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Scam stink in solar mission

New Delhi, Feb. 2: A non-government environmental agency claimed yesterday that it has uncovered a scam in the solar power mission where, it said, a private firm has used front companies to circumvent government rules for solar power projects.

The Centre for Science and Environment (CSE) said its three-month-long investigation suggested the company had used unfair practices to grab lucrative projects under the first phase of the solar mission that hopes to add 1,000MW grid solar power by 2013.

The national solar mission had invited bids from firms, setting rules that a company could bid for and win one 100MW solar thermal and one 5MW solar photovoltaic project. The rules also specified that companies could not change shareholding patterns between the bidding and up to one year after a project’s completion, CSE officials said, presumably to ensure that only serious players make bids.

But the CSE said documents suggested that one firm, Lanco Infratech, floated front companies and grabbed nine solar projects for 235MW. Lanco’s name appears in only two projects, but it has direct links to seven other winning companies, the CSE said.

The CSE probed two of these seven — DDE Renewable Energy and Electromech Maritech — in detail, scanning hundreds of documents from the Union corporate affairs ministry and the companies’ documents. “We find that the original promoters of the two companies now own nothing,” said Chandra Bhushan, deputy director general of the CSE and head of its renewable energy team. Lanco has said it “strongly objects” to all the allegations. It said its equity participation in a few of the companies that have won the solar power projects was “within the permissible level allowed”.

“There is no illegality involved as reported by the CSE,” Lanco’s spokesperson A. Narasimhan said. He also said the information about Lanco’s equity participation in these companies was reported in its annual report and had been submitted to the National Thermal Power Corporation Vidyut Vyapar Nigam, the public sector agency that runs the solar power mission.

But the CSE said the seven companies appeared to have been created for the bidding process, one company named Newton Solar was incorporated only four days before the original bidding date of September 17, 2010.

The detailed project reports submitted by some of these companies are nearly identical, the CSE said. “In two reports from different companies, we find the same handwriting in corrections,” said Bhushan.

“Our documents suggest that the shareholding patterns changed in DDE Renewable Energy and Electromech Maritech after the bidding, contravening the guidelines,” said Jonas Hamberg, a research intern who was part of the CSE team. “And Lanco holds 99 per cent share in all seven companies,” he said.

The CSE said it suspected that neither the NVVN nor the Union ministry of renewable energy had mechanisms to monitor the activities of companies that won a contract. Both agencies declined to release details of the companies to the CSE.

The national solar mission, launched in 2008, has set a goal of generating 22,000MW of power from the sun by 2022. The three-phase programme is expected to deliver 1,000MW by 2013, 10,000MW by 2017, and 20,000MW by 2022.

India’s current installed solar power capacity is about 350MW.

“A huge amount of public money will be spent on the solar mission in subsidising solar power,” Bhushan said. “We want the solar mission to work and expand, but with more transparency and greater public scrutiny.”