Rerc order ppa cancellation petition no 265

of 71 431/13

Rajasthan Electricity Regulatory Commission Petition No. RERC- 431/13

In the matter of Petition filed by Rajasthan Rajya Vidyut Prasaran Nigam Ltd. (RVPNL) for adoption of tariff and approval of deviation regarding procurement of 1000 MW power through case-I bidding.

Coram: Shri Vishvanath Hiremath, Chairman Shri Vinod Pandya, Member Shri Raghuvendra Singh, Member Petitioner : Rajasthan Rajya Vidyut Prasaran Nigam Ltd.

Respondents : 1. Jaipur Vidyut Vitran Nigam Ltd., Jaipur 2. Ajmer Vidyut Vitran Nigam Ltd., Ajmer 3. Jodhpur Vidyut Vitran Nigam Ltd., Jodhpur 4. Secretary, Govt. of India, MoP, New Delhi 5. Secretary, Govt. of Rajasthan, Deptt. of Energy, Jaipur 6. M/s PTC India Ltd., New Delhi. 7. M/s. Maruti Clean Coal & Power Ltd., Raipur. 8. M/s. D.B.Power Ltd., Bhopal. 9. M/s. Lanco Power Ltd., Gurgaon.

10. M/s. SKS Power Generation (Chhatisgarh) Ltd., Mumbai. 11. M/s. Athena Chhatisgarh Power Ltd., Hyderabad.

Presents:

1. Sh. L.L.Gupta, Advocate for Petitioner 2. Sh. Bipin Gupta, Advocate for Discoms 3. Sh. Sanjay Sen, Advocate for D.B.Power Ltd., Bhopal. 4. Sh.Akhil Sibal, Advocate for Lanco Power Ltd., Gurgaon 5. Sh. Atul Shanker Mathur, Advocate for SKS Power

Generation (Chhatisgarh) Ltd., Mumbai 6. Sh. Ravi Chirania, Advocate for Maruti Clean Coal &

Power Ltd., Raipur. 7. Sh. Angad Mirdha, Advocate for Athena Power Ltd.,

Hyderabad. 8. Sh. Ravi Kishore, Advocate for PTC

of 71 431/13

Date of Order: 22.07.2015

ORDER 1. The petitioner Rajasthan Rajya Vidyut Prasaran Nigam Ltd. (RVPN) has filed

this petition on behalf of Discoms for adoption of tariff and approval of

deviation regarding procurement of 1000 MW power through case-I bidding

process.

2. RVPN in its petition has submitted that:

(i) It has been authorized by the Discoms of the State (the “Procurers”) to

undertake the bidding process for selection of Seller(s) for procurement

of 1000 MW ± 10%) base load power under ‘Case 1’ of the “Guidelines

for Determination of Tariff by Bidding Process for Procurement of Power

by Distribution Licensees” issued by Ministry of Power to meet their load

requirements.

(ii) Global invitation for Request for Proposal (RFP) for selection of Seller(s), in

line with the Standard Bid Documents (SBD) issued by MoP, was invited in

leading National Newspapers and International Newspaper. The last

date for submission of bids was kept as 3.8.2012. The RFP came to be

revised at the request of the prospective bidders and final RFP was issued

on 3.8.2012. The last date of submission of bid was rescheduled for

18.9.2012.

(iii) As per clause 5.9 of the Guidelines, a committee, with one member

external to the procurer's organization and affiliates having expertise in

financial matters/ bid evaluation, was constituted by the RVPN for

evaluation of the bids. The Evaluation Committee comprised of the

following members:

i. The Chief Engineer (NPP-R), RVPN ii. The Chief Engineer (Commercial), JVVNL iii. The Chief Engineer (RDPPC) iv. The Chief Controller of Accounts, RVPN v. The Dy. Chief Engineer (PPC&F), RVUN vi. Shri Tarun Agarwal, CA, (Partner of M/s Shyam Lal Agrawal & Co.,)

of 71 431/13

Jaipur. (iv) As per the RFP, the bidders were to submit their bids for the requisitioned

capacity of 1000 MW ± 10% with a minimum bid Capacity of 100 MW.

(v) Eight interested parties purchased the RFP documents, out of which only

the following seven bidders submitted their bids within the due date:

S. No. Bidder Name

Capacity Offered

(MW) 1 Jindal Power Limited 300 2 KSK Mahanadi Power Company Limited 475 3 SKS Power Generation (Chhattisgarh) Limited 100 4 RKM Powergen Pvt. Ltd. 600 5 NSL Nagapatnam Power & Infratech Limited 100 6 Lanco Power Limited 300 7 PTC India Limited (which has bid from

following developers) 1041

(a) Adhunik Power and Natural Resources Limited 135 (b) Maruti Clean Coal and Power Limited 195 (c) MB Power (Madhya Pradesh) Limited 200 (d) DB Power Limited 311 (e) Athena Chhattisgarh Power Limited 200

(vi) Bid Evaluation Committee (BEC) vide its meeting dated 27.12.2012 and

11.1.2013 declared all bidders qualified for opening of their financial bids.

(vii) As M/s NSL Nagapatnam Power & Infratech Limited and M/s RKM

Powergen Pvt. Ltd. did not extend their bid validity, only financial bid of

following five bidders were opened on 4.4.2013 in the presence of the

representatives of the bidders.

S. No. Bidder Name Capacity

Offered (MW) 1 Jindal Power Limited 300 2 KSK Mahanadi Power Company Limited 475 3 SKS Power Generation (Chhattisgarh) Limited 100 4 Lanco Power Limited 300 5 PTC India Limited (which has bid from


(a) Adhunik Power and Natural Resources Limited 135 (b) Maruti Clean Coal and Power Limited 195 (c) MB Power (Madhya Pradesh) Limited 200 (d) DB Power Limited 311 (e) Athena Chhattisgarh Power Limited 200

of 71 431/13

(viii) Evaluation of financial bid was discussed in meeting of BEC held on

17.4.2013 and 22.4.2013 and the order from lowest to highest levelized

tariff evaluated by BEC is as follows:

Rank Qualified Bidder Name Levelized

Tariff (Rs/kWh)

Capacity Offered

Cumulative Capacity Offered

Average Cumulative

Tariff (Rs/kWh)

L-1 PTC – Maruti Clean Coal and Power Limited 4.517 195 195 4.517

L-2 PTC – DB Power Limited 4.811 311 506 4.698 L-3 LPL – Lanco Babandh

Power Limited 4.943 100 606 4.738

L-4 PTC – Athena Chhattisgarh Power Limited 5.143 200 806 4.839

L-5 SKS Power Generation (Chhattisgarh) Limited 5.300 100 906 4.890

L-6 LPL – Lanco Vidarbha Thermal Power Limited 5.490 100 1006 4.949

L-7 PTC – MB Power (Madhya Pradesh) Limited 5.517 200 1206 5.043

L-8 KSK Mahanadi Power Company Limited 5.572 475 1681 5.193

L-9 Jindal Power Limited 6.038 300 1981 5.321 L-10 LPL – Lanco Amarkantak

Power Limited 7.110 100 2081 5.407

(ix) Evaluation of the BEC was placed before the Board of Directors of

the RVPN for approval. The BoD decided that matter be referred to

BEC and Consultant appointed for the purpose M/s Deloitte Touche

Tohmatsu India Pvt. Ltd. to suggest whether negotiation should be

held and if yes, then what should be the process to be followed for

such negotiation, keeping in view the capacity offered by each of

the bidders, consumers interest, financial prudence, other

precedents elsewhere in the country and other factors as may be

considered appropriate for the purpose.

(x) BEC in its meeting dated 4.6.2013 recommended that negotiations

may be held owing to the following :-

1) Capacity offered by various bidders varies from 100 MW to 475 MW

and more than one bidder needs to be selected to fulfil the

Requisitioned Capacity, i.e., 1000 MW.

of 71 431/13

2) It is in the interest of consumers of the State if tariff is lowered

through negotiations. Further looking to the long term impact and

quantum of the amount involved, negotiation with the bidders

may result in lowering tariff payable by Discoms which may in-turn

benefit the Discoms and the end consumers.

3) The negotiations may be done in a transparent manner, following

the ethics of the bidding procedure, resulting in lowering of quoted

tariff and would not hamper the financial prudence.

4) Despite provision of clause 3.5.9 in the Standard RFP, negotiations

were held in following cases as mentioned in Tariff Adoption order

of respective State Electricity Regulatory Commissions:

1. GUVNL Case 1: GERC order dated 20.12.2007 2. MSEDCL Case 1: MERC order dated 14.08.2008 3. RVPN Case 1 for Rajasthan’s Discoms: RERC order dt. 31.05.2010 4. MSEDCL Case 1: MERC order dt. 28.12.2010 5. GUVNL Case 1: GERC order dated 23.08.2011

(xi) In the meanwhile the matter was referred to the State Govt. vide

letter dated 2.9.2013 for seeking exemption under the Rajasthan

Transparency in Public Procurement Act, 2012 read with Rajasthan

Transparency in Public Procurement Rules, 2013. On receipt of

response from the Finance Deptt., GoR, BoD decided that L-1 bidder,

viz., M/s PTC India Ltd. who have offered through their Developer M/s

Maruti Clean Coal & Power Ltd. for 195 MW at the levelised tariff of

Rs. 4.517 per kWh be called in next Board meeting for negotiation. L-1

bidder M/s PTC India Ltd. and their Developer M/s Maruti Clean Coal

& Power Ltd. during the meeting offered an additional quantum of 55

MW of power at their already quoted tariff. The Board considering the

offer decided to issue LoI to L-1 bidder for procurement of 195 MW

power at the levelised tariff of Rs. 4.517 per kWh and decided to call

L-2 bidder for negotiations.

of 71 431/13

(xii) The Board in its meetings held on 20th, 24th and 25th Sept., 2013

negotiated with L-2 and L-3 bidders, viz., M/s PTC India Ltd. and their

Developer M/s DB Power Ltd. and M/s Lanco Power Ltd. for

generation source M/s Lanco Babandh Power Ltd. The bidders

unilaterally offered to supply an additional quantum of 99 MW and

250 MW respectively at their quoted/ reduced tariff. M/s Lanco

Power Ltd. unilaterally offered a rebate of 5 paisa per kWh each year

in their quoted non escalable capacity charges for the full term of

the PPA. The Board after considering the offer made during

negotiation decided to issue LoI for additional 55 MW of power to M/s

PTC India Ltd. through their Developer M/s Maruti Clean Coal and

Power Ltd., LoI for 410 MW (311 MW plus additional 99 MW) of power

to M/s PTC India Ltd. through their Developer M/s DB Power Ltd. and

LoI for 350 MW (100 MW plus additional 250 MW) of power to M/s

Lanco Power Ltd.

(xiii) LoIs were accordingly issued to M/s PTC India Ltd. for supply of

additional 55 MW power through their developer M/s Maruti Clean

Coal and Power Ltd. and for supply of 410 MW power through their

developer M/s DB Power Ltd. LoI was also issued to M/s Lanco Power

Ltd. for supply of 350 MW power from their generation source M/s

Lanco Babandh Power Ltd. which have been duly acknowledged.

(xiv) In compliance of provisions of Clause 6.1 of the Guidelines, the

Power Purchase Agreements (PPAs) were also signed between the

Procurers and Successful Bidders on 1.11.2013. Further, in compliance

of provisions of clause 6.2 of the Guidelines, the certification on

conformity of the bid process evaluation by the Bid Evaluation

Committee and Certification on conformity of the bid process to the

Guidelines by the Procurers has been submitted by RVPN along with

the petition.

of 71 431/13

(xv) The bidding process (from date of issue of RFP on 28.5.2012 to

signing of PPA on 1.11.2013) has been completed and has taken 523

days. As per Clause 5.19 of the Guidelines, approval of Commission is

required in case the bid process takes more than 195 days. Primarily,

the reasons for delay beyond 30.9.2013 are on account of revision in

the RFP as requested by the prospective bidders and reference to

the State Govt. regarding applicability of Rajasthan Transparency in

Public Procurement Act, 2012 and Rajasthan Transparency in Public

Procurement Rules, 2013 and reference to BEC regarding issue of

negotiations.

(xvi) It is submitted that Board of Directors has approved procurement of

additional quantum of power from successful bidders at their quoted

/ reduced tariff which results in reduction of average tariff by 18 paisa

per unit which in turn results in saving of Rs. 4007 crores to all procurer

Discoms. As it would be in the interest of the State to procure the

additional quantum of power offered by the successful bidders, it is

humbly submitted to approve the same.

(xvii) In view of the facts and circumstances mentioned above, It is

prayed:

(a) to approve the extended time line of 523 days for the bid

process, i.e., 328 days beyond the maximum period of 195 days

allowed under clause 5.19 of the Guidelines.

(b) to issue order in terms of Section 63 of the Electricity Act 2003 for

adoption of tariff obtained through the bidding process from

1) M/s PTC India Ltd (through developer M/s Maruti Clean Coal & Power Limited)

2) M/s PTC India Ltd (through their developer M/s DB Power Limited) 3) M/s Lanco Power Limited (Generation Source- M/s Lanco

Babandh Power Limited) (with reduction of 5 paisa per kWh).

(c) Approve procurement of additional quantum of power from the

successful bidders at their quoted tariff on the same terms &

conditions (including rebate of 5 paisa per kWh each year in the

of 71 431/13

quoted non escalable capacity charges for full term of the PPA

by M/s Lanco Power Ltd.)

3. When the matter was taken for consideration it was brought to the notice

of the Commission that selection of three bidders for award of supply of

power, and issuance of LOI in their favour has been challenged before the

Hon’ble High Court of Rajasthan in SB Civil Writ petition No.18699/13 and SB

Civil Writ Petition No.19437/13 filed by SKS Power Generation (Chhattisgarh)

Ltd. and Athena Chhattisgarh Power Ltd & Others.

4. The Hon’ble High Court of Rajasthan, on 07.02.2014 disposed of the above

writ petitions with the following directions:

“1. The petitioners have alleged violation and deviation from the RFP and the Bidding Guidelines of 2005, which may then be considered and decided by the Rajasthan Electricity Regulatory Commission (RERC) after providing an opportunity of hearing to the petitioners though objection regarding locus in respect of petitioner –Athena Chhattisgarh Power Limited has been raised but it is not of substantial nature at this stage as the issues would otherwise be determined by the Commission in reference to the petitioner SKS Power Generation (Chattisgarh) Ltd. The respondents have agreed not to raise objection for hearing of the petitioners before the Commission.

2. The Commission would consider and decide the allegation of deviation and violation of the RFP and the Bidding Guidelines of 2005. While determining the issues, it would exercise power as given under the Act of 2003 and pass necessary order as deem fit in the facts and circumstances of the case.

3. The letters of intent (LOI) shall remain subject to final outcome of the order of the Commission.

4. The Commission would take a proper decision in the matter after considering all the aspects and while doing so, it will take care of the objects of the Bidding Guidelines of 2005 for determination of tariff.”

5. The above judgment of the learned Single Judge of the Hon’ble High Court

was challenged by the appellants before the Division Bench in DB Special

Appeal No.604/2014. Hon’ble Division Bench vide its order dated 18.04.2014

upheld the order of learned Single Judge and dismissed the appeals.

of 71 431/13

6. M/s Athena Chhatisgarh Power Ltd & others have filed SLP No.12325 of 2014

& SLP (C) No.12548 of 2014 before Hon’ble Supreme Court of India

challenging the order of the Hon’ble High Court. The Hon’ble Supreme

Court vide its order dt. 09.05.2014 issued notices to Respondents but

granted no interim order. Further, Hon’ble Supreme Court vide its order dt.

08.10.2014 has passed the following order:

“---------------The Letters of Intent (LOIs) issued by respondent no.2 in favour of respondent nos.3-6, which is the subject matter of these Petitions, is subject to the result of these Special Leave Petitions.

