Power Play

While UP reels under a huge shortfall of power, the Mayawati Government is more interested in the politics of power, says SRAWAN SHUKLA

Illustration: NAOREM ASHISH

IF THEWorld Bank can use its international clout and propose reform, only the hurly-burly of Indian politics can dispose of such reform. The global financial institution has pumped in as much as $4 billion and forced a modicum of reform in the power sector across India. But in Uttar Pradesh, the state continues to lag behind others. Worse, the government is not ensuring that the commissioning of eight new plants in the public and private sector occurs within the Eleventh Five-Year- Plan period. The result: the power situation is so grim that except for Lucknow, the other 70 districts do not get 12 to 16 hours of supply.

There are eight new thermal power plants envisaged: Paricha (500 MW), Harduaganj (500 MW), Anpara D (500 MW) and Obra (1,000 MW) in the public sector; Anpara C (1,200 MW), Roja (1,200 MW), Bara (1,980 MW) and Karchana (1,320 MW) in the private sector. Together they should add installed capacity of 7,200 MW by 2011. But except for Roja, being set up by Anil Ambani’s Reliance Power, none of the others seem to be in any state to come up. The causes: increasing political interference, rampant corruption and the slow pace of work.

If that isn’t enough, another power plant at Dadri in the private sector is caught in a row between the Ambani brothers on supply of gas. The Mulayam Singh government had made available 2,500 acres of land at subsidised rates in 2003 for the Rs 10,000-crore gasbased 3,740 MW plant to Reliance Power despite farmers’ protests. According to the original agreement, it was to begin from 2008. But there is no sign of the project starting.

The state has a capacity for generating 4,700 MW thermal and hydro power, leaving a huge gap of 3,500 MW to 4,000 MW. But while the work is slow at least in the four projects in the public sector, the fate of the new projects in the private sector looks far less certain.

Even after three biddings, the Mayawati Government has failed to take any decision on the Bara and Karchana power projects in Allahabad district. Over 1,000 acres of land for both projects has already been acquired in Shankergarh Tehsil by the UP Power Corporation Limited (UPPCL), but there seems to be no decision taking place to award the contract to the lowest bidders.

Earlier this year, UPPCL invited global biddings for two mega projects. While NTPC, Indiabulls, Lanco Kondapalli Power Limited, GVK, L&T, Adani, Reliance Power and Isolux Corsan had shown interests in Bara; Lanco Kondapalli Power Ltd, Reliance Power, CESE, KSK Energy, Indiabulls, HDIL Energy, Bhushan Steels, GVK, Adani, JSW and L&T had submitted a Request for Qualifications (RFQ) for Karchana.

Bids were invited on ‘levelised tariff’ for 25 years in June 2008. On opening of bids, Rs 2.84 per unit, quoted by Lanco Kondapalli Power Limited, was declared as the lowest bidder (L1). But the Uttar Pradesh Government cancelled the bidding on the pretext that the rate quoted was on the higher side. Soon after the first bid, the state government revised the RFQ. It increased the plant capacity to 2X660 MW in the case of Karchana and 3X660 MW for Bara, and allowed the bidders to sell 80 percent of the power generated from the extra capacity in the open market. “It was done to meet the Central Vigilance Commission guidelines of explaining reasons for inviting second biddings, but at the cost of the state’s interests,” charges Shailendra Dubey, Secretary-General, All-India Power Engineers’ Federation.

IN THE second bidding, Reliance Power emerged as the lowest bidder (L1) with a price of Rs 2.60 per unit. But the state government scrapped this bid also, charging Reliance Power with manipulating the L1 by quoting ‘practically and theoretically’ impossible variable charges. Though Reliance Power officials deny the charge, a senior UPPCL officer told TEHELKA that Reliance Power calculated the charges by claiming a heat rate as low as five kilo calories for generating one unit of power, while the same was a minimum 2,150 kilo calories per unit for Indian thermal power plants. “It was impossible. Accepting that price would have resulted in great loss to the state as the project would have become unviable after a few years due to the increasing price of coal,” says the official.

The third round of bidding for Karchana was submitted in October 2008. When bids were opened, Jaypee Associates, a group closer to the present political dispensation, was found to be a surprise bidder. The company, which had so far evinced no interest, emerged as the lowest bidder with a price of Rs 2.97 per unit, followed by Adani’s Rs 2.98 per unit, and Lanco’s Rs 3.18 per unit. Reliance Power, which had offered the lowest in the second bid, quoted a tariff of Rs 3.98 per unit. The rate quoted by Jaypee was 0.37 paise and 0.13 paise higher than those quoted by Reliance and Lanco respectively. Going by the 1,320 MW capacity of the proposed Karchana project, it will generate about 925 crore units of power every year. Provided that the heat rate calculations were correct, this could mean a loss to the state of Rs 320 crore a year if the contract was awarded to Jaypee Associates.

The bidding process has raised hackles, with officials finding it difficult to justify the cancellation of the earlier biddings and a possible award of the contract to Jaypee Associates at a higher tariff. Both Lanco and Reliance officials say awarding Jaypee the contract will be a grave injustice to them. “My company had offered the most competitive and lowest price but it was rejected to accommodate the government’s favourite,” charges a vice-president of Reliance Power, on condition of anonymity.

The state government is now trying to persuade Japyee to reduce the quoted tariff by 0.10 paise to avoid controversy. A high-level meeting, under the chairmanship of Uttar Pradesh Chief Secretary Atul Kumar Gupta, was held in Lucknow on 21 November with a sixmember delegation from Japyee, where the company was pressed to reduce the tariff. But Jaypee, which was earlier awarded the Rs 40,000-crore Ganga Expressway project by the present regime, has refused. “The meltdown and substantial hike in the construction cost does not allow us to reduce tariffs. The company has already quoted a competitive price and the government should award the contract at the earliest to avoid further delay and increase in cost,” Jaypee officials told the government.

Now the state government is in a fix. If it awards the contract to Japyee Associates, the issue might land into a legal tangle or kick up a row and give a tool to the opposition before the Lok Sabha polls. “The entire exercise is a farce. The government should scrap the bidding and give both the projects to BHEL or NTPC to avoid delay and controversy,” suggests Dubey.

When contacted, Avinish Awasthi, MD of UPPCL, said that “the government has not taken any decision yet on bids for Karchana”, adding, “We are in the process of evaluating bids and take a decision once the processends,” refusing to make any comment on the two projects.

Clearly, while the politics takes centre- stage, business sense and public need seem to have taken a backseat.

WRITER’S EMAIL:
srawan@tehelka.com