1. The Petitioner, ER NER Transmission Limited, has filed the present Petition under Section 63 of the Electricity Act, 2003 (hereinafter referred to as ‘the Act’) for adoption of transmission charges in respect of “Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions” (hereinafter referred to as ‘the Transmission System’ or ‘the Project’) to be established on Build, Own, Operate and Transfer (BOOT) basis. The Petitioner has made the following prayers:
“(a) Adopt transmission charges for “Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions” discovered through competitive bidding process;
(b) Allow the sharing and recovery of Transmission Charges for Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions as per Sharing of Inter-State Transmission Charges and Losses CERC Regulations, 2020 and any other amendment thereon issued from time to time by CERC; and
(c) Pass such other order/orders, as may be deemed fit and proposer in the facts and circumstances of the case”
2. On receipt of the present Petition, the Bid Process Coordinator (BPC), REC Power Development and Consultancy Limited, vide letter dated 7.11.2022 was directed to submit the relevant documents regarding complete process of competitive bidding. The necessary details have been filed by the BPC under affidavit dated 30.11.2022.
Hearing dated 22.12.2022
3. During the course of hearing on 22.12.2022, the representative of the Petitioner submitted that the Petitioner has complied with all the requirements for grant of transmission licence.
4. During the course of hearing, the Commission enquired about the commissioning schedule of Banka (POWERGRID) - Goradih (Sabour New) 220 KV D/c line of BSPTCL, for termination of which the Petitioner is to establish 2 Nos. of 220 kV GIS lines bays under Element 4. The representative of the CTUIL stated that BSPTCL has confirmed that the said line would be ready/coming-up within the period of 18 months.
5. The Commission further observed that CTUIL ought to ensure that there is no mismatch in the commissioning schedule of these assets and in order to avoid such eventualities, CTUIL ought to deliberate upon this aspect with both the Petitioner as well as BSPTCL and may also enter into an Implementation Agreement with them clearly spelling out the liabilities of each side in the event of mismatch in the commissioning of assets under their respective scope as per the prevalent regulations of the Commission. In response, the representative of CTUIL assured that CTUIL will take up this issue with both the parties.
6. In response to the further query, the representative of RECPDCL-BPC confirmed that the entire bid process had been conducted as per the provisions of the Guidelines notified by the Ministry of Power, Government of India. The representative of RECPDCL also made a brief submission on the bid process, number of bidders, e-RA process and outcome of the bidding process.
7. The Petitioner vide Record of Proceedings for the hearing dated 22.12.2022 was directed to submit (a) the copy of the document where approval has been accorded for one no. of bus coupler bay at Banka sub-station (POWERGRID) under ERSS-XXV and one no. of bus coupler bay at Namsai sub-station (POWERGRID) under NERSS-XV, and (b) copy of SLD of the both transmission schemes.
8. The Petitioner vide its affidavit dated 29.12.2022 has submitted that the scope of the project already covers requirement of bus coupler bays at “Banka” Substation and “Namsai” Substation. With regard to implementation schedule of elements at Banka Substation mentioned in the RfP documents, the requirement of matching the commissioning of elements at Banka Substation was deleted vide Amendment No. XI to the RIP documents issued by the BPC. The Petitioner has placed on record the copy of SLD of the both transmission schemes obtained from BPC.
9. We have considered the submissions of the Petitioner and perused the documents available on record. Section 63 of the Act provides as under:
“Section 63 : Determination of tariff by bidding process : Notwithstanding anything contained in section 62, the Appropriate Commission shall adopt the tariff if such tariff has been determined through transparent process of bidding in accordance with the guidelines issued by the Central Government.”
10. Government of India, Ministry of Power has notified the “Tariff based Competitive-bidding Guidelines for Transmission Service” and “Guidelines for Encouraging Competition in Development of Transmission Projects' (hereinafter referred to as “the Guidelines’) under Section 63 of the Act vide Resolution No. 15/1/2017-Trans dated 10.8.2021 as amended from time to time. The salient features of the Guidelines are as under:
(a) The Guidelines are applicable for procurement of transmission services for transmission of electricity through tariff based competitive bidding for selection of Transmission Service Provider (TSP) for new transmission system on Build, Own, Operate and Transfer basis.
(b) For procurement of transmission services, required for any inter-State transmission Project, the Central Government shall notify the CTU or any Central Government Organization/Central Public Sector Undertaking or its wholly owned subsidiary (Special Purpose Vehicle) to be the Bid Process Coordinator (BPC) who would be responsible for coordinating the bid process.
(c) The BPC shall prepare the bid documents in accordance with the Guidelines and obtain approval of the Appropriate Government or alternatively, the BPC can use the Standard Bid Documents notified by Ministry of Power. Any material deviation from the Standard Bidding Documents shall be made only with the prior approval of the Appropriate Government. Intimation about initiation of the bidding process shall be sent by the BPC to the Appropriate Commission.
(d) For the procurement of transmission services under the guidelines, BPC shall adopt a single stage two envelope tender process featuring Request for Proposal (RFP). The entire bidding process shall be conducted online through electronic medium under e-reverse bidding framework.
(e) RFP notice should be published in at least two national newspapers, website of the BPC and preferably in trade magazines also, so as to accord it wide publicity. The bidding shall necessarily be by way of International Competitive Bidding (ICB). For the purpose of issue of RFP, minimum conditions to be met by the bidder shall be specified in the RFP.
