Adani bribe row: If no takers, bidders can cut tariff suo motu, says SECI

Communication between SECI and some states suggest tariff was lowered by Adani and Azure after it became tough to find buyers at a price considered expensive

For the first time since its tendered project became a bone of contention in the Adani bribe controversy, the Solar Energy Corporation of India (SECI) has issued a public statement explaining its “unique business model’’. SECI — a central public sector enterprise under the ministry of new and renewable energy (MNRE) — on Tuesday said a bidder of any project can lower the discovered tariff after the bidding process, if it can’t find takers for power sale at a higher rate.

 

The SECI statement, came five days after the US ‘indictment’ against Adani Green and NYSE listed Azure Power, did not mention any project or developer. The matter pertains to SECI’s first-of-its-kind tender of a solar manufacturing unit along with a power plant in 2019. Adani Green and Azure Power were the only two winners in 2020, both placing bids of Rs 2.92 per unit, just below the ceiling tariff of Rs 2.93 per unit set by SECI. 

But when SECI was unable to find a buyer for these projects, the two companies allegedly approached several states and offered bribes, according to the indictment document of the United States Attorney for the Eastern District of New York. According to the indictment document, the high energy prices outlined in the letters of award (LoAs) made it difficult for SECI to find states willing to purchase energy for the project. 

There’s communication between SECI and some states to suggest tariff was lowered by bidders (Adani and Azure) after it became tough to find buyers at a price considered expensive.   

One of the states which was approached to buy at a reduced price was Andhra Pradesh.  

According to a letter dated September 15, 2021, SECI wrote to the Andhra Pradesh energy department urging it to buy electricity from the project at Rs 2.49 per unit, which it claimed was suo moto reduced by the bidders. 

SECI, in its public statement on Tuesday, explained its business model as one of the ‘Renewable Energy Implementing Agencies’ (REIAs) set up by the MNRE. The MNRE and the ministry of power issue standard bidding guidelines for solar, wind, hybrid, round-the-clock (RTC) tenders. SECI and other REIAs float tenders as per the bidding trajectory allocated by MNRE using transparent electronic bidding method wherein all private/public parties are allowed to participate, it said. 

After the e-bidding and e-reverse auction process, lowest tariffs are discovered and capacity is offered to power distribution companies (discoms) across India for procurement of power. “The same is also put up on SECI’s official website to enable various discoms to avail the capacity at the discovered tariff. The discoms then approach SECI with their requirement of RE power. One bid normally consists of multiple developers and buyers,” SECI said in the notice. 

It added: “In some cases, bidders also suo-motu reduce the discovered tariff if subsequent to the bidding process, tariff(s) have come down and no discom (is) willing to buy at discovered tariff.” 

However, the bidding guidelines issued by MNRE for renewable energy projects do not mention any such provision. Experts said this revision is usually an “understanding” between the developer, SECI and the procurer states. The final tariff is submitted by the bidder to the Central Electricity Regulatory Commission (CERC) for approval. 

Adani Green in its submission to CERC in April 2022 submitted a tariff of  Rs 2.42 per unit, which was approved by the commission then. 

SECI, in its latest statement, has not revealed any further details on tariff reduction and what role it plays in its approval after bidding is concluded. 

SECI said the discoms, based on their internal approval process, provide their consent for offtake of power. Following that, SECI enters into power sale agreements (PSAs) with the concerned discoms. After signing of the PSA, SECI enters into power purchase agreement (PPA) with the selected bidders. 

“Post project commissioning, SECI, as an intermediary power trader, procures the electricity generated by the projects and in turn sells it to the discoms as per terms of the PPA/PSA respectively,” the statement said. 

The corporation, which was formed in 2011, has till date awarded close to 70 Gw of renewable energy projects. SECI was incorporated as a not for profit company (Sec. 25 of  Companies Act, 1956) and converted to a commercial company in 2015 (Sec. 3 of Companies Act, 2013), according to its website.