E&Y seeks clarification from Lanco on low bid

The fate of the Sasan ultra mega power project (UMPP) is likely to be decided within a month even as project consultant Ernst & Young has sought clarifications from developer Lanco Infratech on its "shockingly" low bid.

"E&Y has sought clarifications from Lanco on a few issues such as the low bid of Rs 1.19 a unit, which had shocked many people. After E&Y submits its report, a decision will be taken on whether there will be a rebid or not," Power Secretary Anil Razdan said.

Razdan said the Power Finance Corporation (PFC), the nodal agency for conducting bidding for all the UMPPs, had sought a report from E&Y on the issue. Following this, E&Y has asked for clarifications from the winning consortium.

He said the low bid had also raised doubts on how the developers would implement the project.

The 4,000-Mw Sasan project, to be set up in Madhya Pradesh at an estimated cost of Rs 20,000 crore, ran into rough weather after Lanco's partner Globeleq of Singapore made an exit from the joint venture and sold its 70 per cent stake to Lanco and Jindal Steel and Power Ltd.

In December last year, Lanco-Globeleq had outbid several high-profile competitors, including Reliance Energy, to win the project with a tariff bid of Rs 1.19 per unit. However, allegations have been raised over the past couple of months over Lanco and Globeleq misleading PFC and submitting false information regarding financial and technical capabilities.

Lanco, however, asserted that Globeleq Singapore had used its parents' qualification (UK's Globeleq Ltd) and there was no misrepresentation. PFC has also sought legal opinion from the law ministry as well as the Attorney General of India on whether the Lanco Infratech-Globeleq consortium be disqualified.

There is also uncertainty on whether in the event of Lanco being disqualified, there should be rebid or the project should be awarded to the second-lowest bidder Reliance Energy.