The pendency of the Special Leave Petition(s) will not come in the way of the appropriate Commission in proceeding to pass appropriate orders after hearing the parties in the Writ petition.”

7. In view of the above orders, Commission has held further hearing in the

matter.

8. Chandelao Vikas Sansthan, Chandelao, an NGO, has filed an Interlocutory

Application No.1 of 2014 for impleading it in the petition filed by RVPN for

adoption of tariff obtained through bidding process. M/s Lanco Power Ltd.

and M/s DB Power Ltd. also filed Interlocutory Applications No. 2 and 3 of

2014 respectively to implead them as necessary party to the present

petition.

9. In its application, Chandelao Vikas Sansthan, Chandelao has submitted

that it is based in Rajasthan and is focusing on social and environmental

consumer issues of Rajasthan Discoms. It is further submitted by the

applicant that in the matter relating to adoption of tariff obtained through

the bids by RRVPNL, it should be impleaded as a party to the petition, as it

desires to submit on how RRVPNL has violated the bidding guidelines issued

by Government of India, while issuing the Letter of Intent (LOI), to the three

companies namely PTC India Ltd., for Maruti Clean Coal & Power Ltd.,

D.B.Power Ltd. and Lanco Power Ltd. and how purchase of power as per

LOI, will affect its interest as a consumer.

of 71 431/13

10. RVPN also filed an application for impleading the generating companies as

parties in the interest of justice and transparency, as it would be

appropriate to implead all the parties involved in the cases before the

Hon’ble Rajasthan High Court, Jaipur bench in the SB Civil Writ Petition

18699/2013, SB Civil Writ Petition No.19437/2013 filed by M/s SKS Power

Generation Ltd. and M/s Athena Chhattisgarh Power Ltd. respectively, who

are unsuccessful bidders.

11. The above Interlocutory Applications were heard on 24.04.2014 by the

Commission.

12. The Commission vide its order dated 08.05.2014 disallowed the application

of Chandelao Vikas Sansthan to be impleaded as a party. However,

Commission allowed the application filed by the RRVPNL for impleading (1)

M/s.PTC India Ltd. (2) Maruti Clean Coal & Power Ltd., (3) DB Power Ltd. (4)

Lanco Power Ltd. (5) SKS Power Generation (Chhatisgarh) Ltd. (6) Athena

Chhatisgarh Power Ltd. and directed the petitioner to amend the petition

and the cause title and include proposed parties in the petition as parties

and also to serve copies of its petition to all the impleaded parties, to

enable them to file their submissions.

13. Athena Chhattisgarh Power Ltd and SKS Power have filed their objections to

petition on 30.07.2014 and 31.7.2014 respectively. Lanco Power Ltd. has

filed its rejoinder to the objections filed by Athena Chhattisgarh and SKS

Power Ltd. on 12.08.2014 & 23.09.2014 respectively. DB power filed its

counter affidavit to the petition and to the reply of Athena Chhattisgarh

Power Ltd on 13.08.2014 and 26.09.2014 respectively. DB Power has also

filed its reply to the objection raised by SKS Power Generation on 6.11.2014.

M/s Maruti Clean Coal & Power Ltd. filed counter affidavit on 10.11.2014.

14. On 27.11.2014 RVPN filed an application. under regulation 7 of RERC(Power

Purchase & Procurement Process of Distribution Licensee)Regulations, 2004

praying for allowing it to purchase only 500 MW of power as against 1000

of 71 431/13

MW for which adoption petition is filed. In the application RVPN had

submitted that the Energy Assessment Committee constituted by the Govt.

of Rajasthan under Regulation 3 (3) of the RERC (Power Purchase &

Procurement Process of Distribution Licencee) Regulations, 2004 vide its 4th

meeting held on 29.1.2014 has come to the conclusion that there is no

requirement for long term procurement of 1000 MW ± 10% power under

Case-1 for which PPAs have been executed and tariff adoption petition has

been filed before RERC. Subsequently, the EAC in its 5th meeting held on

21.05.2014, observed that there is a need to review the decision taken in 4th

EAC meeting held on 29.01.2014. The EAC thus decided to consider

demand of 600 MW on long term procurement of power under Case-I for

which PPAs have been executed and tariff adoption petition has been filed

against the bidding process conducted for 1000 MW. RVPN further

submitted that considering EAC’s recommendation and power

requirements of the state in future, Government of Rajasthan vide its letter

dt. 25.7.2014 has approved to purchase only 500 MW power as against 1000

MW for which bidding process was conducted. Therefore, the Commission

may pass orders for adoption of tariff in the light of the above submissions.

15. Since the application of RVPN dated 24.11.14 for reduction of procurement

was strongly opposed by all the bidders, Commission decided to hear the

IA. Accordingly submissions on IA dated 27.11.2014 were heard. The

Commission vide its order dt. 09.01.2015, held that the application filed by

the petitioner cannot be rejected as not maintainable as contested by the

respondents and needs to be considered on merit along with the main

petition.

16. Therefore, the matter was heard on merit and on all issues finally on

04.02.2015. Sh. L.L. Gupta, Advocate appeared for RVPN, Sh. Sanjay Sen,

Advocate for D.B. Power, Sh. Deepak Khurana, Advocate along with Sh.

Akhil Sibbal, Advocate for Lanco Power Ltd., Sh. Atul Shankar Mathur,

of 71 431/13

Advocate for SKS Power Ltd., Sh. Angad Mirdha, Advocate, for Athena

Power Ltd. and Sh. Ravi Chirania, Advocate appeared for Maruti Clean

Coal Ltd.

17. M/s Lanco Power Ltd. and M/s D.B. Power submitted their written

submissions on 02.03.2015 and 03.03.2015 respectively.

18. Sh. L.L. Gupta, Advocate for RVPN has submitted as under:

(i) RRVPNL has filed this petition under 5.16 of "Guidelines for determination of

Tariff by bidding process for procurement of power by distribution

licensees", issued by the Ministry of Power, Government of India, under

Section 63 of the Electricity Act, 2003 for adoption of tariff.

(ii) RRVPNL has conducted the process strictly in accordance with the

Electricity Act, 2003, guidelines and the prescribed procedure. The

allegation of violation, favouritism, etc. are frivolous, baseless and

deserves to be rejected.

(iii) While exercising power under Section 63, the Commission will continue to

be vested with the powers under Section 86(1)(b), which provision vests

the Commission with the jurisdiction to regulate electricity purchase and

procurement process of a distribution licensee.

(iv) Reading of Clause 2.5(c) and 2.17 of RFP clarified that the procurement of

additional quantity of power at the price quoted is permissible and which

under no circumstances can be considered as deviation in process or

modification of the clause 3.5 inter alia requiring approval of amendment

of RFP in terms of the clause 2.3 of the Bidding Guidelines.

(v) There is no bar to either (a) negotiations with a bidder for quantum and/or

grant of additional quantum to bidder offering low rates and/or rates

close to L-1, hence question of violation of procurement process as

alleged does not arise. In support, he cited the decision of Hon’ble APTEL

dated 06.05.2010 in the case of MP Power Trading Company Ltd. Vs

MPERC in appeal no 44 of 2010.

of 71 431/13

19. Maruti Clean Coal and Power Ltd. in its submissions supporting the

petitioner’s case contended that:

(a) RRVPNL has filed this petition under 5.16 of "Guidelines for

determination of Tariff by bidding process for procurement of power by

distribution Licensees", issued by the Ministry of Power, Government of

India, under Section 63 of the Electricity Act, 2003 for adoption of tariff.

The Commission is required to decide the petition filed by the RRVPNL

as per the Sections 62, 63, 64, 82, 86 and 94 of Electricity Act, 2003 and

provisions of guidelines. Provisions of the RFP at clauses 3.5.1 to 3.5.9 &

3.5.12 are also very relevant for the issue.

(b) The plain reading of the RFP and all provisions therein do not prescribe

negotiation with any successful bidder for the quantum of power

offered. The clause 3.5.7 clearly provides for the same but it needs to

be approved by this Hon’ble Commission for which the RRVPNL has

made the prayer in the petition. That plain reading of the RFP and all

provisions therein also do not contain a bar and/or a prohibition

whereby the grant of LoI is restricted to the quantum offered by a

bidder. In fact, all provisions read separately and as a whole also do

not lead to any interpretation that the balance requisition capacity

cannot be achieved by issuing LoI for additional quantum over and

above the bid quantity especially if such additional quantity arises

from those bidding the lowest. Clause 3.5 also does not provide by any

interpretation that a qualified bidder offering lower rates for quoted as

well as additional quantity has to be by passed in favour of a bidder

offering quoted quantum at demonstrably higher rate and/or that all

qualified bidders have to be accommodated and granted tender

irrespective of the rate quoted. If such interpretation as suggested by

L4 and L5 is accepted then this would lead to consequences which

would be disastrous mainly for the consumer, for whose benefit the

entire process of the bidding has been designed and the basic object

of 71 431/13

of the Act of 2003 would frustrate. Thus, L4 and L5 which have quoted

tariff higher than L1 have rightly not been awarded the contract at

their quoted tariff.

(c) After following the due procedure, the BEC in its minutes of meeting of

4th & 5th meeting evaluated the financial bids in the presence of the

members of the committee. The committee after examining all other

factors examined the levelized tariff for qualified bidders submitted by

the bidders as per the format. As per the quoted table as mentioned in

the minutes of meeting shows that the Maruti Clean Coal was declared

as L1 with quoted levelized tariff as Rs. 4.517.

(d) Thereafter the Board of Directors of RRVPNL in its meeting dated

14.05.2013 decided to refer the matter to BEC to suggest whether

negotiation should be done and what should be the process of such

negotiation. BEC in the meeting held on 04.06.2013 decided that since

the rate quoted by bidders vary considerably as they vary from Rs.

4.517/kWh to 7.110/kWh therefore negotiations may be done as per the

provisions of Rule 69(2)(b) of Rajasthan Transparency in Public

Procurement Rules, 2013 but not on the quoted tariff as specifically

provided in clause 3.5.9.

(e) After receiving the consent of BEC, the Board of the Directors of the

RRVPNL called the L1 bidder, i.e., M/s Maruti Clean Coal Power Ltd.

through PTC India Ltd. for negotiation and requested to reduce the

quoted tariff but the M/s Maruti Clean Coal refused the same. However,

M/s Maruti Clean Coal offered an additional quantum of 55 MW of

power which was accepted at the tariff already quoted in bid offer.

Subsequently, RRVPNL issued the LOI in favour of the M/s Maruti Clean

Coal on 24.09.2013. After accepting the LOI the PPA was executed on

01.11.2013 between the parties.

(f) That the Board of Directors of the RRVPNL conducted similar meetings in

the case of L-2, i.e., M/s DB Power Ltd. and L-3 M/s Lanco Power Ltd.

of 71 431/13

Thereafter the Board in its meetings on 20th, 24th and 25th September

approved the allocation of additional quantum of power to the L-1, L-2

& L-3 considering the financial benefits of the Discoms and also the

economic interest of the consumers of the state.

(g) Two bidders, namely L-4, i.e., M/s Athena Chattisgarh Power Ltd. and L-5,

i.e., M/s SKS Power Generation Ltd. whose levelized tariff was much

higher than the present respondent as well as L2 and L3 were dissatisfied

only with the allocation of additional quantum of power. The levelized

tariffs of L-4 & L-5 i.e. Rs. 5.143 and Rs. 5.300 respectively were very high

and any award of the offered quantum of power to them would have

caused huge burden on the consumer as well as the Discoms and

would have been a clear case of undue benefit to them and also

against the guidelines and the law settled by the various Electricity

Regulatory Commissions in respect of determination and adoption of

tariff.

(h) M/s Athena Chattisgarh Power Ltd. and M/s SKS Power Generation

challenged the allocation of additional quantum to L1, L2 and L3 by

filing separate petitions before the Hon'ble Single Judge of Rajasthan

High Court bearing SB Civil Writ Petition No. 19437/2013 and 18699/2013

respectively.

(i) Hon'ble Single Bench of the High Court vide its judgment dated

07.02.2014 refused to grant any indulgence in the matter and dismissed

the writ petitions. Being aggrieved by the order passed by the Hon'ble

Single Bench both L-4 & L-5 filed separate special appeals which were

registered as D.B. Civil Special Appeal (Writ) No. 538/2014 and D.B.

Special Appeal (Writ) No. 604/2014. The Hon'ble Division Bench after

hearing the counsel for L-4 & L-5 at length refused to grant any

indulgence in the judgment dated 07.02.2014 passed by the Hon'ble

Single Judge.

of 71 431/13

(j) The above mentioned orders passed by the Hon'ble Single Judge as well

as the Hon’ble Division Bench of the High Court show that on the basis of

frivolous objections, grounds, allegations, the petitions were filed and the

Hon'ble Court refused to interfere. As far as the present respondent is

concerned there cannot be any allegation as the tariff quoted by it was

the lowest and there was big difference in the tariff quoted by the L-2 to

L-5. The additional quantum offered by the applicant was accepted by

the present respondent on the same terms and conditions and the tariff

which shows that no negotiation in respect of tariff was done and the

allocation of additional quantum was clearly for the benefit of the

consumer at large. The RVPNL allocated the additional quantum of

power as per the clause of RFP. Therefore, the allegations regarding

favoritism, etc. are clearly denied and disputed as there are no grounds

to support and prove the allegations.

(k) Reading of Clause 2.5(c) and 2.17 of RFP clarified that the procurement

of additional quantity of power at the price quoted is permissible and

which under no circumstances can be considered as deviation in

process or modification of the clause 3.5 inter alia requiring approval of

amendment of RFP in terms of the clause 2.3 of the Bidding Guidelines.

(l) It is amply clear that there is no bar to either (a) negotiations with a

bidder for quantum and/or (b) grant of additional quantum to bidder

offering low rates and/or rates close to L-1. Therefore, question of

violation of procurement process as alleged does not arise. In fact, if this

was not followed, applicant would have been guilty of breach of trust

reposed in it to procure power at the most reasonable tariffs for

consumers.

(m) A plain reading of the RFP and Bidding Guidelines establish that the

admitted purpose of the tender was to procure power at most cost

effective rate. The tender for requisitioned capacity of 1000 MW was for

meeting the base load requirements of its distribution licensees, for

of 71 431/13

further onward supply to its customers, i.e., the people of State of

Rajasthan. Necessarily, both in terms of the Electricity Act and Bidding

Guidelines including the RFP document, it is the interest of the consumers

which is paramount and has to be protected. Accordingly, any

interpretation in subservience of this avowed objective and which in turn

requires power to be purchased at a demonstrably higher price (when

the same can be procured at a lower rate), would be untenable,

opposed to public interest and not permitted by any court of law. The

extra financial burden on the consumer as a consequence of any grant

of LoI to the Respondent no. 10 & 11 (if approved by the RERC) over the

period of the contract would be in thousands of crores.

(n) Above mentioned submissions show that the RRVPNL has conducted the

process strictly in accordance with the Electricity Act, 2003, guidelines

and the prescribed procedure and the allegation of violation, favoritism,

etc. are frivolous and baseless and deserves to be rejected. By way of

this reply, M/s Maruti Clean Coal being the L-1 supports the present

petition filed by the RRVPNL and prays that the petition filed for adoption

of tariff under Section 63 of Electricity Act, 2003 and also for approval of

additional quantity of power allocated to L1, L2 & L3 and also certain

deviations, as mentioned, deserve to be approved and allowed by this

Hon'ble Commission and the objections raised by the L-4 & L-5 i.e. M/s

Athena Chattisgarh Power Ltd. and SKS Power Generation (Chattisgarh)

Ltd. deserve to be rejected at the outset considering the submissions

made by the present respondent.

