October 1: You could be forgiven if you thought power minister P R Kumaramangalam and his prize bureaucrats were playing an elaborate game of chess instead of just good old Chinese Checkers. How else can you explain the elaborate and complicated manoeuvres executed by them over the past six months, to by-pass all opposition, to allow state governments in Orissa and Bihar to go ahead with their plans to try and work out a bilateral deal with the Chinese government, to finance two new power plants worth around Rs 4,000 crore in these states.Early this year, the government of Orissa received a proposal from a Chinese government company called M/s China National Machinery Import and Export Corporation (CMIEC), to set up the 2 X 210 mw power plant at Ib Valley. A similar request was put in by the Bihar government, where CMIEC showed interest in implementing the Tenughat 3 X 210 mw power plant. In both cases, the Chinese government was giving loans and wanted this to be tied to these two power plants.Bothgovernments wrote to the Power Ministry, asking if such a project could be executed, as the rule was to go for only international competitive bids for setting up projects - on June 28, 1996, a ministry of power notification laid out these very rules. The logic was simple: negotiated projects allow for padding of costs, and so bidding is to be preferred. More so, when aid is linked to a project, the chances of padding are greater.Interestingly, when the ministry of power asked the Finance Ministry for its view, it said that tied aid usually resulted in padded costs. The ministry of external affairs said it could consider the case provided the finance and power ministries approved it first.So, when the file did the rounds in the ministry, on February 5, the deputy adviser in the ministry referred to this very notification and said that global bidding should be called for. This was then debated back and forth, and what appeared was that the Planning Division said global bidding should be done as perrules, and the thermal division felt the bilateral negotiation was possible.In March, the case was referred to the ministry's IP wing, and this pointed out that while the 1996 notification clearly applied only to private sector projects, the principle of it should apply to government projects as well - in other words, lets go for global bidding only.The ministry then decided to change tack, to come up with a proposal which looked reasonable. Why not, it was then argued, allow bilateral negotiated deals as long as this was then examined by the Central Electricity Authority.
