Transco clarifies on bidding process

In response to the news story with the caption ‘Transco gives competitive bidding process a go-by’ published on Wednesday, CMD, TS Transco, D. Prabhakar Rao, through a statement, denied allegations of violation of norms, and said it is not mandatory for the utilities to go through the competitive bidding process for short term procurement.

Section 62 of the Electricity Act provided for procurement of power at a tariff to be approved by the regulatory commission, Mr.Rao claimed. He also informed that the quantity of power to be procured was 1,500 MW and not 1000 MW as mentioned in the report.

On the question of pricing he said the TSTranco duly considered the “discovered price” within the Southern region which was Rs.5.99 per unit and contended the price comparison with AP, saying the landed price of power depends on the location of the generator and the charges or losses to be paid to the Central Transmission Utility or State Transmission Utility.

Our correspondent reports: Section 62 of the Electricity Act, 2003 does not empower a utility to avoid the competitive bidding process, rather gives directions to the regulatory commission. It requires the commission to fix the minimum and maximum ceiling of tariff for power purchase, in case of supply shortage, for a period not exceeding one year, so as to ensure reasonable prices of electricity.

In a nutshell, the provision seeks to empower the commission to fix boundaries for the utilities towards reasonable tariff, rather than empowering the latter to discover the price by sidestepping competitive bidding process. Section 63 of the same Act says, “Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the central government.” Basis for the price at Rs.5.99 per unit remains unclear, as the procurement price of even deals cancelled by AP stood at Rs.5.91. The generators did not have a choice but to sell power to Telangana, which explains the abundant availability. Only a few weeks ago, the TS utilities had forgone an offer by AP to supply power at their procurement price.