20. Sh. Sanjay Sen, Advocate for DB Power Ltd. also supported the main

petition and contended as under:

(i) DB Power Ltd. participated in the bid process initiated by RRVPNL for

procurement of 1000 MW ± 10% through the competitive bidding route.

The bid process was initiated on the basis of an express approval of this

of 71 431/13

Hon’ble Commission, which approval is recorded in the order dated

23.03.2011 passed in Case No. 205 of 2009.

(ii) DB Power Ltd. had originally bid for a quantum of 311 MW at a levellised

tariff of Rs. 4.811. Petitioner on 19.09.2013 had firstly called L-1 bidder for

discussion in relation of procurement of 195 MW of the 1000 MW power

under Case 1 bidding of the competitive bidding guidelines. While there

was request by the BoD of RVPNL to the L-1 bidder to reduce his tariff, the

same was refused by L-1 bidder. However, such L-1 bidder in good faith

offered an additional quantum of 55 MW at the already quoted tariff as

per the bid offered by them upon completion of the bid process. This

additional quantum was accepted by the Board of the procurer and LOI

for the said additional quantum was subsequently issued. In the meantime

the Board decided to call DB Power, who was L-2. DB Power also did not

agree to any reduction or negotiation in tariff but keeping in view the

interest of the State and in good faith and bonafide reasons offered

additional quantum of power of 99 MW at already quoted tariff. LOI was

issued to DB Power on 27.09.2013 for 410 MW. This was an action fully

permitted under the RFP. In the said minutes it is also recorded that M/s

Lanco Power(L-3) offered a rebate of 5 Paisa per KWH each year in their

quoted escalable capacity charge for the full term of the PPA.

Additionally, Lanco Power offered an additional quantum of 250 MW of

power at the aforesaid reduced tariff. Based on the aforesaid, the Board

after taking in to consideration the financial benefit (of approx Rs 4000

crores) flowing to the Discoms issued LOI to L1 to L3.

(iii) The unsuccessful bidders have questioned the ability of the procurer to

secure additional quantum of power from the lowest bidders, i.e., L-1 to L-

3, and/ or the ability of the Hon’ble Commission to approve the same

under Section 63.

(iv) As per the Section 63 of the Act, the jurisdiction of the Appropriate

Commission is limited only towards adoption of tariff. The Appropriate

of 71 431/13

Commission is mandated to compulsorily adopt tariff, if such tariff is

determined by transparent process of bidding in accordance with the

guidelines issued by the Central Government.

(v) At the very outset it needs to be clarified that it is nobody’s case (not even

of the unsuccessful bidders) that jurisdiction under Section 63 should not

be exercised for adoption of tariff that has been discovered in the current

bid process. It is also not their case that “tariff has not been determined

through a transparent process of bidding” in accordance with the

guidelines issued by the Central Government. On the contrary they (the

unsuccessful bidders), whose tariff is much higher than L-1 to L-3, want to

supply power under the bid process after adoption of tariff at a much

higher price. Therefore, it is not a case where there is any allegation that

the process of price discovery/ tariff is vitiated in any manner due to lack

of transparency or otherwise.

(vi) After discovery of price/ tariff through a transparent bidding process, the

procurer proceeded to procure more (additional) power from the first

three lowest bidders at the tariff determined transparently and in

accordance with the bidding guidelines. It is the case of the unsuccessful

bidders that such procurement of additional power is not permitted.

Therefore, this Hon’ble Commission has to recognize that the case put up

by the unsuccessful bidders is not on the issue of lack of transparency. The

allegation of the unsuccessful bidders is that post the transparent process

of tariff discovery, the award of contract to L-1, L-2 and L-3 for additional

quantum was wrongful. On the contrary the case revolves around

interpretation of certain provisions of the competitive bidding guidelines

and the bidding document as to the ability of the procurer to ask the

successful bidders who are L-1 to L-3 to supply more power at the bid

price.

(vii) It is a settled tool of interpretation that in matters of public procurement,

an interpretation that benefits the public at large has to be made. Here is

of 71 431/13

a State procurer who has followed the Central Government guidelines for

procurement of electricity on a long term basis. That State procurer’s

initiative has thrown up competitive tariff. The State procurer wants to

maximize public welfare by seeking maximum power at the lowest

possible tariff. In the present case, there is no dispute that the process was

conducted in transparent manner and in accordance with the bidding

guidelines and the RFP. There is no grievance as regards the bid

submissions and the evaluations made by the procurer.

(viii) Paragraph 5.16 of the competitive bidding guidelines permits deviation

from the guidelines. As per the aforesaid paragraph the Appropriate

Commission shall approve the deviations from the guidelines, it is a settled

interpretation of law that the Commission’s power to approve post facto is

also available. Therefore, the Commission can at this stage also approve

any deviation from the guidelines, if required. However, it is clarified that in

the present case there is no deviation from the guidelines at all.

(ix) Under Article 3.5.3 of the standard RFP documents, the bidder with the

lowest levelised tariff is required to be declared as successful bidder for

the quantum of power (in MW) offered by such bidder in such financial

bid. Whereas under Article 3.5.6 the selection process shall stand

completed once the Requisitioned Capacity has been achieved through

the summation of the quantum offered by the Successful Bidders. A

combined reading of Article 3.5.3 and 3.5.6 makes it amply clear that

there is no restriction imposed on the procurer from asking such successful

bidder to supply more quantum than what such bidder has offered in the

financial bid.

(x) Under 3.5.4 the selection process of the successful bidder mentioned in

Clause 3.5.3 is required to be repeated for all the remaining financial bids

of qualified bidders until the entire requisition capacity is met. The question

that will arise is whether Article 3.5.4 vests a right on a qualified bidder who

is lower in the ranking to demand that power from him be compulsorily

of 71 431/13

purchased by the procurer when the procurer has the ability to complete

the procurement from bidders who offer lower tariff and have a better

tariff ranking than the bidder offering higher tariff. RFP document does

not give any right to a bidder unless the bid has been accepted by

issuance of LOI. The bidder’s right is limited to a consideration of his offer in

accordance with the RFP process. There is no vested right that a bidder

can claim by virtue of Article 3.5.4.

(xi) Article 3.5.5 of the RFP provided that any step in the process of Clause

3.5.4 in case the requisitioned capacity is not being achieved and the

offered capacity of the bidder with the lowest levelised tariff is larger than

the balance requisitioned capacity, any fraction or combination of

fractions offered by such bidder shall be considered for selection towards

meeting the requisitioned capacity.

(xii) Any interpretation to clauses 3.5.3 to 3.5.12 has to necessarily inure to the

benefit of the consumers in whose interest the Petitioner is procuring the

power. It is the submission of this Respondent that while under Article 3.5.9

there is clear bar/ embargo on negotiation on quoted tariff between the

authorised representative/procurer and the bidder during the process of

evaluation, such embargo does not extend to procurement of additional

quantum from a successful bidder. The reason being that once

competitive tariff has been discovered and the ranking from the lowest to

the highest is made in accordance with Article 3.5.2, then it is up to the

procurer to take the maximum advantage of such competitively

discovered tariff. It is in this context one has to read Article 3.5.3 and 3.5.6

together. Article 3.5.3 requires the successful bidder at the lowest levelised

tariff to compulsorily give the entire quantum offered by such bidder in its

financial bid. The said article locks in the bidder’s offer and does not

permit the bidder after making the offer (in quantum and price) and

declaration of lowest levelised tariff to walk out and/ or reduce its

of 71 431/13

quantum. This article secures the procurer to the extent of the quantum of

power offered by such lowest levelised tariff bidder in its financial bid.

(xiii) However, the said article does not restrict such bidder to give more than

the quantum offered if that option is available. It is in this context that

Article 3.5.6 provides that the selection process shall stand completed only

when the requisitioned capacity has been achieved through the

summation of quantum offered by successful bidders or when the

balance of the requisitioned capacity is less than the minimum bid

capacity. Article 3.5.6 does not contemplate a situation where the

selection process is dependent on the available capacity of the qualified

bidders or is limited to the quantum offered in the financial bid. The

qualified bidders who are at the higher level of the price offered cannot

then claim that they have the right to dump their expensive power and

that the procurer has an obligation to purchase such expensive power. If

the procurer is of the view that L-1 to L-3’s tariff is more competitive and

more aligned to the prevailing market prices in accordance with the

principle enunciated in Article 3.5.12, the procurer need not at its

discretion go forward to make any procurement from other qualified

bidders if the first three or four bidders have adequate additional

capacity to meet the requisitioned capacity. This issue was examined at

length by the Hon’ble APTEL in the case of Wardha Power Company Ltd.

v. Maharashtra Electricity Regulatory Commission and Others, Appeal No.

70 of 2013. Therefore, it is submitted that under Article 3.5 of the RFP there

is no embargo for procurement of additional quantum from the lowest

bidders, which procurement will inure to the financial benefit of the

Discoms and the consumers. The embargo is limited to negotiation of

quoted tariff and not for securing additional quantum.

(xiv) On the allegation of antedating of LOI by unsuccessful bidders it is

submitted that BoD in its meetings held on 20th, 24th and 25th September

2013, decided to issue LoI to L-2 & L-3 Bidders for their offered quantity.

of 71 431/13

Accordingly, LoI were issued on 24.09.2013 to L-1 Bidder – M/s PTC India

Ltd (through developer M/s Maruti Clean Coal and Power Ltd.). On

27.09.2013, LoI’s was issued to L-2 Bidder– M/s PTC India Ltd and L-3 Bidder

– M/s Lanco Power Limited (Generation Source M/s Lanco Babandh

Power Ltd,). On 27.09.2013, another LoI was issued to L-1 Bidder M/s PTC

India Ltd for additional 55 MW. LoI to L1 Bidder was dispatched vide speed

post on 25.09.2013. LoI’s to L2 and L3 bidder, as well as LoI for grant of

additional quantum to L1 Bidder were dispatched vide speed post on

01.10.2013 as 28.09.2013 and 29.09.2013 being Saturday and Sunday

(Holiday). In view of the aforesaid facts and submissions made all the

aforesaid allegations are denied and disputed.

(xv) Apart from the aforesaid facts, Applicant is seeking the reduction of

quantum of power from 1000 MW to 500 MW for which the bid process

was initiated and consequently LOIs issued/ accepted and PPAs

executed. The Application filed by RRVPNL for reduction in quantum of

power to be procured needs to be dismissed as the present proceedings

(being petition no. 431 of 2013) is limited to adoption of tariff under

Section 63 of the Electricity Act, 2003.

(xvi) In paragraph 4 and 5 of the application, it is submitted on behalf of the

RVPN that in the fifth meeting, the EAC has decided to consider the

demand of 600 MW on long term basis for procurement of power under

Case I, for which PPAs have been executed and tariff adoption petition

has been filed against the bidding process conducted for 1000 MW. Later

in paragraph 6, it is submitted that in light of the EAC’s recommendation

dated 21.05.2014 and considering the requirements, the Government of

Rajasthan vide its letter dated 25.07.2014 has approved purchase of 500

MW power on long term basis against the bid process conducted for 1000

MW.

(xvii) A review of Section 63 will demonstrate that the Appropriate

Commission’s jurisdiction is to adopt tariff if such tariff has been

of 71 431/13

determined through transparent process of bidding in accordance with

the guidelines issued by the Central Government. Before going into any

case law of the subject, a plain reading of the provision of law is

warranted. It is submitted on behalf of DB Power Ltd. that the language of

Section 63 is clear and unambiguous. Section 63 compulsorily mandates

that the Hon’ble Commission shall adopt tariff, if such tariff has been


the guidelines. In the aforesaid jurisdictional matrix, there is no scope for

entertaining an application for reduction of procurement quantum. The

procurement quantum is not a subject matter of inquiry in proceedings for

adoption of tariff under Section 63. It is an undisputed fact that the

procurement quantum has been previously approved by the Hon’ble

Commission in an independent regulatory proceeding. After approval of

the quantum of procurement and the process, the RFP document was

made available to the public for purposes of bid. Generating companies,

including DB Power Ltd. acting on such representation participated in the

bid. Thereafter successful bidders were issued LOI and PPAs were also

subsequently executed. A binding contractual agreement has come into

existence. The only issue that the Hon’ble Commission has to decide is

whether the process of procurement was fair and transparent and that

the tariff is aligned to present market conditions. Hence, the question that

arises, which the Applicant has failed to answer, is whether in a

proceeding under Section 63 of the Electricity Act, 2003, can the

Commission revisit the issue of quantum of procurement. It is necessary to

keep in view the sequence leading to the present proceeding for

adoption of tariff. Only after the procurement quantum was finalized and

approved by the Commission, the Section 63 process was set into motion.

Now at the fag end of the process when contracts are in place, where is

the jurisdiction to revisit the procurement quantum. Surely, Section 63

which deals with adoption of “tariff” does not envisage review of the

of 71 431/13

quantum of procurement after the bid process has resulted in discovery of

tariff and execution of PPA.

(xviii) Commission does not have jurisdiction to allow an application of this

nature. A review of Section 63 will demonstrate that the Appropriate

Commission’s jurisdiction is to adopt tariff if such tariff has been


the guidelines issued by the Central Government. Section 63 compulsorily

mandates that the Hon’ble Commission shall adopt tariff, if such tariff has

been determined through transparent process of bidding in accordance

with the guidelines. In the aforesaid jurisdictional matrix, there is no scope

for entertaining an application for reduction of procurement quantum.

The procurement quantum is not a subject matter of inquiry in

proceedings for adoption of tariff under Section 63. It is an undisputed

fact that the procurement quantum has been previously approved by the

Hon’ble Commission in an independent regulatory proceeding. After

approval of the quantum of procurement and the process, the RFP

document was made available to the public for purposes of bid.

Generating companies, including DB Power Ltd. acting on such

representation participated in the bid. Thereafter successful bidders were

issued LOI and PPAs were also subsequently executed. A binding

contractual agreement has come into existence. The only issue that the

Hon’ble Commission has to decide is whether the process of procurement

was fair and transparent and that the tariff is aligned to present market

conditions. Only after the procurement quantum was finalized and

approved by the Commission, the Section 63 process was set into motion.

Now at the fag end of the process when contracts are in place, where is

the jurisdiction to revisit the procurement quantum. Surely, Section 63

which deals with adoption of “tariff” does not envisage review of the

quantum of procurement after the bid process has resulted in discovery of

tariff and execution of PPA.

of 71 431/13

(xix) It was submitted by the RVPNL that while exercising power under Section

63, the Commission will continue to be vested with the powers under

Section 86(1)(b), which provision vests the Hon’ble Commission with the

jurisdiction to regulate electricity purchase and procurement process of a

distribution licensee. The aforesaid suggestion is wrong as Section 86(1)(b)

is a general provision while Section 63 is specific. The case law on the

subject is very clear that the special or a specific provision will always

override a general provision. The reliance is made on the judgment titled

as State of Gujarat v. Patel Ramjibhai Danabhai and Others, reported in

(1979) 3 SCC 347, Godde Venkateswara Rao v. Government of Andhra

Pradesh and Others, reported in (1966) 2 SCR 172 and Gujarat Urja Vikas

Nigam Limited v. Essar Power Ltd., reported in (2008) 4 SCC 755.

(xx) It is also submitted that even if the principles of harmonious construction is

applied then the special provision has to be read to cover special

circumstances which are contemplated within that special provision and

the general provision has to operate in circumstances not contemplated

under the special provision. The special provision under Section 63 talks of

a regulatory regime for procurement of power through transparent

process of bidding in accordance with the guidelines issued by the

Central Government. The guideline issued by the Central Government, is

the regulatory framework for procurement of power under Section 63. If

the guidelines govern such special procurement process contemplated

under Section 63, there is no scope for meddling with the process with

exercise of regulatory powers under Section 86(1)(b). This would render

the Section 63 otiose or a nullity.

