The Telegraph
Tuesday , October 1 , 2013
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Franchise hunt for power trips on terms

A changed eligibility criteria and not base price at which power is bought could be the reason why Patna still does not have a power distribution franchisee.

Some big, nationally acclaimed private power distribution firms had indicated they did not participate in the tendering process as base price of Rs 4.13 per unit was too high and would not be profitable for them. But, a power distribution company is ready to take up the Patna job at Rs 4.13 per unit. Only, it is not eligible.

Bihar State Power (Holding) Company Ltd (BSPHCL) appointed Essel Power as the distribution franchisee for Muzaffarpur, SPML for Bhagalpur and India Power for Gaya. Essel is taking up the franchise at Rs 2.67 per unit (base price) from October 1.

But the appointment of a distribution franchisee for Patna is stuck even after South Bihar Power Distribution Company Ltd gave a third extension in its fourth attempt to hand over the job to a reputable distribution company.

It had floated the tender for distribution franchisee on May 29. The last date for submission of bid was July 25. It was first extended till August 28, then September 17, and then October 22. Prospective bidders were reportedly against the “high” benchmark price of Rs 4.13 per unit that they would have to pay to buy power from Bihar State Power (Holding) Company Ltd.

Power company officials said the date for submission has been extended to address bidders’ queries and suggestions. They say the state exchequer would incur losses of Rs 1,000 crore in the next 15 years if the benchmark price was reduced by even 10 per cent. The franchise is for 15 years.

A senior officer of one of the three distribution companies given the franchise for Muzaffarpur, Bhagalpur and Gaya, however, told The Telegraph: “We are ready to take up distribution franchisee even at Rs 4.13 per unit. We could not bid as the eligibility criteria was changed in the fresh request for proposal issued on May 29.” According to the changed criteria, any power firm with less than three years’ experience in power distribution was disqualified from bidding for Patna. “Why did the power (holding) company formulate two sets of criteria, one for Patna and another for Muzaffarpur, Gaya and Bhagalpur? For the other three cities, a bidder must have two years’ experience for submitting tender documents,” he said.