MSEDCL Petition to Float Open Tenders Under MSKVY Halted by MERC

MSEDCL has had its petition with MERC, seeking approval to float open tenders and taking land on lease by paying rent under MSKVY Scheme, halted for now.

The Maharashtra State Electricity Distribution Company Limited (MSEDCL) has filed a petition with the Maharashtra Electricity Regulatory Commission (MERC) seeking approval to float Open tenders and taking land on lease by paying rent under Mukhyamantri Saur Krishi Vahini Yojana (MSKVY) Scheme.

The main prayers made by MSEDCL in its petition are:

1. To allow it to adopt this new methodology for implementing open tender policy under Mukhyamantri Saur Krishi Vahini Yojana with a celling rate of Rs 3.30 per unit.
2. To consider the procurement of power through this process for fulfilment of Renewable Purchase Obligations (RPO) Targets.

In its favour, MSEDCL stated that at present, it has contracted 4057 MW solar capacity and a further 1133 MW capacity is under signing process. However, in view of the requirement for fulfilling RPO targets in future years and the accumulated shortfalls, the distribution utility has to procure around 5000 MW solar power in the next 2 years. Out of this 5000 MW, it has planned for 3000 MW capacity through the MSKVY scheme.

It added that it has floated tenders for the procurement of solar power through competitive bidding under MSKVY as per the Ministry of Power’s (MoP) guidelines issued for the tariff-based competitive bidding process in the last two years. However, the tenders been undersubscribed and have shown the same pattern over the two years.

Out of total tendered capacity of 6500 MW under MSKVY, bids for only 1873 MW capacity received and PPA for 250 MW solar capacity have been executed so far and 283 MW is under process. The commissioned capacity under MSKVY till date is around 223 MW.

MSEDCL then makes its case by stating that in order to contract the decentralized solar generation capacity on the fast track and to encourage higher/continuous participation of project developers, it proposes to adopt an open tender policy by publishing distribution sub-station wise solar evacuation capacity in Agriculture dominated districts.

It has proposed to implement an open tender procedure wherein MSEDCL will utilise the tender documents prepared on the basis of MNRE guidelines of decentralized solar plants and subsequent amendments and the deviations approved by the Commission in previous Orders related to MSKVY.

In its order, the commission stated that it acknowledges the proactive proposal of MSEDCL to accelerate the bidding process under MSKVY and is principally inclined towards the proposal of MSEDCL to conduct Open Tender i.e. continuous re-biding till targeted capacity is fulfilled, for procurement of solar power under MSKVY.

However, the Commission postulated that there may be certain operational challenges which need to be addressed while inviting the bids on a monthly basis:

• As per the methodology proposed by MSEDCL, the initial tender (RfS) document will form the base for all future continuous bidding process to be conducted in each month till the targeted capacity is fulfilled. Such process may take several months. In case, there is any amendment or issuance of new guideline by the Central Govt. or any other substantial market development which requires revisions in RfS, there needs to be provision for the same.
• Due to the proposed methodology of continuous bidding till fulfilment of targeted capacity, there is possibility that bidders will quote only the ceiling tariff which will vitiate the intent of competitive bidding. To avoid this, MSEDCL may adopt the approach of other agencies like SECI wherein it initially invites the Expression of Interest (EOI) to assess the scale of bids which may be received and if EOI received is less than the anticipated capacity, then bids are called for less capacity (usually 80 percent) of the EOI received. This process may safeguard against any gaming/cartel formation.
• MSEDCL has proposed the option of providing land to bidders only if 3 months of continuous bidding process do not provide a satisfactory response. However, MSEDCL already has enough experience of low response in the last 2 years, hence instead of waiting for 3 months, if the land is available, MSEDCL may include it upfront from day one. MEDA has submitted that MSEDCL may enhance the lease rent rate of the land to be developed for solar projects. As stated in above para 9, the Commission opines that such rates shall be offered by the utility as per their own commercial analysis.

In view of the above, the Commission has directed MSEDCL to make necessary changes in the RfS document to address the above issues and submit a fresh petition for approval of the commission. During such process, MSEDCL has also been asked to submit operational details of already commissioned projects under MSKVY and whether they have faced or facing any operational difficulty, if any.

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