(xxi) An important aspect of the special provision is that before the special

provision under Section 63 is set into motion the Hon’ble Commission

exercises power under Section 86(1)(b). Before the RFQ and RFP

documents are issued it goes through a regulatory process. A distribution

licensee approaches the Hon’ble Commission for approval for

of 71 431/13

procurement of power under Section 86, which includes the quantum of

power, the terms of the RFP and the terms of the RFP documents. The

Commission conducts a public hearing and issues an order confirming the

quantum of procurement, the terms of the RFP and the RPP documents.

Therefore, the regulatory power under Section 86(1)(b) stands substantially

exhausted before the regulatory process under Section 63 kicks-in. In the

present case, a detailed order was issued by the Hon’ble Commission on

23.03.2011 in Petition No. 205 of 2009, filed by RVPNL. Having exercised

regulatory powers under Section 86(1)(b) in relation to the procurement

quantum, there is no scope for further exercise of regulatory powers under

Section 86(1)(b), once the Section 63 process is set into motion. Section 63

process for approval of tariff can start only after the Applicant (with prior

approval of the Commission) has frozen the procurement quantum.

(xxii) The judgment of the Division Bench of the High Court of Rajasthan dated

18.04.2014 in DB Special Appeal (Writ) No. 604 of 2014 has made certain

observations while dismissing the civil appeal filed by SKS Power

Generation (Chhattisgarh) Ltd. and Others. A careful review and analysis

of the judgment would make it clear that at no stage the judgment has

sought to expand the jurisdiction of the Hon’ble Commission so as to

enable the Hon’ble Commission to entertain the present application by

RVPNL for modification of quantum. The Hon’ble High Court has held as

follows:

“Page 32:

... ... A plain reading of these two clauses of Section 86, in our comprehension, admits of no doubt that the Commission is obligated, under the statute, to undertake a detailed exercise, while acting under Section 63 of the Act, to examine as to whether the tariff had been determined through a fair, objective and hyaline process conducted and administered in accordance with the guidelines issued by the Central Government. ... ...”

(xxiii) From the aforesaid, it stands amply clear that section 63 power in case of

adoption of tariff is only limited to an examination as to whether the tariff

has been determined through a fair, objective and hyaline process

of 71 431/13

conducted and administered in accordance with the guidelines issued by

the Central Government. The Hon’ble High Court is conscious of the

limited jurisdiction of the Commission and has confirmed the same within

the four corners of the statute.

(xxiv) Surely Section 86(1)(b) powers cannot be used by the procurer at the

adoption of tariff stage to reverse modifying the terms of bid itself, which

bid process was in accordance with the guidelines. Certainly, the goal-

post cannot be changed after the bid process has come to an end by

execution of PPA and only the act of adoption of tariff is left to be done.

In this context, the reference is placed on the judgment of the Appellate

Tribunal of Electricity in Essar Power Limited v. Uttar Pradesh Electricity

Regulatory Commission and Another, Appeal No. 82 of 2011, Lanco

Kondapalli Power Pvt. Ltd. and Another v. Haryana Electricity Regulatory

Commission Appeal No. 156 of 2009, dated 20.01.2010, (1991) SCC 492 in

the matter of Raunaq International Ltd. Vs. I.V.R. Construction Ltd. and

Others, Adani Power Limited v. Gujarat Electricity Regulatory Commission,

being Review Petition No. 6 of 2011 in Appeal No. 184 of 2010, dated

13.02.2012, and Adani Power Limited v. Gujarat Electricity Regulatory

Commission and Another, being Appeal No. 184 of 2010, dated

07.09.2011.

(xxv) Apart from the aforesaid, there is an additional issue relating to the ability

of the EAC to sit on judgment of the Hon’ble Commission’s order dated

23.03.2011. It is submitted that the Commission has approved the quantum

based on its assessment of the demand. Having passed a regulatory order

presumably under Section 86(1)(b), where is the jurisdiction of the Hon’ble

Commission to revisit the order after the order has worked itself out.

Clearly, this is impermissible. Even if regulatory power for examination of

procurement quantum is available, then the said power stands exhausted

as on 23.03.2011.

of 71 431/13

(xxvi) The RFP document also has to be seen from the perspective of the ability

of the procurer at the bid process stage to reduce procurement

quantum. In this context, it is submitted that for the sake of arguments

even if it is presumed that it is permissible at this stage to reduce the

quantum, then also the RFP only permits a change of quantum to the limit

of ±10%. Therefore, any change in quantum beyond ± 10% tantamounts to

a deviation from the RFP provisions which is not permissible.

(xxvii) The EAC has no jurisdiction to make a suggestion after the order dated

23.03.2011 has been passed by the Hon’ble Commission. It is the case of

DB Power that the order dated 23.03.2011 has been worked out. After an

order has been worked out, it cannot be reviewed or reopened. So there

cannot be a suo motu review of the order also based on the EAC

decision. Further, the EAC’s jurisdiction and role is extremely limited and

precedes any RFP/ bid process. After the bids have been initiated and

LOI/ PPA executed, the EAC has no jurisdiction to reassess the quantum,

so as to recommend reduction of quantum.

(xxviii) The 4th EAC says no quantum is required. The 5th EAC says 600 MW is

required. The Government of Rajasthan says 500 MW is required. All this is

conflicting with the decision of the procurer who has invited bids for 1000

MW, based on the Hon’ble Commission’s long term assessment in its order

dated 23.03.2011. It is the case of the Petitioner that public interest has to

be seen from multiple perspectives, while the long term interest of the

consumers is important and has to be considered. It is also necessary to

consider the impact of market principles on the power generation sector.

Therefore, when dealing with the issue of public interest, a long term

prospect is required. It is submitted that no material has been placed by

the Applicant (independent of the EAC minutes and GOR letter) to justify

reduction of quantum. Also, the EAC does not provide any material in

support of its decision. The minutes are clearly arbitrary and without basis.

of 71 431/13

In light of what is stated above, this Respondent prays that the application

of RRVPNL for reduction of tariff be dismissed.

21. Sh. Akhil Sibbal, Advocate for Lanco Power Ltd. who also supported the

main petition in his oral and written submissions contended that:

(i) The Application filed by RRVPNL for reduction in quantum of power to be

procured purportedly invoking Regulation 7 of the RERC (Power Purchase

& Procurement Process of Distribution Licensee) Regulations, 2004, is

legally untenable and amounts to abuse of process of this Commission

and is therefore liable to be dismissed at the threshold.

(ii) RVPN in aforesaid application prayed that in light of the facts and

circumstances mentioned herein above and the provision of Regulation 7

of the RERC (Power Purchase & Procurement Process of Distribution

Licensee) Regulations, 2004, the Hon’ble Commission may please issue

order for adoption of tariff as it may deem fit and proper in the interest of

justice.

(iii) The aforesaid Regulations are prior to any competitive bidding guidelines

being issued by the Central Government in regard to the adoption of tariff

under Section 63 of the Electricity Act, 2003. It is further submitted that the

instant application of RRVPNL cannot lie under Regulation 7 since the said

regulation only applies to power purchase agreements and amendments

thereto “after execution”. In other words, it is only once the contracting

parties have entered into a contract or an amendment thereto that

contract or amendment is to be placed before the Commission for its

scrutiny under Regulation 7. In the application, RRVPNL is in effect seeking

a reduction in the quantum of power to be procured, which would result

in the nullification of some of the PPAs entered into by the Discoms. As

such, RRVPNL has wrongly invoked Regulation 7 of the aforesaid

Regulations.

of 71 431/13

(iv) Further, Commission does not have jurisdiction to allow an application of

this nature. Admittedly, the application has been filed in a Petition for

adoption of tariff under Section 63 of the Act pending before this Court. In

terms of Section 63, this Commission is under a mandate to adopt the tariff

if such tariff has been determined through transparent process of bidding

in accordance with the guidelines issued by the Central Government. This

is the plain language of Section 63 of the Act. The scope of examination in

Section 63 proceedings is confined to the above two aspects. It therefore

follows that the present application filed for purportedly seeking reduction

in the quantum of power is beyond the purview of Section 63 and cannot

be subject matter of proceedings under Section 63. The application is thus

liable to be dismissed.

(v) The scope of consideration in the said Petition by this Hon’ble Commission

is whether the bidding process of procurement of power was transparent

and in accordance with the bidding guidelines issued by the Central

Government. It is submitted that the scope of enquiry by this Hon’ble

Commission is limited to the said aspect and there is no further scope of

considering a prayer for reduction of quantum of power already

approved for procurement and for which LOIs have been issued and PPAs

executed, in a proceeding under Section 63 of the Act. By way of this

application, RRVPNL is seeking indirectly to reopen/reverse the order of

the Commission dt. 23.3.2011 issued for approval of procurement of 1000

MW+10% power on Case-1 basis on a Petition made by RRVPNL being

Petition No. 205/2009, which has been acted upon and has attained

finality, which is not permissible and if, allowed will lead to further legal

proceedings for breach of PPA.

(vi) It was argued on behalf of RRVPNL that de-hors and independent of

Section 63, this Commission has powers under Section 86(1)(b) of the Act

to regulate electricity purchase and procurement process of distribution

licencees and the said power can be exercised by this Commission in a

of 71 431/13

proceeding under Section 63 of the Act and therefore a prayer for

reduction of quantum of power can be considered and granted by this

Hon’ble Commission. RRVPNL had relied on the judgment of the Division

Bench of the Hon’ble High Court of Rajasthan dated 18.04.2014 in DB

Special Appeal (Writ) No. 604 of 2014 to contend that Section 63 and

Section 86(1)(b) have been read together by the Hon’ble High Court and

therefore even in a proceeding under Section 63, Section 86(1) (b) can be

pressed into service.

(vii) In this regard it is submitted that the said argument is wholly misconceived

in as much as Section 86(1)(b) is a general provision whereas Section 63 is

a specific provision and the specific provision will override the general

provision. Further, in the said matter, the issue before the Hon’ble High

Court did not pertain to reduction of quantum of power after execution of

PPAs. The issue was whether this Hon’ble Commission has jurisdiction under

Section 63 to adjudicate on alleged violation of Bidding Guidelines and

terms of RFP documents and the allegations of non-transparency in the

bidding process. Therefore, the judgment has to be read and understood

in that context.

(viii) Reliance is placed on the judgment of the Appellate Tribunal of Electricity

in Essar Power Limited v. Uttar Pradesh Electricity Regulatory Commission

and Another, Appeal No. 82 of 2011.

(ix) Clause 3.5.7 of the RFP gives a right to RVPNL to increase/decrease the

requisitioned capacity by up to ten percent (10%) of the quantum

indicated in Clause 1.3.1 only with the approval of the appropriate

Commission. Thus, even as per the RFP, an increase or decrease in the

quantum of power to be procured can be made during the stage of

evaluation and selection of the successful bidders. This process of

selection of successful bidders is completed and LoIs have been issued to

them, requisite PPAs have also been executed and a Petition has been

of 71 431/13

filed for adoption of tariff. Therefore, even under the RFP the proposed

reduction in the quantum is impermissible at this stage.

(x) Pleadings as well as prayer made in the application are completely

vague and the materials placed in the form of decisions taken by Energy

Assessment Committee (EAC) in the 4th and 5th meetings also appear to

be completely arbitrary. In the meeting held on 23.11.2010, EAC

approved procurement of 1000 MW for the next 25 years based on the

long term power requirement of the State. In the minutes of the 4th

meeting held on 29.01.2014, it is recorded by EAC that there is no

requirement of any quantum of power. Quite to the contrary, in the 5th

meeting of EAC held on 21.05.2014, it is recorded that quantum of power

required is 600 MW. As against this, the Energy Department, Government

of Rajasthan vide its letter dated 25.07.2014 conveys its approval for

purchase of 500 MW power, without disclosing any reasons for the

reduction of 100 MW. Notably, as per the procurer, i.e., RRVPNL, 1000 MW

power is required. Thus, the decision of the EAC, in as much as it lacks any

reasons or justification, is wholly contrary to the order dated 23.03.2011

passed by this Hon’ble Commission.

(xi) It may be noted that the decision taken in the 5th meeting dated

21.05.2014 overrules the decision taken in the 4th meeting dated

29.01.2014. In the 4th meeting, the EAC had decided not to procure any

power on long terms basis under Case-1 for the purported reason that 800

MW units were available (no details are given) and the loss in capacity of

the projects mentioned in the minutes would be slightly compensated by

upsizing 660 MW units under planning at Kalisindh and Banswara. In the

5th meeting, it is noted that Kalisindh TPS would have to be restricted to

2X660 MW. Additionally, it is stated that there is a continuous shortfall in

generation from Giral Lignite TPS Unit 1 & 2 and these units are operating

at 25-30% PLF. However, the minutes of meeting do not reflect any basis

of 71 431/13

for arriving at a conclusion that 600 MW and not 1000 MW would be

required.

(xii) It is important to note that the 18th EPS published by CEA states that

power demand of Rajasthan increases every year by about 1000 MW on

an average for the next 25 years. The likely power demand in 2016-17 is

projected to be 13886 MW, in 2021-22, 19692 MW which will further

increase to 40284 MW in 2031-32. As per projections of RVPN, projected

Demand in 2016-17 is 12558 MW & in 2021-22 it is 19997 MW. From the

above, it can be seen that demand trend is increasing as compared to

18th EPS demand in 2021-22. Further the State’s own generation of about

1000 MW has been dropped which will create further demand gap

capacity requirements. Thus, procurement of 1000 MW for the next 25

years is clearly justified keeping in view the ever increasing demand. Thus,

there is an apparent conflict in so far as views of EAC, Government and

procurer itself is concerned. The application thus lacks credibility and is not

made bonafide and is liable to be dismissed on this ground as well.

(xiii) RRVPN has filed this petition for adoption of tariff quoted by M/s PTC India

Ltd. (through developer M/s Maruti Clean Coal and Power Limited), M/s

PTC India Ltd. (through developer M/s DB Power Limited) and M/s Lanco

Power Ltd. (Generation source- M/s Lanco Babandh Power Limited) (with

reduction of 5 paisa per kWh) in terms of Section 63 of the Electricity Act

2003 whereas SKS Power Generation (Chhattisgarh) Ltd. and Athena

Chhattisgarh Power Ltd. (SKS and Athena), who had participated in the

bidding process filed objections to the Petition for adoption of tariff before

this Commission to argue that the bidding process was not conducted in

accordance with the guidelines and the terms of the RFP and further that

the bidding process was not transparent.

(xiv) Both SKS and Athena have raised an objection that the additional

quantum for supply permitted to L1 to L3 beyond what was originally

offered by them is an impermissible deviation from the terms of the RFP

of 71 431/13

and further that the discount of 5 paisa in the tariff of Lanco Power Ltd.

after the financial bid was opened is also prohibited. It is submitted that

neither of the two actions amount to a departure or violation of the RFP

conditions especially Clause 3.5. In this regard, Clause 3.5 of the RFP is

reproduced hereunder:-

“3.5 STEP IV – Successful Bidder(s) Selection

3.5.2 - The Levelized Tariff calculated as per Clause 3.4.8 for all Financial Bids of Qualified Bidders shall be ranked from the lowest to the highest.

3.5.3 - The Bidder with the lowest Levelised Tariff shall be declared as the Successful Bidder for the quantum of power (in MW) offered by such Bidder in its Financial Bid.

3.5.4 - The selection process of the Successful Bidder as mentioned above in Clause 3.5.3 shall be repeated for all the remaining Financial Bids of Qualified Bidders until the entire Requisitioned Capacity is met or until the time when the balance of the Requisitioned Capacity is less than the Minimum Bid Capacity.

3.5.6 The selection process shall stand completed once the Requisitioned Capacity has been achieved through the summation of the quantum offered by the Successful Bidders or when the balance of the Requisitioned Capacity is less than the Minimum Bid Capacity.

