding

process but also the same shall be in accordance with the bidding

Guidelines. In the light of these things, the Commission is bound to

apply its mind whether both the ingredients are satisfied.”(Emphasis

supplied)

20

28. In the light of above discussed position, due consideration needs to

be given to the issues relevant to transparency of the process as well

as adherence by the procurer to the guidelines of the Central

Government. The Commission has to satisfy itself on both transparency

of process as well as adherence to guidelines of Central Government.

29. It would be appropriate now to deal with the main issues, which have

arisen in the matter i.e. appointment of RVPN as BPC, constitution of

Bid Evaluation Committee (BEC) by RVPN and Certificate issued by

BEC on compliance of the guidelines of the Central Government.

The appointment of RVPN as BPC

30. The guidelines regarding BPC says “3.3. For procurement of

transmission services required for intra-state transmission, the

appropriate State Government may notify any Organization/State

Public Sector Undertaking especially engaged for this purpose by the

appropriate state government or BPC notified by the Central

Government to be the BPC for the state.”

31. The State Government vide its order dated 15.10.08 constituted

empowered committee wherein it was specifically mentioned that

the Empowered Committee will also take care of the functions of the

BPC till a Bid Process Coordinator (BPC) is set up. This is in line with the

clause 3.2 of guidelines which specifies that “…For immediate

implementation of these guidelines the Empowered Committee

constituted as per the provisions of the guidelines for encouraging

competition in development of Transmission Projects will be the BPC

till any other organization is nominated as BPC by the Ministry of

Power.”

32. As per said order dated 15.10.08 the secretarial services was to be

provided by RVPN. However, the Empowered Committee in its

meeting dated 16.1.09 recorded “The STU (RVPN) shall be a nodal

agency on behalf of the Committee to act as Bid Process Coordinator

(BPC) for procurement of required transmission services as per

guidelines till a separate BPC is constituted by the GoR.”.

21

33. It is not very clear from the decision of the Empower Committee

whether RVPN was designated as BPC or whether it was to act as a

nodal agency on behalf of the Empowered Committee. In any case,

the BPC could be appointed only by the Government as per

guidelines of the Central Government and Empowered Committee

having been so appointed by the State Government cannot on its

own delegate the functions of BPC to RVPN.

Constitution of Bid Evaluation Committee by RVPN

34. The guidelines regarding Evaluation committee specifies; “9.8. Bid

evaluation committee: The Empowered Committee shall constitute a

committee for evaluation of the bids with at least one representative

from CEA and not less than two representatives from the concerned

Regional Power Committees with at least one representative from

every concerned RPC and one independent member. The

independent member shall have expertise in financial matter/bid

evaluation.”

35. In the present case, RVPN acting as BPC, constituted Bid Evaluation

Committee vide order dated 29.12.2009 for evaluation of bids, which

was later re-constituted vide order dated 08.1.2010. It has obviously

been incorrectly constituted, as it is the function assigned to the

Empowered Committee.

36. BEC has been assigned important role in the bid process as per the

guidelines issued by the Central Government. The adoption of tariff

hinges on the certification by the Bid Evaluation Committee. As per

guidelines, the Bid Evaluation Committee was to certify as to the

whole process being as per guidelines of the Central Government as

well as reasonability of charges was also to be evaluated by this

committee.

37. As has come out, both Bid Process Coordinator as well as Bid

Evaluation Committee have been incorrectly constituted. BPC as well

as BEC have key role in the entire bid process. These two

omissions/mistakes, when seen together, lead to deviations in the

process which cannot be reckoned as minor. The inference,

22

therefore, emerges that the bidding process has not been in

accordance with the guidelines of the Central Govt. The contention

of RVPN that the guidelines are not clear and they interpreted

guidelines in light of GoR order & Empowered Committee‟s decisions

and acted accordingly are well taken. However, Since Commission

under Sec. 63 of the Electricity Act, 2003 has to only satisfy itself as

regards the process being in accordance in the guidelines of the

Central Government, the said contention is not sufficient to infer that

the process is in accordance with the guidelines of the Central

Government.

38. In the light of what has been discussed above, the conclusions that

clearly emerges is that bidding has not been in accordance with the

guidelines of the Central Government. It may be mentioned that

nothing adverse has been noticed or raised as far as transparency of

the bidding is concerned. However, as discussed in para 28 of this

order, the Commission is to get satisfied on both transparency of

process as well as process being in accordance with guidelines. As

has been mentioned earlier, the satisfaction as regards the process

being accordance with the guidelines of the Central Government

cannot be arrived at due to the reasons discussed earlier in the order.

Conclusion & Decision of the Commission

39. There being difference in views of the members of the bench in the

matter the views as of Chairman would prevail as per Sec. 92 (3) of

the Electricity Act, 2003. Accordingly, it is held that the process

followed has not been in accordance with the guidelines of the

Central Government and therefore the proposed tariff cannot be

adopted under Section 63 of the Electricity Act, 2003. The petition is,

therefore, dismissed with no order as to cost.

(S.K.Mittal) (D.C. Samant) Member Chairman