GoM switches off ‘invalid’ Lanco bid for Sasan mega power project, rebid likely

Nearly seven months after having shortlisted the Globeleq-Lanco consortium for the first ever 4000 MW Sasan ultra mega power project in Madhya Pradesh

Nearly seven months after having shortlisted the Globeleq-Lanco consortium for the first ever 4000 MW Sasan ultra mega power project in Madhya Pradesh, the empowered group of ministers (EGOM) today cancelled their bid, declaring that it was invalid from the very beginning.

The ministers’ group, chaired by Union Power Minister Sushilkumar Shinde, which met today for the fourth time in two months, has now asked Sasan Power Ltd, the special unit formed by Power Finance Corporation (PFC) and the beneficiary states, to “examine the further course and submit its recommendations to the EGOM expeditiously”.

After the meeting, Shinde said that the group “has concluded that the response to request for qualification of Globeleq-Lanco consortium was void” from the very start.

The estimated Rs 16,000-crore project is expected to supply power to eight states: MP, Uttar Pradesh, Delhi, Haryana, Punjab, Rajasthan, Uttaranchal and Chhattisgarh.

As the bid has failed to meet the basic qualification criteria, the price of Rs 1.19 per unit received subsequently also stands cancelled.

The nine other contenders, which submitted their bids in December last, included the Anil Ambani Group-promoted Reliance Energy Ltd (REL) with a bid of Rs 1.296 per unit and Tata Power, whose price was Rs 1.40. REL now automatically becomes the lowest bidder. Jaiprakash with a Rs 1.65 per unit bid, and NTPC with Rs 2.126 also remain in the running.

So the options before Sasan Power would be to either award the contract to REL or recommend a rebidding for the entire project, which sources said, would take a long time.

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Shinde said while Lanco has not been blacklisted for future projects, any decision would be taken “keeping in view the overall public interest and the terms and conditions of the bid documents”.

He also said that the EGOM did not discuss any possible action against those responsible for first shortlisting a company and then disclosing that it did not meet the qualifying parameters. He, however, said that in future, the government would put more safeguards to ensure that a Sasan-like situation does not come in other projects.

Since December, the Lanco bid has been dogged by a variety of legal complications. First, the Singapore-based Globeleq withdrew from the consortium and Globeleq’s parent company in the UK totally distanced itself from the Sasan project. The Lanco group, along with the Jindals, took over the Singapore arm of Globeleq and thus the entire composition of the consortium changed. Second, Ernst &Young, the consultants aiding PFC in the shortlisting process, admitted that there was some misrepresentation of facts by the Globeleq-Lanco. Lanco managing director Madhusudan Rao had, however, told The Indian Express in early June: “We are confident that we have not violated any bid conditions.”

But after all the obstacles about the likely winner came to light, the matter was referred to the EGOM, which today concluded that the decision to cancel the bid was taken after considering “all legal aspects”.