3.5.9 - There shall be no negotiation on the Quoted Tariff between the Authorized Representative and the Bidder(s) during the process of evaluation.

3.5.12 - The Authorized Representative, in its own discretion, has the right to reject all Bids if the Quoted Tariff are not aligned to the prevailing market prices.”

(xv) In terms of clause 3.5.9 of the RFP there is an interdict on ‘negotiation’ on

the ‘Quoted Tariff’ between the authorised representative/ procurer and

the bidder during the process of evaluation. This prohibition is restricted to

‘negotiation’ and ‘quoted tariff’. Quoted tariff is defined in the RFP to

mean the sum total of quoted capacity charges and quoted energy

charges which in turn are further defined. It is further the contention of

Athena that the quoted tariff as referred to in Clause 3.5.9 includes

quantum of power. This contention is misconceived because firstly,

Clauses 3.5.3 and 3.5.6 which are sub clauses of the same clause 3.5,

of 71 431/13

specifically use the term “quantum” whereas 3.5.9 uses the term ‘quoted

tariff’. By the use of different terms, it follows that the one does not refer to

the other. Secondly, it is clear from the definition of ‘quoted tariff’ that it

refers to the price / charges and not to ‘quantum’ inasmuch as it is the

sum total of the capacity and energy charges. Therefore, inasmuch as

the definition of ‘quoted tariff’ refers to the charges as quoted in format

4.10, it is referring to the figures and not to the ‘quantum’. The contention

of Athena and SKS seeks to expand the express prohibition, which is

limited, to include by implication a prohibition as regards “quantum”,

which is impermissible and defeats the intent behind expressly limiting the

prohibition in the RFP.

(xvi) As regards the interpretation of clauses 3.5.3 to 3.5.6, it is SKS and Athena’s

case that the procurer can only accept the quantum of power for supply

offered by the bidder in its financial bid and nothing more. It is submitted

that the correct interpretation of the said clauses is to the effect that the

procurer is bound to, at the least, as a minimum, accept what is offered

by the lowest bidder in its financial bid but is not precluded from

accepting a greater quantum upto the requisitioned capacity. This

follows not only from the fact that Clause 3.5.9 restricts the prohibition to

“Quoted Tariff” but also from the fact that the language of Clause 3.5.3

only obligates the procurer to declare the lowest bidder as the successful

bidder for at least the quantity offered in its financial bid. Clause 3.5.3 thus

states that the lowest bidder ‘shall be declared as the successful bidder

for the quantum of power (in MW) offered by such bidder in its financial

bid’ and does not state that the said bidder shall be declared successful

‘only for such quantum of power’.

(xvii) It is an undisputed fact that the tariff quoted by SKS and Athena, if

considered, would result in additional expenditure of Rs. 4007 Crores,

which would then have to be charged and recovered from the

of 71 431/13

consumers, i.e., the general public and would therefore be against the

policy of the State.

(xviii) In the instant case, the process for allocating additional quantum was

entirely transparent inasmuch as first the L-1 bidder was given the

opportunity to offer additional quantum, thereafter the L-2 bidder, and

lastly the L-3 bidder, by which point the requisitioned capacity was

exhausted. With all three bidders, as required by the terms of the RFP, the

quantum as offered in their bid was accepted, and each one, in turn, was

permitted to offer additional quantum which is not prohibited under the

terms of the RFP and subserves the public interest of procuring power at

lower cost, and is therefore permissible.

(xix) As regards the prohibition on negotiation on the quoted tariff, it is

submitted that what clause 3.5.9 prohibits is ‘negotiation’. Negotiation

necessarily involves a give and take, a bargaining of some sort. What is

sought to be prohibited is to prevent the procurer from pressurizing the

lowest bidder into reducing its price by making acceptance of its offer a

condition of such reduction. In the instant case, Lanco is not complaining

about the 5 paisa reduction in its quoted tariff and it does not lie in the

mouth of an unsuccessful bidder to raise such a grievance. Moreover, by

such reduction, the ranking of lowest to highest bidder has not been

disturbed in any manner on the basis of what was quoted in the financial

bid. It is not therefore, a case where Lanco was given an opportunity to

lower its bid, such that it would gain any preference or precedence in the

queue that had been formed, when the financial bids were opened. As

such there is no impermissible deviation.

(xx) It is also significant to note that the competitive element in the structure is

the tariff and not the quantum. The bidders are free to quote for supply of

as much capacity as they wish upto the requisitioned capacity. Even if

the 5 paisa reduction were struck down, Athena or SKS are not thereby

of 71 431/13

put to any advantage since there is no change in the ranking of lowest to

highest bidder and the only casualty is public interest.

(xxi) If this Commission finds, that the 5 paisa reduction ought not to be

permitted, then to that extent the original tariff as offered by Lanco,

without the 5 paisa reduction, may be approved. It is submitted that the

consequence of disapproval of the 5 paisa reduction would not be that

the entire bidding process and its outcome must perish. The 5 paisa

reduction does not in any manner affect the ranking of the bidders, and

its dispproval would equally therefore, have no impact on the ranking. As

such, the tariff, only to the extent of the 5 paisa reduction, would be

disapproved, and the remaining tariff be approved.

(xxii) SKS and Athena in their objections have alleged that the bidding process

is not transparent, Respondents have committed a fraud and have sought

to give preference to the L1 to L3 bidders and have indulged in ante-

dating of documents to achieve a malafide objective. In this regard, SKS

and Athena have placed reliance on the fact that letters were issued to

the unsuccessful bidders asking them to keep alive the bid bonds(security)

even though letters of intent had already been issued to the so called

successful bidders prior thereto. The objectors infer once that in fact the

LOIs issued had been back dated and were never issued on the dates on

which they were purportedly issued because had that been the case,

there would have been no occasion for the Respondents to seek

extension of the bid bonds by the unsuccessful bidders once the decision

to grant LOIs had already been taken and LOIs issued. In this regard, it is

relevant to submit that the RVPNL had filed an additional affidavit before

the Ld. Single Judge in the Writ Petitions filed by the unsuccessful bidders

explaining the circumstances in which the said communications were

issued and providing proof of dispatch of the LOIs which conclusively

establishes that the speculative and wild allegations of malafide and

antedating by the objectors are wholly without substance.

of 71 431/13

(xxiii) Athena has no locus to object to the bidding process inasmuch as it was

not a bidder in the bidding process that is sought to be impugned, it is

submitted that Athena is a generating company who had tied up with a

trading licensee and it is the trading licensee which placed a bid on its

own behalf without any relationship of agency, relying on the generation

source of Athena. The said bidder, namely, PTC India Ltd. has not

challenged the bidding process and therefore has not sought any award

in its favour in respect of supply from the Athena’s generating station.

(xxiv) It is further submitted that in respect of the generating station of Athena, it

is PTC and not Athena who is bidder, it is PTC and not Athena who would

enter into the PPA, and it is PTC and not Athena who would be required to

give the performance guarantee. In other words, upon any award of

contract in respect of the generating station of Athena, it is PTC and not

Athena who would have the privity of contract with the procurers and

would be bound to make the supply. No rights under such PPA would be

created in favour of Athena and no obligation imposed thereupon. In the

absence of PTC having challenged the bid process, Athena cannot be

permitted to do so. Athena thus has no locus to challenge the bid process

before this Hon’ble Commission.

22. Per contra Sh. Angad Mirdha, Advocate for Athena Chhatisgarh Power

Ltd.(APCL) in submissions contended that:

(i) RRVPNL had issued RFP for procurement of 1000 MW of power(+/- 10%)

wherein a bidder could bid for supply of minimum 100 MW of power. In

terms of Clause 3.5.3 of the RFP, the lowest tariff bid would be declared

successful for the quantum of power offered by such bidder. In terms of

Clause 3.5.4 the selection process of the successful bidder as mentioned

in Clause 3.5.3 shall be repeated for all the remaining Financial Bids of

Qualified Bidders until entire requisitioned capacity is met.

of 71 431/13

(ii) ACPL had bid for supply of 200 MW of power and was declared to be the

fourth lowest bidder (L4). The first 5 lowest bidders cumulatively bid for

supply of 906 MW of power. Therefore ACPL should have been declared a

successful bidder and awarded the LOI for supply of 200 MW of power at

the bid tariff.

(iii) The present petition was filed by RRVPNL under Section 63 of the Electricity

Act, 2003 for adoption of tariff provided the process of procurement was

fair and transparent. On the contrary RRVPNL had issued LOIs in a non

transparent and unfair manner and in complete violation of mandate of

Section 63 of the Act as per the following reasons:

(a) Despite the fact that M/s. PTC India Ltd. for DB Power having made an

original bid of 311 MW, LOI dated 27/9/2013 was issued for additional 99

MW at the quoted tariff as per the financial bid.

(b) Similarly, LOI dated 27/9/2013 was issued to M/S Lanco Power Ltd. for

total 350 MW (original bid quantity of 100 MW + additional 250 MW).

There is also a reduction in tariff of 5 Paisa from the original bid

document.

(c) Maruti Clean Coal & Power Ltd. has also been awarded an additional

quantum of 55 MW on 27.09.2013 over and above the quoted quantum

of 195 MW.

(d) Para 5.5 of guidelines expressly stipulates that no deviation is permissible

from the bidding document without the approval of the appropriate

Commission. Further all revised documents have to be provided two

months prior to all bidders so as to enable them to submit bids. Para 5.6

(ii) & (iii) also rule out any amendment beyond the Request for Proposal

(RFP) stage. Clause 5.16 expressly mandates that any deviation from

these guidelines shall not be made without prior approval of the

Commission.

(e) The RFP at the outset makes it clear that the bidding has to be in

accordance with the aforementioned guidelines. It is also expressly

of 71 431/13

mentioned in the RFP that it intends to procure 1000 MW power. Clause

2.3 of the RFP expressly states that any amendment to the RFP must be

notified to all entities to whom RFP is issued, besides all clarifications also

have to be sent to all bidders. Clause 3.5 is vital as under Clause 3.5.3

the bidder with the lowest levelized tariff shall be declared as the

successful bidder for the quantum of power offered by the bidder on its

financial bid. Clause 3.5.4 expressly mandates that procedure in Clause

3.5.3 shall be repeated for all remaining financial bids of qualified

bidders until entire requisitioned capacity is met. The same is also the

effect of a cumulative reading of Clause 3.5.5, 3.5.6, 3.5.7.

(f) The only discretion vested in Clause 3.5.7 which gives a right to increase

the requisition capacity upto 10% but there is no discretion vested in the

tendering authority to deviate from the aforementioned clauses.

(g) As per Clause 3.5.9, negotiation w.r.t. the quoted tariff is completely

prohibited. It is apparent that the action of the RRVPNL in having

altered the quantity of bid by DB Power vide LOI dated 27/9/2013 and

having altered the quantity and price qua M/s. Lanco Power Ltd. and

that of Maruti Clean Coal Ltd. is clearly in violation of the

aforementioned express and mandatory clauses. The Hon’ble Supreme

Court in the case of West Bengal State Electricity Board vs. Patel Engg.

Co. Ltd. (2001) 2 SCC 451 has upheld this proposition. The Hon’ble

Supreme Court in the case of Monarch Infrastructure (P) Ltd. v.

Commissioner, Ulhasnagar Municipal Corporation and Ors., AIR 2000 SC

2272 has held that the rules of the game cannot be changed after the

game had begun.

(h) There is also an additional overarching case of ante-dating of LOI

issued on 24.9.2013 and 27.9.2013. RVPN vide its letter dt. 30.09.2013 has

requested for extension of validity of bid till 31.12.2013 with suitable

extension in validity of the Bid Bond in respect of all developers. Thus, if

the selection of the successful bidder and decision of the issue of LOI

of 71 431/13

and acceptance was yet to be taken as on 30.9.2013 then there could

be no question of issuance of LOI on 24.9.2013 and 27.9.2013. The

reason for such ante-dating is not far to seek on declaration of the

elections the code of conduct under the Representation of People Act,

1951, came into force w.e.f 4/10/2013. Thus, the Respondent acted with

hot haste and proceeded to ante-date LOI’s. The impugned action is

thus malafide and deserves to be set aside.

(i) It is well settled that when the Government is dealing with the public, by

way of entering into contracts or granting other forms of largesse, it

cannot act arbitrarily at its sweet will and, like a private

individual, deal with any person as it pleases. Its action

must be in conformity with standard or norms which are

not arbitrary, irrational or irrelevant. In dealing with

tenders, the Government has to necessarily conform to the terms and

conditions of tender documents and conditions. There is very little

discretion in such cases and even, where there is discretion, the power

or discretion of the Government in the matter of grant of largesse must

be confined and structured by rational, relevant and non-discriminatory

standard or norm. RRVPNL in this case has acted in complete

contravention of the' Guidelines for Determination of Tariff by Bidding

Process for Procurement of Power by Distribution Licensees, 2005'

(hereinafter "Bidding Guidelines") as amended from time to time.

(j) In the present case, pursuant to the conclusion of the competitive

bidding process and in violation of all principles relating to bidding,

RRVPNL entered into negotiations with L 1, L2 and L3 to increase their

offered/bid quantum of power without informing any of the other

qualified bidders and thus prejudicing all other qualified bidders

including L4, i.e., ACPL.

(k) The action of RRVPNL in negotiating the bid conditions with L 1, L2 and

L3 without involving any of the other qualified bidders and in complete

of 71 431/13

contravention of the provisions of the RFP and the Bidding Guidelines is

grossly illegal and are liable to be quashed. Clause 5.5 of the Bidding

Guidelines provides that RRVPNL may amend the RFP subject to giving

notice of 2 months after the amendment for submission of bids.

Therefore, in terms of the Guidelines, RFP can be modified only prior to

the submission of the bid. This principle is further incorporated in Clause

2.3.1 and 2.3.2 of the RFP. RRVPNL has indirectly modified the terms of

the RFP by arbitrarily increasing the bid quantum of power over and

above the quantum originally offered by L 1, L2 and L3, when ACPL was

declared L4 being one of the successful bidders. Therefore, RRVPNL has

in effect taken away the right of L4 to be a successful bidder and

handed it over to L 1, L2 and L3 by a process which is vitiated by

arbitrariness and unfairness, a modus which demonstrates in

unequivocal terms that RRVPNL has acted with malafide intention and

contrary to the settled principles of law.

(l) RRVPNL is expressly prohibited from engaging in private negotiations

with any bidder to the prejudice of other qualified bidders. The Bidding

Guidelines specifically provide that any deviation from RFP or the

Bidding Guidelines must have prior approval from the

appropriate Commission. Given that RRVPNL on its own whims altered

the bid process without any approval being sought from the

appropriate Commission, the LOls must be struck down with immediate

effect in order to avoid perpetuating the Illegality.

(m) The action of the RRVPNL to clandestinely negotiate with L1, L2 and L3

by arbitrarily increasing the quantum of power bid by them, is in

complete supersession of Clause 5.5 and 5.16 of the Bidding guidelines.

It is settled law that when any statutory guideline provides a particular

manner for doing a particular act, the thing or act must be done in

accordance with the manner prescribed therein. State instrumentalities

are expected to strictly comply with statutory guidelines.

of 71 431/13

(n) As per the RFP, any bidder can be successful only to the extent of the

quantum offered by the bidder in its financial bid. Since Clause 3.5.3 of

the RFP clearly provides that "the Bidder with the lowest Levelized Tariff

shall be declared as the Successful Bidder for the

quantum of power (in MW) offered by such Bidder in its Financial Bid."

the selected bidder is a successful bidder only for the quantum of

power offered. Beyond the quantum of power offered, the selected

bidder cannot be considered as successful. This is the plain and

unambiguous interpretation of Clause 3.5.3 and it should be given

effect to. The issuance of LOls for quantum of power more than the

quantum of power offered under the financial bid is illegal and liable to

set be aside and quashed.

