The deal struck between the Adani
group and the Modi government for supply of power to the state smacks of
blatant favouritism and corruption. While the people of Gujarat
are being duped, the Adani group is reaping massive profits. The
Gujarat government challenged court judgements, inserted tailor made
clauses and muscled out all other private players who were in the fray
to sell power to Gujarat, all to ensure that Adani got an exorbitant
price for the power it produces.
Chairman, Adani Group
It
all began in 2006 when the Gujarat Urja Vikas Nigam Limited (GUVNL)
invited tenders for the purchase of 2000MW electricity. Three companies –
Adani Enterprises Limited, Jindal Power Limited and Power Trading
Corporation (PTC) India Limited filed tenders on 26 June 2006. Adani
offered a price of Rs 3.7038 per unit, Jindal Rs 3.48 per unit and PTC
offered a price of Rs 3.25 per unit. Adani and Jindal had bid to supply
500MW and 150 MW power respectively, while PTC had bid to supply 440 MW
(190 MW from Chitarpur Coal and Power Limited and 250 MW from JSW Energy
Limited at Ratnagiri). PTC is a power trading company which purchases
and sells power.
Also Read: Adani-Modi nexus to cost 23,625 cr
But
the Tender Evaluation Committee of the GUVNL found these rates
unreasonably high and hence it re-invited financial bids from the
bidders who had already submitted their RFQ (request for qualification)
documents. On 9 November 2006 three companies – Adani, Jindal and PTC –
filed fresh tenders offering rates of Rs 3.2939, Rs 3.24 and Rs 3.2497
respectively. The Evaluation Committee recommended that Jindal’s bid
should be allotted tender because it was offering the lowest price. When
PTC and Adani came to know about the Jindal offer, they too offered to
supply power at the same rate as Jindal. As a result the corporation
sent letters of intent to all the three companies to supply power at the
same rate, which was Rs 3.24 per unit.
The
day PTC received the letter of intent it wrote back proposing to
increase its total power supply from 440 to 630 MW. But strangely the
GUVNL rejected its proposal contending that it could not be considered
since the letter was received after the letter of intent had been sent.
The rejection of PTC’s revised offer was shocking to say the least.
It
shows that the Gujarat government had already made up its mind to make a
closed-door deal with the Adani group. The state needed at least 2000MW
power whereas the total contract capacity of all successful bidders was
just 1590MW. In such a scenario the rejection of PTC’s renewed proposal
made no commerical or financial sense. On the contrary it exposes a
case of favouritism and corruption. Gujarat was grappling with severe
power shortage. To make up for the widening gap in demand and supply,
the governmnet was buying merchant power (the business terminology for
power that is purchased on temporary basis as distinguished from power
purchased under long term agreements) from Adani Enterprises at an
exorbitant rate of Rs 5.31 to Rs 5.45 per unit. Documents available
with Gulail show that between October 2006 to August 2007 alone, Gujarat
government had paid Rs 322 crores to Adani Enterprises for short-term
power at a rate of Rs 5.45 per unit.
On
the one hand the Modi government was purchasing expensive short-term
power from Adani and on other it resolutely refused to accept additional
190 MW power from PTC which was cheaper by Rs 2.21 per unit. Why?
The
story of crony capitalism doesn’t stop at this. At this stage Adani and
Modi governmnet held hush-hush back door mettings and decided to award
Adani the contract for 1000 MW at Rs 2.89 per unit. A similar
opportunity to lower their bid offers was not offered to PTC and Jindal.
Instead they were unilateraly issued termination letters invalidating
the earlier issued letters of intent. The ground for termination was
cited as lower tariff of Rs 2.89 offered by Adani.
The
subsequent judicial process revealed that the contract with Adani was
signed on 8.1.2007 while the LOIs of Jindal and PTC were cancelled on
12.1.2006. It is a classic case of politician-corporate nexus under
which diefferent rules were set for different companies. It shows that
the Modi regime had already made up its mind to award contract only to
Adani while shutting its doors to Adani’s competitors.
