Tamil Nadu

Power struggle


Tangedco is planning to revert to conventional system of financing projects as it faces legal cases from bidders for rejecting their tenders

Faced with legal cases, Tangedco, the State’s power utility, is considering reverting to its conventional system of funding its thermal power plants.

Owing to financial constraints, Tangedco had opted for the debt financing-cum-EPC model for its supercritical thermal power plants in Ennore SEZ and Udangudi, but is facing a court battle in both, as one of the bidders - Consortium of Central Southern China Electric Power Design Institute (CSCEPDI) – Trishe Infrastructure Energy Services Ltd – has moved the Madras High Court.

Fact file

  • 2008 - Proposed as a JV between Tangedco and BHEL
  • 2012 - The then Chief Minister Jayalalithaa cancels the deal with BHEL. The Government said that TNEB will implement it on its own
  • 2013 - Fresh tenders floated
  • 19 July, 2013 - Techno-commercial bid opened
  • 19 July, 2013 - Tangedco BLTC takes up the subject. BHEL an Chinese consortium tenders are approved
  • 16 July, 2014 - Tangedco Board approves opening of price bids
  • 18 October, 2014 - Price bids: original price bid along with the supplementary bid – opened
  • 30 December, 2014 - Consultant M/s. Fichtner India Ltd submits report. Says both the bids have deficiencies, but their acceptance is Tangedco’s decision
  • 14 March, 2015 - Tangedco board scraps both the bids.

Unlike in earlier projects, Tangedco floated tenders for the projects under debt financing-cum-EPC model as a single package. In this, the bidder has to arrange debt (financial assistance) for the procuring entity, factoring in the interest costs during construction.

 In Ennore SEZ, the Chinese consortium approached the court against awarding the contract to Bharat Heavy Electrical Limited (BHEL) – the lowest bidder. In the case of Udangudi project, the consortium bid the lowest, but the Tangedco Board scrapped the tenders as the consultant found deficiencies in both the bids.

 As the project, conceived in 2008, is yet to kick-off, Tangedco has proposed to revert to the conventional system to avoid any unnecessary delay, sources in the power utility confirmed. “The government is yet to approve the proposal,” the source adds.

Tangedco had applied for loan from Rural Electrification Corporation (REC).

 Meanwhile, documents accessed by  The Hindu reveal that the consultant, Fichtner India Limited, which evaluated the price and supplementary bids and found them to be deficient, left the decision to accept or reject the bids to Tangedco.

 The documents also show that both the bidders had represented to Tangedco to reject the other’s bid citing various reasons.

 While CSCEPDI-Trishe Consortium said the BHEL’s bid has to be rejected on the basis of poor performance and vendor rating in the past, BHEL wanted the other bid to be rejected since their original price bid did not contain any detail of debt financing package.

 Considering the infirmities, the Tangedco’s project wing recommended to the Board to reject the bids as they did not satisfy the specific requirements in full. Based on the reports, the Board scrapped the bids.

Four Bidders

M/s. SEPCO Electric Power Constructio Coroporation, China (SEPCO)

M/s. SEPCO Electric Power Construction Corporation, China (SEPCO 1)

Consortium of M/s. Central Southern China Power Engineering Consulting Group and M/s. Trishe Energy Services Private Ltd.

M/s Bharat Heavy Electricals Limisted

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Printable version | Jan 21, 2020 1:29:00 PM | https://www.thehindu.com/news/national/tamil-nadu/tamil-nadu-may-have-to-find-funds-for-power-plants/article7061021.ece

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