(o) ACPL being L4 and SKS Power Limited being L5 were also successful

bidders since the total cumulative capacity bid by L 1, L2, L3, L4 and L5

was 906 MW (within Requisitioned Capacity) but ACPL being L4 and SKS

Power being L5 were not awarded the LOls in contravention of the RFP

since RRVPNL chose to arbitrarily increase the quantum of power bid by

L 1, L2 and L3 and issued LOls to and signed PPAs with L 1, L2 and L3.

(p) It is submitted that the bidding parameters prescribed have to be

followed to the letter to ensure transparency. The Hon'ble Supreme

Court in the case of West Bengal State Electricity Board vs. Patel Engg.

Co. Ltd. (2001) 2 SCC 451 and in Air India Ltd. vs Cochin International

Airport Ltd. (2000) 2 SCC 617 has upheld this proposition.

(q) RRVPNL could not have negotiated the quantum of power with L1, L2

and L3 after the process of bidding was over and in contravention of

the guidelines and the RFP especially when the bidding process

provided that the selection process of the successful bidder as

mentioned in Clause 3.5.3 shall be repeated for all the remaining

financial bids of qualified bidders until the entire requisitioned capacity

is met or until the time when the balance of the requisitioned capacity

of 71 431/13

is less than the minimum bid capacity. Reference in this regard may be

made to the order of Appellate Tribunal for Electricity in Appeal No.

109/2009, dated 4th September, 2009 in the matter titled Lanco

Infratech Ltd. v Punjab State Electricity Regulatory Commission and Ors

and judgment of the Supreme Court in M/s G.J. Fernandez Vs State of

Karnataka and Ors (1990) 2 SCC 488.

(r) RRVPNL is seeking to evolve its own procurement process which is

contrary to Section 63 (Bidding route) and the statutory framework of

the Act, 2003. Since RRVPNL chose to procure power through a

competitive bidding process there can be no negotiations now on the

quoted quantum of power and the quoted tariff in terms of Clauses

3.5.3, 3.5.4, 3.5.6 and 3.5.9 after bids have been opened and once the

evaluation process had commenced. It is submitted that when tenders

are invited, the terms and conditions must indicate with legal certainty,

norms and benchmarks. This "legal certainty" is an important aspect of

the rule of law. If there is vagueness or subjectivity in the said norms it

may result in unequal and discriminatory treatment. It will violate the

doctrine of 'level playing field' as it does in the present case. Reference

may be made to the judgment of Supreme Court in Reliance Energy

Limited and Anr. v Maharashtra State Road Development Corporation

Ltd. and Ors. (2007)8SCC and judgment of APTEL in the case of Essar

Power Ltd. Vs UPERC & Anr 2012 ELR (APTEL) 182.

(s) RRVPNL has failed to appreciate that it is well settled law that every

activity of a public authority must be informed by reason and guided

by public interest and must not be violative of Article 14 of the

Constitution of India. Reference may be made to the judgment of

Supreme court in Akhil Bhartiya Upbhokta Congress v. State of Madhya

Pradesh [(2011) 5 SCC 29J.

(t) In terms of the RFP and by way of the extension letters, ACPL remains

tied up with the subject tender as the 200MW of power offered by it

of 71 431/13

continues to be there even as of today being a successful bidder and

for that reason RRVPNL has sought continuous extension of the bid

bonds. Therefore, in the terms of the bid documents and being a

successful bidder even as of date, ACPL has a legitimate expectation

of being granted the bid for the quoted quantum.

(u) Principles of promissory estoppel as laid down by the Supreme Court of

India were directly applicable to the facts of the present case. It is

respectfully submitted that L1, L2 and L3 by means of the RFP had held

out a promise on the opening of a financial bid on 4th April, 2013 and

accordingly was estopped from going back on their promise by issuing

the alleged LOls in favour of L 1, L2 and L3 to the exclusion of ACPL.

23. Sh. Atul Shanker Mathur, Advocate for SKS Power Generation (Chhatisgarh)

Ltd., in his submissions mainly contended as under:

(a) It is respectfully submitted that as per the Section 63 of the Act, this

Hon'ble Commission has the power to adopt the tariff if such tariff has

been determined through transparent process of bidding in

accordance with the guidelines issued by the Central Government. The

power given to this Commission under this Section is merely to adopt or

reject the tariff and has no power to modify the tariff in any manner

whatsoever. It is further submitted that the challenge to the tender

process by the SKS Power Generation relates only to the grant of

additional quantum of power to the Respondent Nos. 7 to 9 for which

order cannot be passed by this Hon'ble Commission in exercise of

power under Section 63 of the Act. In this view of the matter, the

present Petition is liable to be rejected on this ground alone.

(b) The Commission has no jurisdiction to entertain the present petition as

there are various disputes raised by the parties which relate to the

tender process itself and do not relate to the tariff as offered by such

bidders to the tender in any manner. If the manner of determination of

of 71 431/13

tariff is illegal and arbitrary and the same does not encompass 'tariff' as

such, it would not be within the scope of powers as provided in Section

63 of the Act of this Hon'ble Commission to adjudicate upon.

(c) The limited jurisdiction of Electricity Regulatory Commissions under

Section 63 of the Electricity Act has been spelt out by the Appellate

Tribunal for Electricity in Madhya Pradesh Power Trading Company Ltd.

vs. Madhya Pradesh Electricity Regulatory Commission & Ors. [2010 ELR

(APTEL) 634]. Section 63 of the Electricity Act, 2003 came up for

interpretation in the Judgment of the Appellate Tribunal in Essar Power

Limited versus U.P.E.R.C. & Others in 2012 ELR (APTEL) 182. This

Commission in Petition No. RERC- 222/10 in the matter of M/s RKM

Powergen Private Limited, Chennai has categorically held that

unsuccessful bidders cannot have the indulgence of the Commission in

relation to award of bid/contract.

(d) Present petition filed by the RRVPNL is liable to be dismissed as in the

present case none of the essential conditions as provided in Clause 5.5

of the Standard Bidding Guidelines have been followed by the RRVPNL.

It is in violation of Clause 5.5 of the Standard Bidding Guidelines issued

by the Ministry of Power.

(e) Present petition is liable to be dismissed on the ground that the

RRVPNL has not sought approval of deviations made by the

RRVPNL in the manner of selection of bidder even in the present

Petition filed. It is respectfully submitted that the RRVPNL without

seeking any approval from this Hon'ble Commission cannot deviate

from the terms of the RFP (which admittedly Applicant has done). Such

an act of the present RRVPNL completely vitiates the entire tender

process and does not let the same remain fair and transparent in any

manner whatsoever.

(f) The SKS Power Generation bid for supply of 100 MW of power and was

declared to be the fifth lowest bidder (L5). The first 5 lowest bidders

of 71 431/13

cumulatively bid for supply of 906 MW of power. Therefore the SKS

Power Generation should have been declared a successful bidder and

awarded the Lol for supply of 100 MW of power at the bid tariff.

Instead, the RRVPNL clandestinely indulged in private negotiations with

the Respondent Nos. 7, 8 and 9 and arbitrarily increased the bid

quantum of power.

(g) RRVPNL in its petition has mentioned that the Board of Directors had

decided the matter to be referred to the BEC and the Consultant to

suggest whether negotiation should be done and if yes in what

manner. The said fact is clearly in violation of not only the Standard

Bidding Guidelines but also the RFP and particularly Clauses 3.5

onwards which mention about the manner of selection of the

successful bidder. The said fact clearly shows that the tender process

adopted by the RRVPNL was not transparent in any manner

whatsoever.

(h) Apart from the Respondent Nos. 7 to 9, no other bidder was aware that

the RRVPNL has called for the increase of the quantum of power

offered by such bidder which was in violation of Clause 3.5 of RFP.

Negotiations were completely done behind the back of the successful

bidders which would categorically show that the same were not

transparent in terms of Section 63 of the Act.

(i) RRVPNL on one hand in their letter dated 30 September, 2012 sent to

the SKS Power Generation as well as Respondent No. 6 stated that the

"Bid process" has not yet been concluded and on the other hand in the

alleged LOls sent to Respondent No. 8 and 9, illegally granting

additional quantum of power on 27 September, 2012 stated that the

"Bid process" has been concluded. This act shows the malafide

conduct of the RRVPNL throughout the process of finalization of bids

and in view thereof the complete tender process has been vitiated.

of 71 431/13

(j) RRVPNL could not have changed the terms of the bid after the bidding

process had begun, i.e., rules of the game cannot be changed after

the game has begun. It is germane to mention that the RVPNL could

not have modified terms of the RFP that too after the bids were made.

If the RVPN had followed the process prescribed under the RFP, M/s SKS

Power would have been a successful bidder as having quoted the fifth

lowest tariff and the total bid quantum of 5 lowest bidders being under

1000 MW. Further such increase in the quantum of power bid by the

Respondent Nos. 7, 8 and 9 indirectly amounts to amendment of the

RFP which amendment is in complete contravention of Clause 2.3.1

and 2.3.2 of the RFP and Clause 5.5 and 5.16 of the Bidding Guidelines

which state that the provisions of RFP can be amended only prior to

submission of bids and not thereafter. The present petition is liable to be

dismissed on this ground alone.

(k) As per the RFP, bid bond shall mean the unconditional and irrevocable

bank guarantee to be submitted along with the bid by the bidder

under clause 2.12 of RFP as per format 4.9 whereas format of bid bond

as given in 4.9 of the RFP provides the amount of the bid bond to be

not less than that derived on the basis of Rs. 3,00,000/MW multiplied

with the total quantum of power offered by the bidder. This shows that

the bid bond given by the Respondent Nos. 7, 8 and 9 along with their

bids were for the quantity of power offered and in the absence of the

additional bid bond to the extent of the additional quantum of power

granted to the Respondent Nos. 7, 8 and 9, the bids of the said

Respondents cannot be accepted in terms of the RFP. Accordingly, the

grant of additional quantum of power to the said Respondents’ for

which no bid bond was given along with their bids is completely illegal

and in violation of the terms of RFP itself.

(l) However, RRVPNL has reduced the quantum of power procurement by

50% from 1000 MW to 500 MW without taking any approval of

of 71 431/13

Commission in gross violation of RFP and Competitive Bidding

Guidelines issued by MOP (refer Clause 3.5.7). In any event, there can

be no amendment to RFP at this stage and any changes if at all

permissible, had to be carried out prior to invitation of the financial

bids.

(m) The guidelines for bidding as issued by the MoP have a statutory basis

and are in the nature of subordinate legislation on which basis the

model form of RFP and RFQ was drafted by MoP for all licensees

including the Petitioner. The same are binding in nature and the RFP

issued by the RRVPNL is within the purview of the guidelines as issued by

the MoP and no deviation in any manner whatsoever can be made by

the RRVPNL from the same.

24. We have considered the averments made in the petition, the interim

application filed on 24.11.2014, the oral submission made during the course

of hearing by the Petitioner’s Advocates, the statements filed by L-1, L-2 & L-

3 bidders both on the petition and interim application filed by the

Petitioner, the averments made on behalf of the unsuccessful bidders

namely M/s.SKS Power Generation Ltd., and Athena Chattisgarh Power Ltd.,

and the judgments cited by respective parties.

25. The issues which arise for consideration in view of the rival contentions are :

i. Whether the bidding process carried out by the petitioner is in

accordance with Section 63 of Electricity Act, 2003 and bidding

guidelines issued by Govt. of India; and

ii. Whether the bidding process carried out by the Petitioner is

actuated by malafides;

iii. Whether Petitioner can seek approval for purchase of reduced

quantity of power of 500 MW when this Commission had approved

for procurement of 1000 MW for which bidding process was carried

out.

of 71 431/13

26. Before dealing with the issues framed as above it is necessary to notice the

undisputed facts.

27. RVPN duly authorized by Discoms had invited bids for procurement of 1000

MW base load power under case-1 “Guidelines for Determination of Tariff

by Bidding Process for Procurement of Power by Distribution Licensees”

issued by Ministry of Power, Govt. of India, to meet their additional load

requirements. In all 8 Companies purchased RFP documents out of which

the following 7 bidders submitted their bids within the due date :

S. No. Bidder Name Capacity

Offered (MW) 1 Jindal Power Limited 300 2 KSK Mahanadi Power Company Limited 475 3 SKS Power Generation (Chhattisgarh)

Limited 100

4 RKM Powergen Pvt. Ltd. 600 5 NSL Nagapatnam Power & Infratech

Limited 100

6 Lanco Power Limited 300 7 PTC India Limited (which has bid from


(a) Adhunik Power and Natural Resources Limited

135

(b) Maruti Clean Coal and Power Limited 195 (c) MB Power (Madhya Pradesh) Limited 200 (d) DB Power Limited 311 (e) Athena Chhattisgarh Power Limited 200

28. The Bid Evaluation Committee declared all bidders qualified for opening

their financial bids. However, except for M/s. NSL Nagapatnam Power &

Infratech Limited and M/s. RKM Powergen Pvt. Ltd., who did not extend

their bid validity, the bids of remaining 5 bidders were opened on 4.4.2013.

The offers of these 5 bidders were placed before the Board of Directors of

RVPN. The Board of Directors in view of the recommendations of Bid

Evaluation Committee, decided to hold negotiations at Board level.

Accordingly it invited first the L-1 bidder M/s.Maruti Clean Coal and Power

of 71 431/13

Limited, and thereafter M/s.DB Power Ltd., and M/s.Lanco Power Ltd. The

first two lowest bidders M/s.Maruti Clean Coal and Power Limited, and

M/s.DB Power Ltd., did not agree to reduce the tariff but offered to give

additional quantity of power of 55 MW and 99 MW respectively in addition

to 195 MW and 311 MW offered in the bid. The third lowest bidder M/s.

Lanco Power Ltd., not only agreed to reduce the tariff but also agreed to

offer increased quantum of power of 250 MW in addition to 100 MW initially

offered. As per negotiations held, LoIs were issued in favour of these bidders

and PPAs, subject to approval of Commission, were also signed thereafter.

29. Challenging the issue of LoI and signing of PPAs with M/s.Maruti Clean Coal

and Power Limited, M/s.DB Power Ltd., and M/s.Lanco Power Ltd., M/s. SKS

Power Generation (Chhattisgarh) Limited and M/s.Athena Chhattisgarh

Power Limited, filed writ petitions before the Hon’ble High Court of

Rajasthan. It was contended before the Hon’ble High Court that the

negotiations held by RVPN after the completion of bidding process is in

violation of Section 63 and the Bidding Guidelines issued there under and

are on account of malafide exercise of power and is actuated by ulterior

motives and are to be set aside. The learned Single Judge and also the

Division Bench of Hon’ble High Court of Rajasthan disposed of the writ

petitions directing the petitioners to raise the disputes before this

Commission which can look into them, in the proceedings pending before

it for adoption of tariff in exercise of its powers under Section 63 of the

Electricity Act and also Section 86 of the Electricity Act, 2003.

30. During the course of the hearing Shri L.L.Gupta, Advocate appearing for

the petitioner submitted that bidding process carried-out by the petitioner is

in accordance with the Section 63 and bidding guidelines issued there

under and no fault can be found with the same. He further contended that

the negotiations held by the petitioner with the L-1, L-2 & L-3 bidders is not in

violation of bidding guidelines as bidding guidelines do not prohibit any

negotiations. He in support of his argument, drew the attention of the

of 71 431/13

Commission to the decision of Hon’ble APTEL in the case of M.P.Power

Trading Co., Ltd. v/s MP Electricity Regulatory Commission & Ors., in

particular to para 38 & 39 wherein it is held as follows :

“38. If we go through the entire bidding documents, we can easily conclude that the negotiation is inherent and in-built in the bidding process. With regard to the principle relating to negotiation for reduction in prices, the Supreme Court has held in Food Corporation of India v. Messrs Kamdhenu Cattle Feed' (1993) 1 SCC 71, as under :

10. From the above, it is clear that even though the highest tender can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. The inadequacy may be for several reasons known in the commercial field. Inadequacy of the price quoted in the highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good.

