Guidelines related to the tariff-based competitive bidding (TBCB) mechanism are likely to be reviewed to tackle situations where there is only one bidder participating.
This proposed review of guidelines has been prompted by two recent cases where Power Grid Corporation of India Ltd (PGCIL) was the only bidder in the fray in connection with two interstate transmission system (ISTS) schemes being awarded using the TBCB mechanism.
Following directions received from the Union power ministry, the National Committee on Transmission (NCT) in its latest meeting has come up with a working rule for dealing with such “single-bidder” situations.
This working rule, once formalized, will be incorporated in the existing “Tariff-based Competitive Bidding Guidelines for Transmission Service, 2021,” issued by the Union power ministry in August 2021.
It may be noted that the aforementioned guidelines state that there should be at least two qualified bidders to conduct the bid process. As such, there is no clarity available in the existing guidelines to deal with a “single-bidder” situation.
The proposed working rule
NCT has proposed a working rule addressing two cases – project cost is less than Rs.500 crore and project cost is above Rs.500 crore.
Case 1: Project cost is less than Rs.500 crore
In case no bid or single bid is received, the bid process coordinator (BPC) may extend the bid process for seven more days. After the extended period, the BPC may open the bids.
Sub-case 1-A: If single bid is received, even after the extension, the following steps are recommended:
- Based on estimated cost by the Cost Committee constituted by CEA and the norms provided in CERC tariff regulations, the levelised tariff for the project shall be calculated by the BPC.
- If the quoted transmission charges by the bidder are lower than levelised tariff estimated by the BPC, the bidder may be declared as successful bidder and Letter of Intent (LoI) may be issued.
- In case, the quoted transmission charges by the bidder are higher than the estimated levelised tariff by the BPC, the bidding process may be annulled and matter may be referred by the BPC to the government.
- The government may give exemption to the transmission project from competitive bidding and allocate the same under Regulated Tariff Mechanism (Section 62 of the Electricity Act, 2003).
Sub-case 1-B: If no bid is received, even after the extension, the bidding process may be annulled by BPC and the matter may be referred by the BPC to the government. The government may give exemption to the transmission project from competitive bidding and allocate the same under Regulated Tariff Mechanism.
Case 2: Project cost is above Rs.500 crore
If only one bid is received, the BPC may not open the bid and refer the matter to the Government. In case no bids are received, the bid process would be annulled and the matter shall be referred to the government.
Background
As mentioned above, two recent ISTS-TBCB schemes saw PGCIL as the sole bidder despite extensions in the bid submission date. Both these schemes were handled by bid process coordinator PFC Consulting Ltd (PFCCL). The BPC referred the matter to the Union power ministry, which in turn, sought the intervention of NCT in submitting recommendations to the power ministry in this regard. The working rule proposed by NCT stands for its recommendation on the issue. Meanwhile, CTUIL also expressed concern over delays in implementation of these two schemes due to bid-related issues.
The two ISTS-TBCB schemes in question are:
Scheme: Augmentation of transformation capacity at Bhuj-II PS (GIS)
Location: Gujarat
Project SPV: Bhuj II Transmission Ltd
Estimated cost: Rs.428 crore
In bidding stage since: March 29, 2024 [issuance of RfP]
Scheme: Transmission system strengthening to facilitate evacuation of power from Bhadla/Bikaner complex
Location: Rajasthan
Project SPV: Bhadla and Bikaner Complex Transmission Ltd
Estimated cost: Rs.198.75 crore
In bidding stage since: August 1, 2024 [issuance of RfP]
Note: In the Electricity Act, 2003, TBCB is covered under Section 63 while RTM falls under Section 62.
