E&Y terms Lanco bid 'invalid'

The impasse over the 4,000-Mw Sasan ultra mega power project (UMPP) is unlikely to see an early resolution, with the bid consultant Ernst & Young (E&Y) labelling the winning bid of Lanco-Globeleq "invalid".

According to sources, in a draft report submitted to the Power Finance Corporation (PFC), the nodal agency for implementing the UMPPs, E&Y has said there were discrepancies in the bidding documents submitted by the Lanco-Globeleq consortium, which made their bid invalid.

"Though Globeleq Singapore claimed its parent company's (Globeleq Ltd of the UK) credentials to bid for the Sasan project, it didn't have mandatory board resolution from the parent company, which makes its bid a 'non-responsive' or 'invalid' bid," said a source close to the development.

The parent company needed to be aware and supportive in such situations, which was not there in the case of Globeleq, the source added.

It is now for the PFC and the power ministry to decide whether to scrap the bid for the Rs 16,000-crore project or to call a limited bid from the eight other bidders. Another option is to ask the second-best bidder, Reliance Energy, to take up the project. There are, however, legal complications with each of these options.

Lanco, however, maintains that its bid, where it offered to supply power at a record low price of Rs 1.19 per unit from the coal pithead-based project, is valid. It says there has been no "misrepresentation" in its bid documents, though there has been a change of the lead bidder, Globeleq, Singapore. Lanco says such a change is allowed as per the bid conditions.

Globeleq Singapore is now owned by Lanco and Jindal Steel.