•Initially the decision was taken to invite Jindal but later Adani
and PTC too were sent PPAs to supply power at the same rate as Jindal
had proposed
•GUVNL held a meeting with Adani without letting the other companies get a whiff of it
•Contract awarded to Adani to supply power at Rs 2.89 per unit while bids of other companies were rejected
•Jindal and PTC went to court, got a stay order but GUVNL promised that it would accommodate them in case they won
•It signed a PPA with Adani the same as the stay on the deal was lifted by the court
•This was done to benefit Adani by
giving them a contract to supply power at Rs 2.89 per unit despite the
fact that just 4 days earlier it had signed another agreement with Adani
to supply power at Rs 2.35 per unit
•The GUVNL kept PTC and Jindal at bay even as it kept buying power from Adani at exorbitant rates.
•To
bridge the power shortage the Gujarat govt bought of power from Adani
on a temporary basis at exorbitant rates of Rs 5.31-5.45 per unit.
•90 percent of short term power purchases were made from Adani.
•Rs 322 crore out of Rs 358 crore spent on short power purchase between October 2006 and August 2007 went to Adani.
Even
though PTC and Jidnal were willing to supply long term power they were
denied the opportunity to renegotiate even as Adani entered into closed
door negotiations to lower its offer price after the letter of intent
had been sent.
Shantanu
from Prayas Energy Group, a Pune based NGO dedicated to democratizing
energy governance in India, stressed, “There needs to be transparency in
the tender process. There should be no tampering with the documents
related to bidding and after the details have been set there should be
no changes implemented in the original conditions that were laid out.”
Jindal
Power filed a writ petition in the Gujarat High court against this
one-sided decision of the GUVNL, following which the HC on 24 January
2007 put a stay on the tender process, which essentially meant that
GUVNL could not go ahead with the deal with Adani. In response Adani
Power Limited filed a Civil Application asking for the stay to be
vacated. On 6 February 2007, the Advocate General, the top law officer
of the Gujarat government, appeared for GUVNL and made a written
submission before the court that in case the final outcome of the case
went in Jindal Power’s favour, the GUVNL would sign the agreement with
Jindal on same tems as it had offered Adani. On this, the court vacated
the stay.
Within a few hours of the court order, the GUVNL signed the contract with Adani group.
There was a sinister design behind this mad rush to sign the contract with Adani, as subsequent court proceedings revealed.
Four days before signing the Rs 2.89 PPA, on 2.2.2007, the GUVNL entered
into another agreement with Adani for supply of 1000MW power at the
rate of Rs 2.35 per unit. This fact was hidden from both public and
other power producers.
The
question is why did the Modi regime sign a contract at Rs 2.89 when
only four days earlier it had signed a similar contract with Adani at Rs
2.35 per unit. A difference of even one paisa per unit balloons into an
extra burden of hundreds of crores every year. After all it’s the
people of Gujarat who are going to foot the bill for expensive
electricity. (Subsequently, Adani reneged on the Rs 2.35 contract on
various dubious grounds, only honouring the more expensive Rs 2.89
contract)
Coming
back to the fight put up by PTC and jindal against favouristism shown
towards Adani, the PTC too filed a separate case in the HC on February
22, 2007 challenging the cancellation of its Letter of Intent. The GUVNL
again submitted in the court that in case PTC went on to win the case
it too would be accommodated in the bid and allowed to supply 440MW
power at the same terms as Adani.
Subsequently, Jindal Power opted out of the race and its application was disposed of.
But PTC continued its fight. Finally, the HC allowed PTC to enter into
an agreement with GUVNL to sign a PPA to supply 440MW power for 25 years
at the rate of Rs 2.89 per unit, the same as was signed with Adani on 6
February 2007. But the GUVNL was so intent on muscling out PTC and
allowing only Adani to reap the benefits that it filed a Special Leave
Petition in the SC challenging the directions of the HC. The SC threw
out the application.
But
still the Modi regime refused to sign the contract with PTC. The GUVNL
now rejected PTC’s bid on the pretext that the company had now offered
to give all of 440 MW from just one source that is Chitrapur Power Ltd.
by Rajeev Kumar
October 07, 2013
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