‘System error’ hits BEST’s 750 MW power tender

In September, Mumbai power distributor BEST invited tenders to buy 750 MW electricity a day for five years in different time slots. Reverse auction was conducted on the DEEP e-bidding portal – hosted by the Power Ministry, State-run MSTC and PFC Consulting – in November.

The bidding is now set to be cancelled. On December 8, BEST appealed before the State electricity regulator that “it did not yield desired optimum results”, primarily due to flaws with the online platform. In an initial order on December 14, the regulator asked BEST to submit the fresh bidding proposal for due consideration.

The benefit of the “system error” may go to Tata Power. The bidding was conducted in view of scheduled termination of BEST’s 800 MW purchase contract with Tata Power in March 2018. BEST already proposed extension of the contract by six months due to tender cancellation. Tata Power proposed one year extension at a lower tariff.

“BEST submitted that as against the proposed extension of the existing PPA, TPC-G [Tata Power Company-Generation] has requested to extend the agreement by one year and TPC-G is considering bringing down its rates further,” the regulator said in the initial order and asked both the parties to come back with a firm proposal.

That there were system flaws is a fact. The petition submitted by BEST (a copy of which is available with BusinessLine) lists complaints from participants, including Dhariwal Infrastructure of CESC, on the bidding process.

Dhariwal was adjudged the lowest bidder for 300MW round-the-clock supply slot that witnessed stiff competition. Adani Power, which was the second-lowest bidder for the 300MW slot, reported that the reverse auction followed a course that was different from mock auctions conducted by the platform operators on November 24 and 25.

“We regret to inform you that the way the reserve auction is being conducted is not in line with the mock,”Adani Power wrote to BEST on the day of the auction.

What makes the story interesting is the rarity of such flaws in e-tendering process. “The Centre has asked States to enter even short and medium-term contracts through portals hosted by the ministry. And normally they are very stable. I haven’t come across such a situation,” said an analyst.

At least two participants contacted by BusinessLine confirmed that they haven’t come across such a situation in recent memory. “E-tenders are norm in today’s world and we keep participating in such tenders. We have never faced cancellation of tender for such reasons,” said a power official.