39. The above principle has been laid down by the Supreme Court in a case of sale of food grains where higher price was beneficial for the public good. The present case relates to the purchase of electricity by the procurer for consumers for the lower price in the public interest. The ratio decided by the above decision taking note of public interest squarely applies to the present case as well.”

of 71 431/13

31. Shri L.L.Gupta in support of the application filed for reduction of quantity in

purchase of power contended that RVPN/Discoms are within their rights to

reduce the quantity of power on the reassessment of energy requirement, if

it is found that requirement has come down. In support he relied upon the

4th and 5th Energy Assessment Committee recommendations and the

approval of Govt. of Rajasthan dated 25.7.2014.

32. Shri Gupta strongly denied the allegations of malafide, etc. on the part of

petitioner in holding the negotiations. When the negotiations have yielded

the better price and consumers of State of Rajasthan are getting the power

at a lesser price no malafides at all can be attributed.

33. Shri Ravi Chirania, Advocate who appeared for M/s.Maruti Clean Coal and

Power Limited, supported the arguments submitted on behalf of RVPN.

Though, there is no specific provision for RFP document providing for

negotiation still the petitioner was entitled to negotiate with the successful

bidders with the due approval of the Commission. He further contended

that the arguments of L-4 and L-5 bidders if accepted, the basic objects of

Section 63 of obtaining the competitive price will get frustrated as L-4 and

L-5 have admittedly quoted higher tariff. Further, he submitted that

petitioner can negotiate the quantity offered at the offered price.

34. Shri Sanjay Sen, Advocate appearing for M/s.DB Power Ltd., also supporting

the contention of the petitioner except for the application for reduction of

quantity, contended that the bidding process has been conducted in

accordance with Section 63 of the Electricity Act, 2003. The entire process

of bidding is conducted in a transparent way and in accordance with

bidding guidelines. According to him it is a settled tool of interpretation that

in the matters of public procurement an interpretation that benefits the

interest of public at large has to be adopted. In the present case,

according to him the State procurer wants to maximize the public welfare

by seeking maximum power at the lowest possible tariff. Further according

to him, the bidding guidelines provided for deviation from the guidelines

of 71 431/13

with approval of the Commission. The Commission, therefore, can grant

approval for the deviations taken while accepting the bids.

35. On the application filed by the petitioner for procurement of reduced

quantum of power from 1000 MW to 500 MW, he submitted that the same

has to be rejected as the proceedings before the Commission are limited

to adoption of tariff u/s 63 of Electricity Act, 2003 if such tariff has been

determined through the transparent bidding process carried out in

accordance with the guidelines issued by the GoI.

36. The application filed by the petitioner, therefore, for procurement of

reduced quantum cannot be entertained in the proceedings for adoption

of tariff u/s 63, that too when this Commission has already approved the

quantum of power to be procured before initiating bidding process. When

bidding has been completed and contracts have come into existence, the

only issue the Hon’ble Commission may decide is whether process of

procurement was fair and transparent and the tariff is aligned to present

market conditions. He further argued that contention of RVPN that the

Commission has power u/s 86(1)(b) to consider reduction in quantity of

power is untenable. According to him Section 86(1)(b) is a general provision

whereas Section 63 is specific and therefore Section 86(1)(b) cannot

override Section 63 and on the contrary Section 63 will prevail over Section

86(1)(b).

37. Further, he contended that Energy Assessment Committee cannot alter the

decision of this Commission where quantum of power has been approved.

38. Sh.Akhil Sibbal, Advocate appearing for M/s.Lanco Power Ltd., also

contended that the bidding process that has been conducted by the

petitioner is in accordance with Section 63 and bidding guidelines.

According to him clause 3.5.7 of the RFP gives a right to petitioner to

increase or decrease the requisitioned capacity by/upto 10% of the

quantum with the approval of the appropriate Commission. Therefore, the

of 71 431/13

increase in quantum of power offered by the successful bidders is in

accordance with RFP documents. According to him, there is no prohibition

under the RFP documents for negotiations on the quantum of power to be

procured at the quoted tariff. What is prohibited is negotiation on tariff

during the bidding process. The process of buying of additional quantum of

power from successful bidders was transparent as could be seen from the

negotiations held by Board of Directors first with L-1 bidder and thereafter L-

2 & L-3 bidders. The negotiations for additional quantum of power from the

lowest bidders sub serves the public interests of procurement of power at

the lowest cost. According to him even negotiations of tariff for lower tariff is

also not prohibited as the reduction in tariff by the L-3 bidder does not alter

the ranking of lowest or highest bidders. He contended that if reduction of

tariff by his client by 5 paise are not to be permitted then the original tariff

may be approved by this Commission. Reduction of tariff would not vitiate

the bidding process.

39. As regards the application filed by RVPN for reduction of quantum of power

to be procured, he submitted that the application for reduction of

quantum cannot lie under regulation 7 of RERC (Power Purchase and

Procurement Process of Distribution Licensee) Regulations, 2004 as the said

Regulation only applies to power purchase agreements and amendments

thereof after execution. He further contended that the Commission does

not have jurisdiction to allow an application of this nature in the petition

filed for adoption of tariff u/s 63 of the Act wherein the Commission is

mandated to adopt the tariff if such tariff has been determined through

transparent process of bidding in accordance with the guidelines issued by

GoI. The scope of consideration in the present petition by this Commission is

only whether the bidding process of procurement of power was

transparent and in accordance with the bidding guidelines. By way of

present application RVPN is trying to reopen the order by the Commission

dt.23.3.2011 which has been acted upon and has attained finality.

of 71 431/13

According to him Section 86(1(b) is a general provision whereas Section 63

is the specific provision and the specific provision will override the general

provision.

40. Shri Angad Mirdha and Shri Atul Shankar, Advocates appearing for

M/s.Athena Chhattisgarh Power Ltd. & M/s SKS Power Generation

(Chhatisgarh)Ltd. respectively (the unsuccessful bidders), contended that

the issuance of LoI in favour of successful bidders for increased quantum of

power is non-transparent and unfair and is in complete violation of

mandate of Section 63. The increase in quantum of power to be purchased

from the lowest bidders and negotiation on tariff are contrary to the

bidding guidelines. In support of malafide exercise, they quoted antedating

of LoI. Further they cited the letter addressed by RVPN dt. 30.9.2013 wherein

bid validity was sought to be extended. They submitted that :

i. It is well settled that when the Government is dealing with the public,

by way of entering into contracts or granting other forms of largesse,

it cannot act arbitrarily at its sweet will and, like a private

individual, deal with any person as it pleases. Its action

must be in conformity with standard or norms which are

not arbitrary, irrational or irrelevant. In dealing with

tenders, the Government has to necessarily confirm to the terms and

conditions of tender documents and conditions. There is very little

discretion in such cases and even, where there is discretion, the power

or discretion of the Government in the matter of grant of largesse must

be confined and structured by rational, relevant and non-

discriminatory standard or norm. RRVPNL in this case has acted in

complete contravention of the' Guidelines for Determination of Tariff

by Bidding Process for Procurement of Power by Distribution Licensees,

2005' (hereinafter "Bidding Guidelines") and as amended from time to

time.

of 71 431/13

ii. In the present case, pursuant to the conclusion of the competitive

bidding process and in violation of all principles relating to bidding,

RRVPNL has entered into negotiations with L 1, L2 and L3 to increase

their offered/bid quantum of power without informing any of the other

qualified bidders and thus prejudicing all other qualified bidders

including L4, i.e., ACPL.

iii. The actions of RRVPNL in negotiating on the bid conditions of L-1, L-2

and L-3 without involving any of the other qualified bidders is in

complete contravention of the provisions of the RFP and the Bidding

Guidelines and is grossly illegal and are liable to be quashed. Clause

5.5 of the Bidding Guidelines provides that RRVPNL may amend the

RFP subject to giving notice of 2 months after the amendment for

submission of bids. Therefore, in terms of the Guidelines, RFP can be

modified only prior to the submission of the bid not thereafter. This

principle is further incorporated in Clause 2.3.1 and 2.3.2 of the RFP.

RRVPNL has indirectly modified the terms of the RFP by arbitrarily

increasing the bid quantum of power over and above the quantum

originally offered by L-1, L-2 and L-3, when ACPL was declared L-4

being one of the successful bidders. Therefore, RRVPNL has in effect

taken away the right of L-4 and L-5 and handed it over to L 1, L2 and

L3 by a process which is vitiated by arbitrariness and unfairness, a

modus which demonstrates in unequivocal terms that RRVPNL has

acted with malafide intention and contrary to the settled principles of

law.

41. They submitted that the bidding parameters prescribed have to be

followed in the letter to ensure transparency and cited the decision of the

Hon’ble Supreme Court in the case of West Bengal Electricity Board v/s

M/s.Patel Engineers Ltd., Air India Ltd. v/s Cochin International Airport Ltd.

of 71 431/13

Commission’s analysis and decision :

42. As the issues framed at para 23 have to be considered in the light of

Section 63 of the Electricity Act, 2003 and the relevant provisions of the

Bidding Guidelines contained in Standard Bidding Document (hereinafter

referred to as SBD) issued by Ministry of Power, Government of India, it is

desirable to extract them in extenso.

Section 63 of the Act reads as under :

“Determination of tariff by bidding process: 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.”

43. The relevant clause of SBD which deals with selection of bidders are as

under :

“3.5 STEP IV – Successful Bidder(s) Selection

3.5.1 Bids qualifying in Step III shall only be evaluated in this stage.

3.5.2 - The Levelized Tariff calculated as per Clause 3.4.8 for all Financial Bids of Qualified Bidders shall be ranked from the lowest to the highest.

3.5.3 - The Bidder with the lowest Levelised Tariff shall be declared as the Successful Bidder for the quantum of power (in MW) offered by such Bidder in its Financial Bid.

3.5.4 - The selection process of the Successful Bidder as mentioned above in Clause 3.5.3 shall be repeated for all the remaining Financial Bids of Qualified Bidders until the entire Requisitioned Capacity is met or until the time when the balance of the Requisitioned Capacity is less than the Minimum Bid Capacity.

3.5.6 The selection process shall stand completed once the Requisitioned Capacity has been achieved through the summation of the quantum offered by the Successful Bidders or when the balance of the Requisitioned Capacity is less than the Minimum Bid Capacity.

3.5.7 At any step during the selection of Successful Bidder(s) in accordance with Clauses 3.5.2 to 3.5.6, the Procurer / Authorized Representative reserves the right to increase / decrease the Requisitioned Capacity by up to ten percent (10%) of the quantum indicated in Clause 1.3.1 to achieve the balance Requisitioned Capacity and select the Successful Bidder with the lowest Levelized Tariff amongst the remaining Bids. Any increase / decrease in the Requisitioned Capacity exceeding ten percent

of 71 431/13

(10%) of the quantum in Clause 1.3.1, can be made only with the approval of the Appropriate Commission.

3.5.8 The Letter(s) of Intent shall be issued to all such Successful Bidder(s) selected as per the provisions of this Clause 3.5.

3.5.9 - There shall be no negotiation on the Quoted Tariff between the Authorized Representative and the Bidder(s) during the process of evaluation.

3.5.10 Each Successful Bidder shall unconditionally accept the LOI, and record on one (1) copy of the LOI, “Accepted Unconditionally”, under the signature of the authorized signatory of the Successful Bidder and return such copy to the Procurer/ Authorized Representative within seven (7) days of issue of LOI.

3.5.11 If the Successful Bidder, to whom the Letter of Intent has been issued does not fulfill any of the conditions specified in Clauses 2.2.8 and 2.2.9, the Procurer / Authorized Representative reserves the right to annul the award of the Letter of Intent of such Successful Bidder. Further, in such a case, the provisions of Clause 2.5 (b) shall apply.

3.5.12 - The Authorized Representative, in its own discretion, has the right to reject all Bids if the Quoted Tariff is not aligned to the prevailing market prices.”

44. In the light of above, let us consider the issues that have arisen in this

petition. Further as the first 2 issues are interconnected, we consider them

and dispose of together.

45. The first issue is whether the bidding process carried out by the petitioner is

in accordance with the provision of Section 63 of the Act and the bidding

guidelines/SBD.

46. As per Section 63 of the Act, the appropriate Commission has to adopt the

tariff, if such tariff has been determined through transparent process of

bidding conducted in accordance with the guidelines issued by the

Central Government.

47. It is an admitted fact that RVPN with the approval of this Commission had

invited bids for procurement of 1000 MW power under case-1 bidding in

accordance with the bidding guidelines. The bids received were

considered by the Bid Evaluation Committee, constituted for the purpose

and offers of 5 bidders were accepted for consideration. Thereafter

petitioner decided to call the bidders for negotiation starting from the

of 71 431/13

lowest L-1 & L-2 namely ‘M/s Maruti Clean Coal Ltd.’ and ‘M/s D.B.Power’,

who had bid through PTC India. Bidders did not reduce the price but

agreed to give enhanced quantum of power of 55 MW and 99 MW

respectively in addition to the original quantity offered by them. Third lowest

bidder namely ‘M/s Lanco Power’ during negotiation voluntarily agreed to

reduce the price offered and also offered additional quantity of power of

250 MW in addition to 100 MW originally offered. Since the additional

quantity offered by the lowest bidders came-up to the required bid

quantity of power of 1000 MW, LoIs were issued and PPAs were signed with

L-1, L-2 and L-3 bidders subject to approval and adoption of tariff by the

Commission.

48. From the pleadings, it is observed that there would not have been any

questions raised on the bidding process had there not been enhancement

of quantity of power offered by first three bidders. The questions have been

raised because of the additional quantum awarded to the three lowest

bidders on the ground the same is contrary to bidding guidelines.

According to the L-4 and L-5, who were unsuccessful bidders, the bidding

guidelines do not allow any negotiation with the bidders once bidding

process is completed. The negotiations held with the lowest bidders and

acceptance of offer of additional quantum of power is malafide and

actuated by ulterior motives. The very negotiation after completion of

bidding process vitiates the entire process and consequently this

Commission has to reject the LoIs issued in favour of L-1, L-2 & L-3 and

adoption of the tariff in exercise of its powers conferred in Section 63 of the

Act. It is further contended by the unsuccessful bidders that the

negotiations were held only with L-1, L-2 & L-3 and therefore the process is

non-transparent and without giving an opportunity to them. According to

them negotiations should have been held with all the bidders.

49. From the records and material placed before us, we observe that bidding

process including the negotiation held with L-1, L-2 & L-3 bidders was

of 71 431/13

transparent. It is the BoD of Petitioner which held negotiation with the L-1

bidder first and then with L-2 and L-3 bidders, at which stage required

quantum of power of 1000 MW got exhausted. When the quantum required

got exhausted question of negotiating with L-4 and L-5 bidders does not

arise.

50. The reading of clause 3.5.1 to 3.5.12 of SBD in particular 3.5.9 it is clear that

there is no bar for any negotiations on the quantum of power to be

procured. What is prohibited under 3.5.9 is on the quoted tariff during the

process of evaluation (emphasis supplied). There is no dispute that

negotiation has not been held on tariff during the process of evaluation.

Negotiations have been held only after evaluation of the bids is completed

and that too only on quantum of power to be procured. The bid process is

therefore held to be transparent.

