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Power Play: DVC Bends for Rinfra

  • The Damodar Valley Corporation (DVC) has come under further cloud regarding the commissioning of six power plants to supply power to Delhi during the 2010 Commonwealth Games (CWG).DNA has found that DVC violated rules to award the Anil Ambani-owned Reliance Infra Limited an Engineering Procurement and Construction (EPC) contract worth Rs4,000 crore to construct a 1,200 MW power plant in Raghunathpur, West Bengal.DVC also gave Reliance an interest-free loan of Rs354.07 crore in violation of Central Vigilance Commission (CVC) guidelines. The loan was given to Reliance before it submitted all bank guarantees (BGs) and before an agreement was signed.

  • The contract for the Raghunathpur Thermal Power Plant (RTPP), located in WB’s Purulia district, was awarded to Reliance on a single tender basis without re-tendering despite other bidders, including BHEL, formally asking that the tender opening date be extended.DNA has documents that show that AK Barman, ex-chairman, DVC; Subrata Biswas, ex-secretary, DVC, and currently principal secretary, animal husbandry, Govt of Kerala; Gautam Chatterjee, ex-Chief Vigilance Officer (CVO), DVC, now vice-president & CEO, Maharashtra Housing and Area Development Authority (MHADA), and top officials of the ministry of power were involved in awarding this questionable contract. It is alleged that the contract was given in lieu of kickbacks and the matter needs to be investigated further.

  • Even as questions were raised over the awarding of the contract, the main contract file disappeared from the DVC office, making it impossible for the CAG to begin an audit of the contract. While DVC bent several rules to award Reliance the RTPP project using the urgency of the 2010 Games as an excuse, the project along with five others commissioned, is still incomplete. The projects are part of a power purchase agreement (PPA) executed between DVC and Delhi Transco Ltd in August 2006 for the supply of 2,500 MW of power for the CWG.

The contract: Tailor-made for Reliance Infra

  • A notice inviting tender (NIT) was issued in May 18, 2007, through the international competitive bidding (ICB) route for which the extended bid submission date (during the pre-bid conference) was July 31, 2007. Three out of the four bidders — Dongfang Electric Corporation, China; China Machinery Engineering Corporation (CMEC) and Bharat Heavy Electricals Limited (BHEL) in letters dated July 9, July 18 and July 21 requested that the dates be extended to August 31, August 14 and September 10 respectively.

  • However, the DVC management denied an extension, stating that it would impact the project schedule geared towards supplying the CWG with power. This denial is against a chief technical examiner’s organisation (CTEO) manual of the CVC that states that for any big project, extensions asked for by a majority of bidders, may be considered in the interest of the project. Because of this non-extension, the other three bidders couldn’t submit bids and Reliance Infra was the only company to do so.

  • DVC opened the Reliance bids by August 31. In the negotiations that followed, Reliance submitted a revised price of Rs 3,725 crore on September 14. During negotiations, DVC officials accepted Reliance’s request for interest-free loans.Controversially, DVC also accepted a modification of a coal specification that Reliance wanted along the lines of its plant in Hisar. This violated another CVC guideline that specifies neither party can change any tender specification after the bid is opened.

  • “Accepting this is a clear favour by DVC management which includes the then chairman, secretary and CVO,” says Padamjit Singh, chairman, All India Power Engineers’ Federation (AIPEF).After the deed was done, the DVC board curiously decided to seek the CVC’s advice regarding its decision not to extend the date of submission of bids as per the request of the three other potential bidders.DNA has a copy of a letter dated October 4, 2007, to the CVC on behalf of the DVC board by the company’s CVO Gautam Chatterjee in which the CVO suggests the DVC board was justified in not extending the date for the submission of bids and that the decision did not lack fairness or transparency.Chatterjee’s role in sending the letter is questionable since he should not have been party to processing and decision-making as a vigilance functionary.

  • To this, the CVC replied that “an extension of time or snap bid” is the preferred option. A ‘snap bid’ is a period of time given to those who have made a bid but do not fulfill tender specifications. This allows bidders to bring their bid up to required specifications. The DVC management seemed so desperate to ink the deal that it approached the CVC again via Chatterjee. This time, Chatterjee personally met Pratyush Sinha, the then CVC. The result was that the CVC removed the option of an ‘extension of bid’ and suggested ‘snap bid’ as the only option. “Such an intervention on the part of a CVO clearly suggests his intentions,” said AIPEF’s Singh.Since technically, ‘snap bids’ are open to those who have made a bid in the first place, the ‘snap bid’ was an unfair option as of the four bidders who purchased bid documents, only Reliance Infra actually submitted the bid and was technically eligible for the ‘snap bid.’ DNA has a copy of a letter written by chief engineer, central electricity authority (CEA), part of Ministry of Power, dated October 30, 2007, where he suggests the ‘snap bid’ option was unfair since the other three bidders had not participated in the earlier tender and therefore it was inappropriate to invite snap bids from these bidders.

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