The Telegraph
Saturday , August 11 , 2012
Since 1st March, 1999
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Power play over source of supply

Patna, Aug. 10: Power distribution for Patna remains in limbo with Essar Power, which has been offered the franchisee for the state capital, learnt to have laid down fresh conditions before the Bihar State Electricity Board (BSEB) that includes sourcing energy from its own resources.

Under the initial proposal, the board was to supply power to Essar, which would in turn distribute it to consumers.

The board has now issued a letter of interest (LOI) — given to the highest bidder immediately after a financial bid is opened — to Essar Power, the sole bidder following a protracted legal battle over the grant of franchise.

The company was supposed to send its acceptance letter to the board by August 4, but it hasn’t. Instead, top sources in the BSEB said, it has sought some queries from the board regarding amending the Request for Proposal that would enable it to procure power from its own source.

Essar, when asked by The Telegraph, confirmed that it has sought some clarifications from the board before it inks a memorandum of understanding. “Essar Power can confirm receipt of LOI from the BSEB. We have requested BSEB to provide certain clarifications with respect to the LOI and will revert on developments on the matter in due course,” a spokesman for Essar Power said in an email reply to The Telegraph.

BSEB’s member (finance & revenue) Vinayak Chandra Gupta accepted that Essar has sought some queries. “The board has already sent its reply to the queries raised by Essar. Now, we are waiting for their response,” he said.

Gupta, however, refused to confirm or deny any condition set by the power firm that it should be allowed to source its supply.

A top official of the board, who spoke on condition of anonymity, said it would not be possible to alter the Request for Proposal at this juncture. “The conditions laid down in the Request for Proposal would be applicable. Any deviation from the Request for Proposal will not be permitted… They (Essar Power) will have to accept the Letter of Intent without any conditions. The board has invited tenders for appointment of input-based franchisee.”

At present, Patna requires supply of about 600MW daily against which BSEB can give about 350MW to 450MW.

Board sources said Essar would have to pay Rs 3 per unit plus an additional 10 per cent that would be added every year. However, if Essar sources its own power, it would only have to pay for usage of the board’s infrastructure and licence.

But the board does not want to let go of its kitty of revenue to the franchisee as Patna is a major source of income. BSEB has built into the Request for Proposal the provision of energy supply to the franchisee keeping in mind future generation. The board is expected to receive supply from new power plants in the next two to three years.

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