51. The Hon’ble APTEL in case of M.P.Power Trading Co., Ltd. v/s MP Electricity

Regulatory Commission & Ors., has held as follows :

"38. If we go through the entire bidding documents, we can easily conclude that the negotiation is inherent and in-built in the bidding process. With regard to the principle relating to negotiation for reduction in prices, the Supreme Court has held in Food Corporation of India v. Messrs Kamdhenu Cattle Feed' (1993) 1 SCC 71, as under:

10. From the above, it is clear that even though the highest tender can claim no right to have his tender accepted, there being a power while inviting tenders to reject all the tenders, yet the power to reject all the tenders cannot be exercised arbitrarily and must depend for its validity on the existence of cogent reasons for such action. The object of inviting tenders for disposal of a commodity is to procure the highest price while giving equal opportunity to all the intending bidders to compete. Procuring the highest price for the commodity is undoubtedly in public interest since the amount so collected goes to the public fund. Accordingly, inadequacy of the price offered in the highest tender would be a cogent ground for negotiating with the tenderers giving them equal opportunity to revise their bids with a view to obtain the highest available price. The inadequacy may be for several reasons known in the commercial field. Inadequacy of the price quoted in the highest tender would be a question of fact in each case. Retaining the option to accept the highest tender, in case the negotiations do not yield a significantly higher offer would be fair to the tenderers besides protecting the public interest. A procedure

of 71 431/13

wherein resort is had to negotiations with the tenderers for obtaining a significantly higher bid during the period when the offers in the tenders remain open for acceptance and rejection of the tenders only in the event of a significant higher bid being obtained during negotiations would ordinarily satisfy this requirement. This procedure involves giving due weight to the legitimate expectation of the highest bidder to have his tender accepted unless outbid by a higher offer, in which case acceptance of the highest offer within the time the offers remain open would be a reasonable exercise of power for public good.

39. The above principle has been laid down by the Supreme Court in a case of sale of food grains where higher price was beneficial for the public good. The present case relates to the purchase of electricity by the procurer for consumers for the lower price in the public interest. The ratio decided by the above decision taking note of public interest squarely applies to the present case as well."

52. The Hon’ble Supreme Court in the case of AIR India Vs Cochin International

Airport (2000) (SC) SCC 617 has held at para (7) that :

“The award of a contract, whether it is by a private party or by a public body or the State, is essentially a commercial transaction. In arriving at a commercial decision considerations which are paramount are commercial considerations. The State can choose its own method to arrive at a decision. It can fix its own terms or invitation to tender and that is not open to judicial scrutiny. It can enter into negotiations before finally deciding to accept one of the offers made to it. Price need not always be the sole criterion for awarding a contract. It is free to grant any relaxation for bona fide reasons, if the tender conditions permit such a relaxation. It may not accept the offer even though it happens to be the highest or the lowest but the state, its corporations, instrumentalities and agencies are bound to adhere to the norms, standards and procedures laid down by them and cannot depart from them arbitrarily. Though that decision is not amenable to judicial review, the, court can examine the decision-making process and interfere if it is found vitiated by mala fides, unreasonableness and arbitrariness. The State, its corporations, instrumentalities and agencies have the public duty to be fair to all concerned. Even when some defect is found in the decision-making process the court must exercise its discretionary power under Article 226 with great caution and should exercise it only in furtherance of public interest and not merely on the making out of legal point. The court should always keep the larger public interest in mind in order to decide whether its intervention is called for or not. Only when it comes to conclusion that overwhelming public interest requires interference, the court should intervene.”

53. Hon’ble APTEL in the above case at para (38) of its judgment held that the

negotiations are only for reduction of tariff which is in the best interest of the

consumer. Further it was also held that negotiations are inherent and inbuilt

of 71 431/13

in the bidding process. Hon’ble Supreme Court in its aforesaid judgment

also held that larger public interest should always be kept in mind. As

observed earlier, negotiations held in the present case were transparent

and have resulted in the reduction of tariff by L-3 bidder though not by the

first two bidders. Any purchase of additional quantum of power at the

lower rate than the quoted rate or the rate quoted by the bidder cannot

be held to be contrary to law. On the contrary it is in the interest of the

public. Even clause 3.5.7 authorises the petitioner to increase or decrease

the quantum more than 10% with the approval of the Commission.

54. In the light of the facts noticed as above and the law laid down by Hon’ble

Supreme Court and APTEL, we are of view that the bidding process carried

out by the petitioner and negotiations held are not in violation of either

Section 63 of the Act or the bidding guidelines/bidding conditions.

55. The contention of L-4 & L-5 bidders that the negotiations held were

malafide and actuated by ulterior motive also has no substance. It is well

settled law that if allegation of malafides is made, the same has to be

established by the person who alleges it.

56. The Hon’ble Supreme Court has held in several cases that since allegations

of malafides are of a serious nature and essentially questions of fact,

sufficient particulars and cogent materials making out a prima facie case

must be given in the petition. In the present case no material except an

assertion based on some discrepancy in dates in the correspondence is

produced in support of the allegation. Therefore, we have to reject the

allegations of malafides.

57. Now we come to issue No.3, i.e., whether application filed by the Petitioner

seeking approval of the Commission for purchase of reduced quantity of

power of 500 MW as against this Commission approved quantity of 1000

MW is maintainable and can be accepted by this Commission.

of 71 431/13

58. We observe that Counsels of all Respondents opposed the application of

petitioner for reduction of quantity of power from 1000 MW to 500 MW. The

main contention of the Counsels is that the application for procurement of

reduced power cannot be entertained in the proceedings for adoption of

tariff under Section 63 of the Act wherein Commission is mandated to

adopt the tariff if such tariff has been determined through transparent

process of bidding in accordance with the guidelines issued by GoI. They

also argued that RVPN through this application is trying to reopen the order

of the Commission dt. 23.03.2011 wherein Commission has already

approved the quantum of power to be procured before initiating bidding

process and the said order has attained finality.

59. Per contra, Petitioner has submitted that RVPN/Discoms are within their

rights to reduce the quantity of power on the re-assessment of energy

requirement. He relied upon the recommendation of Energy Assessment

Committee and approval of the Govt.

60. As Petitioner is relying on EAC recommendation we may see the minutes

which are as under

The extracts of minutes of 4th meeting of EAC is reproduce as under:

“------------------------------

It was noted that the likely installed capacity at the end of 12th and 13th plan, considering no slippages would be 16832 MW & 29510 MW (excluding 1000 MW through Case-1).

CMD, RVUN intimated that RVUN’s projects, already sanctioned and included in availability as under, may not be implemented and be deleted in 13th plan owing to heavy fuel transportation costs and non-availability of Gas:

1. 2x660 MW Suratgarh STPS Unit 9 & 10 2. 3x110 MW Dholpur GTPP Stage-II 3. 3x100 MW Kota Gas based power project 4. 3x110 MW Chhabra Gas based Power Project

During discussions, it was deliberated that since 800 MW units are now available, the loss in capacity for above projects would be slightly

of 71 431/13

compensated by suitable upsizing of 660 MW units under planning at Kalisindh and Banswara. It was also discussed that due to likely slippages in 13th plan period, considering 100% success rate would not reflect true picture for availability.

Further, it was discussed that long term planning for power procurement for Discoms be done considering RTC- base load demand and not for peak power requirement for seasonal period. The requirement against seasonal peak may be met through alternate purchase strategy if required. Looking to this aspect, there is no shortages against the demand at the end of 12th and 13th plan period even after considering slippages.

The EAC thus unanimously observed and agreed that there is no requirement for:

1. Long term procurement of 1000 MW + 10% power under Case-1, for which PPAs have been executed and tariff adoption petition has been filed before RERC;

2. 500 MW peak power, for which load approval petition has been filed before RERC; and

3. 1120 MW power generation project proposed by M/s Gamma Energy Ltd.

Recommendations of EAC in this regard be communicated to the Energy Department, Govt. of Rajasthan.”

61. The relevant extract of minutes of 5th meeting is reproduced as under:

----------------------------------------------

“Issues regarding petition for adoption of tariff and approval of deviations in 1000 MW Case-1 bidding and petition for approval of quantum of capacity/ energy to be procured by the Discoms to the tune of 500 MW during peak period came up during discussions.

In the 4th EAC meeting held on 29.1.2014, it was deliberated that since 800 MW units are now available, the loss in capacity for some projects which would not be implemented in 13th plan would be compensated by suitable upsizing of 660 MW units under planning at Kalisindh and Banswara.

It was informed by CMD, RVUN that Unit-3 & 4 at Kalisindh TPS would have to be restricted to 2x660 MW as availability of water in Kalisindh will be insufficient for 2x800 MW and hence there would be long term loss in available capacity after 2017-18. It was also informed that due to constraints in water availability and delay in MOEF clearance, 660 MW Chhabra Supercritical Unit-6 is likely to slip.

Apart from above, there is a continuous shortfall in generation from Giral Lignite TPS Unit 1&2 due to high Sulphur content in the Fuel. Out of 2x125 MW installed capacity, these units operate at 25-30% PLF resulting in continuous

of 71 431/13

loss of available capacity. There is also uncertainty of installation of Giral Unit 3&4 (2x125 MW) on similar reason.

It was also informed that Andhra Pradesh UMPP, from which Rajasthan had allocation of 55 MW, has been closed by the Min. of Power, Govt. of India.

In light of the likely unavailability from these sources and to meet such future contingencies, there is a need to review the decision taken in the 4th EAC meeting held on 29.1.2014. The matter was discussed at length and it was decided that if this shortfall is bridged through the long term tie-up, requirement of contracted capacity should be around 600 MW.

The EAC thus decided to consider demand of 600 MW on long term basis for procurement of power under Case-1, for which PPAs have been executed and tariff adoption petition has been filed against the bidding process conducted for 1000 MW.”

62. Counsel of the Petitioner further submitted that EAC in its 5th meeting

reassessed the requirement of power has come down and recommended

that the procurement of power should be reduced. He further submitted

that the Commission, independent of Section 63, has powers under Section

86(1)(b) of the Act to regulate electricity purchase and procurement

process of distribution licensees and the said power can be exercised by

this Commission in a proceeding under Section 63 of the Act.

63. Counsel of the Petitioner had relied on the judgment of the Division Bench

of the Hon’ble High Court of Rajasthan dated 18.04.2014 in DB Special

Appeal (Writ) No. 604 of 2014 to contend that Section 63 and Section

86(1)(b) have been read together by the Hon’ble High Court and therefore

even in a proceeding under Section 63, Section 86(1) (b) can be pressed

into service.

64. We observe that EAC has been constituted by this Commission under RERC

(Power Purchase & procurement process of distribution licensee)

Regulations, 2004 for assessment of estimated requirement of distribution

licensees and for assessment of availability & demand and finalize

unrestricted maximum demand and energy requirement, maximum

demand & energy requirements feasible to be met and power purchase

requirement. This committee reviews these assessments annually and

of 71 431/13

finalizes maximum demand and requirement for next 12 months and also

for next 5 years. Based on these assessments the Energy Assessment

Committee will recommend additional generation and power purchases,

or their curtailment.

65. Based on the assessment of EAC, distribution licencee(s) shall effect power

purchase or enter into long term or short term power purchase agreements

or arrangements complying with the criterion to be laid down by the

Commission from time to time. Hence it is clear that assessment of EAC

plays an important role in the procurement of power by distribution

licencee(s).

66. In the present case, the Energy Assessment Committee, during the re-

assessment, has recommended the reduction in the requirement of power

to be procured by distribution licensees considering the power scenario of

the State. Therefore, we accept the recommendation of EAC as approved

by GoR. Any other decision will go against the consumers’ interest as they

are the ones who will suffer and pay the cost for extra power purchase

which is considered to be not necessary in the near future.

67. We have also looked into order dt.23.3.2011 passed by this Commission

approving procurement of 1000 MW power under case-1 bidding process.

The said order nowhere states that 1000 MW power has to be bought by

the petitioner irrespective of the actual need of power on a future

reassessment. The approval given by this Commission for 1000 MW was

based on the material placed and the prayer then made by the Petitioner

including the EAC recommendation and not on its own. If the Petitioner

based on relevant considerations and EAC recommendation has now

come to the conclusion that they may not need 1000 MW of power for

which approval of the Commission was obtained and need only 500 MW,

the same deserves to be accepted. Ultimately it is the requirement of the

State which should prevail as power not needed will cost hugely and it will

be in turn a burden on the consumers.

of 71 431/13

68. In view of above, the Commission holds that what should ultimately weigh is

requirement of power of the State and not the other technicalities. The

extract of minutes produced of 4th & 5th EAC clearly indicates that the

quantum of power required is reassessed based on relevant considerations

with due application of mind. In our view, therefore, the order of this

Commission dated 23.3.2011 will not come in the way of petitioner seeking

reduction in power purchase quantity and Commission accepting the

same.

69. It is contended by Shri Sen and Shri Sibbal that Section 63 of the Electricity

Act, 2003 is a special provision dealing with adoption of tariff obtained

through the bids whereas Section 86(1)(b) is a general power of the

Commission. It is well settled law that special provision prevail over the

General Provision and therefore under Section 86(1)(b) Commission cannot

allow the petitioner to reduce the quantity of power for which bids were

obtained to 500 MW from 1000 MW.

70. We have carefully considered the wordings of Section 63 as well as Section

86. We do not see any conflict between them. Section 63 only deals with

the tariff whereas Section 86 deals with general powers of the Commission.

Once there is no conflict between them, there is no question of Section 63

prevailing over Section 86. The judgments relied upon by the Counsels in

support of the principle that special provision would prevail over general

provision has no application in this case as the two provisions operate in

different spheres.

71. Under Section 86(1)(b) this Commission has a function to regulate electricity

purchased through agreements. In other words quantum of power to be

procured has to be regulated which in turn has to depend on the

requirement. Further as pointed out earlier the petitioner can increase or

decrease the quantum by more than 10% with the approval of the

Commission. The consumer cannot be burdened with purchase of power

which is not required. Therefore, we are in agreement with the contention

of 71 431/13

of the Petitioner that this Commission has power to approve reduced

quantity of power based on the requirement.

72. It is contended by the successful bidders that in a petition filed u/s 63 of

Electricity Act, 2003, this Commission has to merely adopt tariff obtained

through the bidding process and it cannot approve the purchase of the

reduced quantity of power.

73. We have looked into the prayers made in the petition by the Petitioner. The

prayers made in the petition do not limit the petition for mere adoption of

tariff. It is also prayed in the petition that the Commission may approve

additional quantity of power to be procured from L-1, L-2 & L-3. Thus the

petition is not merely for adoption of tariff but is also for purchase of

additional quantum of power. Therefore, in the present petition Commission

has power to consider decrease/increase in the quantity of power to be

purchased.

74. We therefore, hold that the Petitioner is entitled to restrict procurement of

power to 500 MW as required by it now as against 1000 MW for which

approval was given earlier.

75. The Petitioner has submitted reasons for delay of 328 days beyond the

maximum period of 195 days allowed under clause 5.19 of the Guidelines.

Commission, after taking into consideration the reasons submitted by the

Petitioner, approves the additional time taken for the bid process.

76. In the light of the above discussion, we answer issue No.1 & 3 in the

affirmative and issue No.2 in the negative.

77. Accordingly, Commission adopts the tariff arrived at in the bid process for

purchase of 500 MW power which as follows:

(a) M/s PTC India Ltd. (through Developer M/s Maruti Clean Coal & Power

Ltd.) for 250 MW (195 MW +55 MW) at the levelized tariff of Rs. 4.51 and

subject to the other terms of PPA.

of 71 431/13

(b) M/s PTC India Ltd.( through Developer M/s DB Power Ltd.) for 250 MW at

the levelized tariff of Rs. 4.81 and subject to the other terms of PPA.

78. The order passed by the Commission as above is subject to the decision of

the Hon’ble Supreme Court in the Special Leave Petitions referred to at

para (6) of this order.

(Raghuvendra Singh) (Vinod Pandya) (Vishvanath Hiremath) Member (T) Member (F) Chairman

Rerc order ppa cancellation petition no 265

Business

Transcript of Rerc order ppa cancellation petition no 265