- (1.) THE present application has been made by Coastal Andhra Power Limited under Section 63 of Electricity Act, 2003 for adoption of tariff determined through international competitive bidding process for supply of electricity from Krishnapatnam Ultra Mega Power Project (hereinafter referred as 'Krishnapatnam UMPP').
(2.) Section 63 of the Electricity Act, 2003 (hereinafter referred to as 'the Act') envisages that the Appropriate Commission shall adopt the tariff if such tariff has been determined through the transparent process of bidding in accordance with the guidelines issued by the Central Government. The Central Government in Ministry of Power has issued the guidelines contemplated under Section 63 of the Act, titled "Guidelines for Determination of Tariff by Bidding Process for Procurement of Power by Distribution Licensees" (hereinafter referred to as 'the guidelines') vide Resolution No. 23/11/2004-R&R(Vol.II) dated 19.1.2005 which have been further modified vide amendments dated 30.3.2006,18.8.2006 and 27.9.2007. The salient features of the bidding process as laid down in the guidelines are discussed hereunder for convenience of reference: (a) The guidelines are applicable for procurement of base-load, peak-load and seasonal power requirements of distribution licensees through process of competitive bidding by following one of the two mechanisms. Case I mechanism covers the cases where the location, technology or fuel is not specified by the procurer. Case 2 mechanism pertains to hydro-power projects, load center projects and other location specific projects with specific fuel allocation such as captive mines available which the procurer intends to set up under the tariff based bidding process. The distribution licensees (referred to as procurers for the purpose of competitive bidding) may adopt the guidelines for long-term procurement for a period of 7 years and above and medium term procurement for a period exceeding 1 year up to a period of seven years. (b) Procurement by more than one distribution licensee through a combined bid process is permitted and in such a case, the procurer has the option of conducting the bid process through an authorized representative. The authorized representative may be one of the procurers or for Case 2 mechanism, a special purpose vehicle (SPV) may be incorporated for the purpose. (c) The bid documentation is required to be prepared in accordance with the Guidelines and the Standard Bid Documents (SBD) issued by the Central Government. In such cases, intimation shall be sent by the procurer to the appropriate Regulatory Commission about initiation of the bidding process. In the event of deviation from the bidding conditions contained in the guidelines, approval of the Appropriate Commission shall be sought by the procurers or their authorized representative. (d) For long-term procurement from the projects with pre-identified sites, the procurers or their authorized representative are required to complete such activities as site identification, land acquisition, environmental clearance, water linkage etc required for the project. (e) A two-stage bidding process comprising separate Request for Qualification (RFQ) and Request for Approval (RFP) shall be adopted for long-term procurement under the guidelines and the procurer or authorized representative shall prepare bid documents including RFQ and RFP in line with these guidelines and standard bid documents. (f) The procurer shall publish a RFQ notice in at least two national newspapers, company website and preferably in trade magazines to accord it wide publicity. The bidding process shall necessarily be by way of international competitive bidding. RFP shall be issued to all bidders, who are qualified at RFQ stage. In case, the bidders seek any deviation and procurer finds that deviation is reasonable, the procurer shall obtain approval of the appropriate Commission before agreeing to such deviation. (g) Formation of consortium shall be permitted. In such cases the consortium shall identify a lead member and all correspondence for the bid process shall be done through the lead member. The procurer may specify technical and financial criteria, and lock in requirements for the lead member of the consortium, if required. (h) The minimum number of qualified bidders should be at least two other than any affiliate company or companies of the procurer to ensure competitiveness. If the number of qualified bidders responding to the RFQ/RFP is less than two and the procurer still wants to continue with the bidding process, the same may be done with the consent of the Appropriate Commission. (i) The procurer shall constitute a committee for evaluation of the bids with at least one Member external to the procurer organization and affiliates. The external Member shall have expertise in financial matters/bid evaluation. The procurer shall reveal past association with the external Members directly or through its affiliates that could create potential conflict of interest. (j) Eligible bidders shall be required to submit separate technical and price bids along with necessary bid-guarantee. The bid shall be opened in public and representatives of bidders desiring to participate shall be allowed to remain present. The bidder, who has quoted lowest levellised tariff as per evaluation procedure, shall be considered for award of the contract. (k) The Power Purchase Agreements (PPAs) shall be signed by the procurers with the selected bidder/SPV (after its acquisition by the selected bidder) consequent to the selection process in accordance with the terms and conditions as finalized in the RFP bid documents. However, in case of projects under Case 2 from which more than one distribution licensee located in different States intend to procure power by carrying out bidding process through a SPV, the PPA and other required project agreements may be entered into between the SPV and the procurers prior to the last day of submission of RFP bids with the proviso that these agreements shall be effective from the date of acquisition of the SPV by the selected bidder. (l) After conclusion of the bid process, the Evaluation Committee shall provide appropriate certification on conformity to the bid process evaluation according to the provisions of the RFP document. The procurer shall provide a certificate on the conformity of the bid process to the guidelines. (m) For the purpose of transparency, the procurer shall make the bids public by indicating all the components of tariff quoted by all bidders, after signing of the PPA or PPA becoming effective whichever is later. While doing so, only the name of the successful bidder shall be made public and details of tariffs quoted by other bidders shall be made public anonymously. The procurer shall also make public the PPA signed with the successful bidder/SPV. (n) The applicant shall submit the signed PPA along with the certification certificates by the Evaluation Committee to the Appropriate Commission for adoption of tariff in terms of Section 63 of the Act. The applicant, Coastal Andhra Power Limited, was incorporated under the Companies Act, 1956, as a wholly owned subsidiary of Power Finance Corporation (a Government company) with a total authorized and paid up share capital of Rs. 5 lakh. The applicant has been authorized by all the procurers (Distribution licensees of the State of Andhra Pradesh, Karnataka, Tamilnadu and Maharashtra) as the authorized representative for discharging all the rights and obligations of the procurers to undertake the bidding process for selection of bidder who shall acquire the applicant company, the Coastal Andhra Power Limited (CAPL) and after acquisition, shall cause CAPL to build, own and operate (BOO) the Krishnapatnam UMPP located at Krishnapatnam, District Nellore, in the State of Andhra Pradesh.
(3.) THE applicant has stated that allocation of power from Krishnapatnam UMPP along with other UMPPs was discussed and finalized in a meeting taken by Secretary (Power), Government of India on 10.7.2006 with the Principal Secretaries/Energy Secretaries of the beneficiary states and the representatives of Power Finance Corporation and Central Electricity Authority. THE allocation of power from Krishnapatnam UMPP is as under: JUDGEMENT_306_TLET0_20080.htm ;