Deals under scanner for international bidding rules violation
SHILLONG: Frequent change of guards coupled with the political compulsions have in the past resulted in freezing agreements already entered into with private power companies, then scrapping the deals and later reviving the same projects with the same companies.
There is no continuity as far as decisions on allotment of power projects to private parties are concerned as some projects which had been cancelled by one Government are revived by another Government. This change of decision fuels doubts over the motive of the government.
The recent decision to allot Umngot hydel project to Jaypee Group, a private power company may put the present Government in trouble as International Competitive Bidding was not followed when the Government decided to hand over the power projects afresh to Jaypee. Already, several organizations have opposed the government’s move.
The UDP-NCP combine Meghalaya Progressive Alliance Government headed by Donkupar Roy had on July 24, 2008 scrapped the Kynshi stage I project given to Athena Project Private Limited, and Kynshi stage II and Umngot power projects handed over to Jaypee Group as the previous Congress-led Government did not follow the procedure of mandatory International Competitive Bidding (ICB) for as many as six projects above 100 MW.
It is mandatory to call ICB if the generation capacity of the projects is above 100 MW.
In fact, the projects taken up by Athena, Jaypee and others were first signed by the Congress-led Meghalaya Democratic Alliance (MDA) Government in 2007 when DD Lapang was the Chief Minister and the present Chief Minister Mukul Sangma was the Deputy Chief Minister in-charge power then.
Since the Congress-led Government did not follow International Competitive Bidding process, the pressure groups and the public had opposed the projects compelling the Government to keep at least six projects in abeyance on January 18, 2008.
It was on December 7, 2007 that the High Power Committee on Power headed by Mukul Sangma as Deputy Chief Minister in charge power, recommended the Cabinet to sign agreements with the six private power companies
Following this, the Government entered into joint-venture agreements with the Jaypee Group (450 MW Kynshi Stage II and 240 MW Umngot ) Dharampal Satyapal(240 MW thermal project in Nangalbibra), ETA Star Infrastructure Ltd (Umdunah and Umjaut projects in East Khasi Hills together over 100 MW), Athena Projects Pvt Ltd ( 450 MW Kynshi Stage I) , Seven Sisters Energy Ltd ( Simsang basin) and SEW Energy Ltd (initially for Leshka Stage II, but Rangmaw project in South West Khasi Hills was allotted ) without adhering to the International Competitive Bidding process.
Under compulsion, the Lapang-led MDA Government put on hold the execution of power projects considering the fall out of the decision in the Assembly elections in early part of 2008.
However, in a U-turn, after the Assembly elections when Mukul Sangma was still holding the power portfolio in the capacity of Deputy Chief Minister, in a cabinet meeting chaired on December 21, 2009 by the then Chief Minister DD Lapang, it was decided to hand over the two power projects to the same private companies which were earlier scrapped by the previous NCP-UDP-led MPA Government. While the Kynshi Stage I was again given to Hyderabad based Athena Projects Private Limited , Kynshi Stage II was handed over to Jaypee Group.
Though the decision on Umngot project was kept on hold due to protest from several quarters, the Government now has decided to hand over the project to Jaypee Group.
Moreover, Dharampal Satyapal Group, makers of chewing tobacco Rajnigandha and Tulsi – was given the task of executing the 240 MW thermal project in Nangalbibra.
Subsequently, while ETA Star Infrastructure Ltd was entrusted with Umdunah and Umjaut projects, the Government handed over Rangmaw hydel project to SEW Energy Ltd instead of Leshka Stage II . It is yet to be known about the fate of Simsang basin project which was earlier entrusted with Seven Sisters Energy Limited.
The agreement entered with the power companies is for 40 years.
While some of the private companies have completed the Detailed Project Reports, others are preparing the same.
The additional Chief Secretary in charge power BK Dev Verma told reporters recently that the Government had appointed an official committee to go into the agreements with the private companies after which a decision was made to hand over the projects to the private companies.
He said that International Competitive Bidding was not necessary as the Government has entered into a joint venture mode with the private companies to tap power.
“Through the Memoranda of Agreements (MoAs), the Government will be a shareholder as one of the directors of the company and the Government will have a stake in the companies,” Verma said.
According to him, the issue of International Competitive Bidding process “comes only when there is no joint venture”.
The same view was aired by Mukul Sangma after a cabinet meeting when he was the Deputy Chief Minister in charge Power on December 21, 2009.
Sangma had said,” The State Government need not go through the International Competitive Bidding as the Meghalaya Electricity Act 2003 and the subsequent amendments to the Act do not necessitate competitive bidding, when the state government is partnering the project. We will develop these power projects in a joint venture manner”.
However, it was based on the argument that International Competitive Bidding was not followed that the Congress-led Government under DD Lapang on January 18, 2008 had decided to put on hold the MoAs signed between the Government and six power companies besides constituting a committee headed by the then Chief Secretary Ranjan Chattejrjee to examine the merits and demerits of the MoAs and the credentials of the companies.
The Ranjan committee later asked the Government to go ahead with the projects to avoid legal complications fearing that the private companies will approach court once the projects are scrapped.
Earlier in July, 2008, after scrapping the power deal above 100 MW with Athena and Jaypee Groups, the then power minister Conrad Sangma had said that the Government was taking the extreme step as proper procedures were not followed before signing the agreement. Conrad had said that based on the state power policy, 100 MW above projects should go through International Competitive Bidding and added that power policy was manipulated at the last minute by the previous Government to suit the interest of the private companies.
Change of decisions on pvt projects
lCongress led MDA under DD Lapang signs agreement with six companies in December, 2007 and under pressure, Lapang Govt freezes agreements in January, 2008.
lUDP-NCP led MPA Govt under Donkupar Roy scraps six power projects in July 2008
lCongress led MUA hands over Kynshi Stage I to Athena, Kynshi II to Jaypee in December 2009.
lSince 2010, other scrapped projects handed over to private players
Private power company projects
lAthena Projects Pvt Ltd: 450 MW Kynshi Stage I, West Khasi Hills
lJaypee Group: 450 MW Kynshi Stage II, 240 MW Umngot, East Khasi Hills
lDharampal Satyapal Group: 240 MW thermal project in Nangalbibra, South Garo Hills
lETA Star Infrastructure Ltd: Umdunah and Umjaut projects (together over 100 MW) in East Khasi Hills
lSEW Energy Ltd: 65 MW Rangmaw project in South West Khasi Hills