Also-rans may get to bid for Sasan again

Power Finance Corp official overseeing project eased out.

The 4,000 MW Sasan ultra-mega power project in Madhya Pradesh may be headed for another round of limited bidding from the eight unsuccessful bidders after easing out the original bidder, Hyderabad-based power company Lanco.

Bankers, officials and consultants are seriously exploring the option of inviting rebids from the also-rans in the light of irregularities in the original bid from the Lanco-Globeleq consortium, which has subsequently become the Lanco-Jindal combine.

"The decision requires legal endorsement. That is what we are waiting for," an official closely associated with the process told Business Standard. Power Finance Corporation (PFC), the nodal agency for implementing the Rs 16,000 crore project, is said to be strongly in favour of the limited bid.

This would make Jindal Steel and Power, Lanco's new partner, eligible for a bid, along with NTPC, L&T, Sterlite, Reliance Energy, Essar, Jaiprakash and Tata Power.

Meanwhile, the current debate is on the terms of Lanco's exit. "The issue now is whether Lanco is no longer qualified (because of Globeleq-UK's exit) or whether Lanco's bid was not valid to start with (since it was without an explicit backing of Globeleq UK)," said the official.

Lanco, however, may not forfeit the Rs 120-crore bid bond since it is not backing out of the project.

On another front, the Central Vigilance Commission (CVC) started a probe on Saturday into the award of the project following a partial change in ownership of the winning bidders from Lanco-Globeleq to Lanco-Jindal.

The move comes as pressure builds on Union Power Minister Sushil Kumar Shinde and PFC to implement the Deepak Parekh evaluation committee's recommendations for scrapping the award of the project to Lanco-Jindal Steel & Power.

This took place after Globeleq-Singapore, the lead developer, sold its stake in the Sasan project to the Lanco-Jindal combine.

Questions had earlier been raised about Globeleq Singapore's competence to implement projects of this scale at the price quoted. The fact that Jindal had been one of the eight unsuccessful bidders for the project has also been questioned.

The CVC's involvement in the Sasan project follows a letter by former Finance Minister and BJP leader of Opposition in the Rajya Sabha Jaswant Singh to Prime Minister Manmohan Singh raising questions about the deal.

Singh's missive charges the government with trying to protect a Congress MP. Lanco Infratech is promoted by Vijaywada Congress MP L Rajagopal. Jindal Steel is promoted by the Congress MP from Kurukshetra, Naveen Jindal.

Jaswant Singh is not the first politician to raise issues on the Sasan project. Last month, Gurudas Kamat, a Congress MP and the chairman of the Parliamentary Standing Committee on Energy, wrote to Shinde asking him to get the entire deal examined and make sure that the project is implemented by a party with proper credentials.

Meanwhile, Shyam Wadhera, director (projects) at PFC, and overall in-charge of the ultra mega power projects (that is, power projects of 4,000 MW and more), is learnt to have been eased out of this assignment.

He was heading the shell companies for Sasan as well as the Mundra ultra mega power project. When contacted, Wadhera declined comment on the issue, saying: "I have no information on this."

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AN ULTRA-MEGA CONTROVERSY

December 18: Hyderabad-based Lanco Infratech, in partnership with Globeleq Singapore, bags the bid to build the 4,000 Mw Sasan ultra mega power project by offering to supply power at a record low price of Rs 1.196 per unit. They beat the likes of NTPC (Rs 2.126), L&T (Rs 2.251), Jindal Steel and Power (Rs 1.799), Reliance Energy (1.296) and Tata power (Rs 1.412)

February: Globeleq's promoters change. It is now owned by Lanco and Jindal, the latter being one of the unsuccessful bidders for the project, even as questions are raised about the alleged "misrepresentation" in the bid. The target date for signing power purchase agreements and merging the shell company - Sasan Power Ltd - with the successful bidder lapses

March: The controversy begins over the promoter change. Power Finance Company - the nodal agency for implementing the project - gets into a quiet mode. Fingers are pointed at Ernst & Young, the financial consultants for the project. Multiple legal opinions are floated by each interested party. Central Vigilance Commission begins probe.