The Telegraph
Monday , July 7 , 2014
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CESC lawsuit threat to ‘scrap’ move

Ranchi, July 6: Calcutta Electric Supply Corporation (CESC) today reiterated it was readying to file a writ petition before Jharkhand High Court in a climate of widespread speculation that state energy minister Rajendra Prasad Singh had ordered scrapping of the December 2012 agreement that had given the flagship company of the RP-Sanjiv Goenka Group rights to power distribution in Ranchi.

On July 4, the state energy minister repeatedly stressed he had asked for a “review” of the December 2012 twin agreements under which power distribution rights for Ranchi and Jamshedpur were awarded to CESC and Tata Power, citing “larger interest of the state” and fears of a bleeding state exchequer.

But insiders insist that Singh’s review was a thinly veiled call to the energy department and Jharkhand Urja Vikas Nigam Ltd (JUVNL), asking for the cancellation of the tender under which these jobs were offloaded to these two private sector giants.

Apparently, under the cloak of the review, the minister gave a nod for fresh tenders.

Sources told The Telegraph that the minister’s directives had been conveyed to JUVNL in writing by the energy department.

Though no one has told the CESC anything directly, the company, headquartered in Calcutta, plans to challenge its purported ouster.

“So far, we have not received any written communication from the state government relating to the cancellation of our agreement signed on December 5, 2012 under which we were awarded the power distribution job for Ranchi. However we will be moving high court based on newspaper reports,” Sanjib Sengupta, CESC spokesperson told The Telegraph.

Conjecture apart, the official decision in the matter will be taken by the board of directors of JUVNL, which comprises secretaries of finance and energy departments, besides its chairman S.N. Verma.

“The last JUVNL board of directors meet was held on June 19. Meetings of JUVNL board are usually held once every month. Though the date of the next meeting has not been fixed, board may meet on July 19 or 20, depending on availability of board members,” said Pandey Ramanikant Sinha, JUVNL director of public relations.

But before the matter is put up before the power board, JUVNL officials are doubtless examining the state energy minister’s so-called cancellation directive with a fine-tooth comb, legal implications being the prime concern.

The glaring anomaly is that since both the tenders have already been finalised and agreements have been concluded with the parties, they cannot be cancelled with retrospective effect.

Legally, a tender ceases to exist once the work is awarded to a successful bidder.

In this case, the tenders for power distribution in Ranchi and Jamshedpur ceased to exist once agreements were signed by the state with two corporate heavyweights CESC and Tata Power in December 2012. Logically, what doesn’t exist can’t be scrapped, which puts energy minister’s alleged wish on dubious legal ground.

A Tata Power official, when contacted, said that they were also keeping a close watch on the situation to see how it would unfold, but declined to comment further.

On December 5, 2012, the state energy department inked agreements with CESC and Tata Power, giving them jobs related to power distribution in the state’s two biggest cities. Jobs included distribution of power to existing and future consumers, minimising transmission and distribution losses, meter reading, billing, collection of bills, maintenance of overhead transmission lines, transformers and others.

Political uncertainty, that began with then chief minister Arjun Munda’s resignation in January 2013, followed by six months of President’s Rule and the swearing-in of the Hemant Soren government in July 2013, put the agreements under wraps. Finally, on July 4, 2014, minister Singh ordered a “review”.