The Union ministry of new and renewable energy (MNRE) is in the eye of a storm over allotment of power plants under the National Solar Mission, in the first batch of its ambitious plans to install 20,000 Mw of grid-connected solar power by 2022.
The Delhi-based Centre for Science and Environment (CSE) has, after field investigation, made detailed charges of distribution of projects worth Rs 13,000 crore to bidders last year being rigged to favour some companies, in violation of the guidelines. It has accused infrastructure company Lanco Infratech of grabbing many of the projects under the garb of nine different entities.
CSE investigators led by deputy director general Chandra Bhushan found the plant sites of all these companies converging at the same plot in a village in Rajasthan’s Jaisalmer district. “It could be all a coincidence,” says CSE director-general Sunita Narain, without suppressing a chuckle, narrating what she says has been a thoroughly enjoyable exercise of investigation. But everyone in the village of Askandra in Jaisalmer, as well as people in the state government which has given subsidised land to Lanco, knew the site of the power plants belonged to the latter, says Bhushan.
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Lanco: The lowdown |
The ministry says it is not fully convinced about the accusations. A senior official, defending the company, said original bidders were allowed to transfer up to 49 per cent of shares to another company. And, Lanco does not have more than that. Lanco has issued a denial of the allegations. It said: “Equity participation of Lanco is within the permissible level allowed and these facts were also reported in Lanco Infratech’s annual report. There is no illegality involved as reported by CSE.”
It said it had already given the information to NTPC Vidyut Vyapar Nigam, which conducted the bidding process. Further justifying its role, it said: “It is important to note that the bidders who Lanco supported were able to bid at one of the lowest tariffs (rates), as Lanco provided them the latest technology and complete EPC (engineering-procurement-construction) solutions for the projects. As the power purchase agreements for these projects are for 25 years, Lanco’s equity participation in these projects also brings confidence to the bidder to use our technology and EPC solutions in arriving at such a competitive tariff.”
However, CSE asserts that Lanco has 99 per cent ownership in these companies through preferential shares. Not desirable because it was smothering competitors and usurping a whole new market, creating a monopoly, said Narain.
The companies had sprouted just days before the deadline for the bids last year, and all of them had no assets to show for net worth. They depended on shares transferred by Lanco to qualify for the bidding process, says Bhushan. The directors of some of the companies were employees of Lanco, with two of the directors found to be teenaged children of a Lanco worker, identified by CSE through their Facebook accounts.
The National Solar Mission guidelines require that the bidding company had to be worth Rs 15 crore for setting up a solar photovoltaic project and Rs 220 crore for a solar thermal project. Lanco holds shares worth Rs 15.2 crore in each PV project and Rs 221.7 crore in each solar thermal project, which matches almost exactly the net worth needed for the projects, says CSE.
The guidelines also allowed one company to bid for and win only one 100 Mw solar thermal and one five-Mw solar PV project. Of the 1,000 Mw of solar power that was to be generated in the first phase of the mission, Lanco has bagged 235 Mw of the allocation and an assured revenue of Rs 13,000 crore, based on the guaranteed feed-in rate being paid to solar projects in the first phase, says CSE.
The companies which won the bids and were found to be floated by Lanco included Khaya Solar Projects, DDE Renewables, Electromech Maritech, KVK Energy Ventures, Newton Solar, Vasavi Solar Saidham Overseas and Finehope Allied Energy. They showed their net worth by share transfer, by issuing ‘preference shares’’, worth Rs 15.2 crore on the same day, December 31, 2010.
These shares were compulsorily convertible, says Chandra Bhushan. These would turn into normal shares after two to three years. It means Lanco had 99 per cent shares in all these companies it floated, without appearing to be so, he said. Even with preferential shares, Lanco would have only 49 per cent, a ministry official told Business Standard. Adding that if the guidelines were found to have been violated, penalties were sure to follow.