(f) Standard documentation to be provided in the RFP shall include definitions of requirements including brief description of the Project, commissioning milestones to be achieved by the bidders, Qualification requirements to be met by bidders including, minimum net-worth, etc. with necessary proof of the same, as outlined in the bid documents, Specified target dates/months for commissioning and commercial operations, Standard Transmission Service Agreement (TSA), agreement(s) under Central Electricity Regulatory Commission (Sharing of Inter State Transmission Charges and Losses) Regulations as amended from time to time, period of validity of offer of bidder, TSA proposed to be entered with the SPV including amendments, bid evaluation methodology to be adopted by the BPC, specification regarding bid bond as well as the Contract Performance Guarantee to be furnished by the bidders, proposed indemnification agreement between the TSP and the Nodal Agency, liquidated damages that shall apply in event of delay in start of providing the transmission services and technical, operational and safety criteria to be met by the bidder/TSP and requirement of obtaining transmission Licence from Appropriate Commission.
(g) The TSP on the date of acquisition of SPV from the BPC will enter into a Transmission Service Agreement with the Nodal Agency.
(h) To ensure competitiveness, the minimum number of qualified bidders shall be two. For inter-State transmission system, bids shall be opened in the office of CEA by a bid committee comprising of at least one member from CEA and one member from BPC. For inter-State transmission system, CEA shall constitute a committee for evaluation of the bids with at least one representative from CEA and not less than two representatives from the concerned Regional Power Committees and one independent member. Further, in case project is inter-regional, there shall be at least one representative from every concerned RPC. The technical bids shall be examined to ensure that the bids submitted meet minimum eligibility criteria set out in the bid documents on all technical evaluation parameters. Only the bids that meet all elements of the minimum technical criteria set out in the bid documents shall be considered for further evaluation on the transmission charges bids. The online initial price bids shall be electronically opened by the bid opening committee in presence of the bid evaluation committee. The bidder, who has quoted the lowest transmission charge as per the evaluation procedure, shall be considered for the award.
(i) BPC is required to complete e-reverse bidding after opening of the initial offer within 75 days. The procurer may give extended time-frame indicated herein based on the prevailing circumstances and such alterations shall not be construed to be deviation from these guidelines.
(j) The TSP shall make an application for grant of transmission license to the Appropriate Commission within five (5) working days from the date of execution of share purchase agreement for acquisition of SPV.
(k) BPC shall make the final result of evaluation of all bids public. The final TSA, along with the certification by the bid evaluation committee, shall be forwarded to the Appropriate Commission, for adoption of tariff discovered from the quoted annual transmission charges during the e-reverse bidding process in terms of Section 63 of the Act.
11. Therefore, we have to examine whether the process as per the provisions of the Guidelines has been followed in the present case for arriving at the lowest annual transmission charges and for selection of the successful bidder.
12. Ministry of Power, Government of India, vide its Gazette Notification No. 15/3/2018-Trans-Pt (1) dated 19.7.2021 has notified REC Power Development Consultancy Limited (RECPDCL) as Bid Process Coordinator (BPC) for the purpose of selection of bidder as Transmission Service Provider to establish “Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions” on Build, Own, Operate and Transfer basis through tariff based competitive bidding process.
13. ER NER Transmission Limited (the Petitioner) was incorporated on 6.10.2021 under the Companies Act, 2013 as a wholly owned subsidiary of RECPDCL with the objective to establish Inter-State Transmission System for “Inter-State Transmission System for System Strengthening Scheme for Eastern and North Eastern Regions” and to act as the Transmission Service Provider after being acquired by the successful bidder. The main objectives of the Petitioner Company in its Memorandum of Association are as under:
“To plan, promote and develop an integrated and efficient power transmission system network in all its aspects including planning, investigation, research, design and engineering, preparation of preliminary, feasibility and definite project reports, construction, operation and maintenance of transmission lines, sub-stations, load dispatch stations and communication facilities and appurtenant works, coordination of integrated operation of regional and national grid system, execution of turn-key jobs for other utilities/organizations and wheeling of power in accordance with the policies, guidelines and objectives laid down by the Central Government from time to time”.
14. BPC prepared the bidding document RfP in accordance with the Standard Bid Documents issued by the Ministry of Power, Government of India.
15. BPC started the process of selection of successful bidder with the publication of Global Invitation for Qualification for selection of developer on BOOT basis for the Project. The notice of RfP was published on 9/11.11.2021 in all editions of Hindustan (Hindi), Hindustan Times (English), Mint (English) and Financial Times (English-worldwide) with the scheduled last date of submission of response to RfP as 11.1.2022. Intimation regarding initiation of the bid process was given to this Commission in accordance with Clause 4.2 of the Guidelines vide letter No. RECPDCL/ISTS/TBCB/2021-22/1761 dated 9.11.2021.
16. The key milestones in the bidding process were as under:
S. No. Events Date 1 Publication of Request for Proposal 9.11.2021 2 Technical & Price Bid Submission 25.7.2022 3 Technical Bid Opening 25.7.2022 4 Initial Price Opening (IPO) 17.8.2022 5 e-Reverse Auction 18.8.2022 6 Final Bid Evaluation Committee Meeting 25.8.2022 7 Issuance of LoI 30.8.2022 8 Signing of Agreements & Transfer of SPV 10.10.2022
17. The scope of the Project as per the Request for Proposal and the Transmission Service Agreement is as under:
Sl. No. Name of the Transmission Element Scheduled COD in months from Effective Date Element(s) which are pre-required for declaring the commercial operation (COD) of the respective Element 1. Creation of 220kV GIS bus at Banka (POWERGRID) S/s 24 Elements at Sl. No. 1, 2, 3 & 4 are required to be commissioned simultaneously as their utilization is dependent on commissioning of each other. 2. 400kV bus extension works at Banka (POWERGRID) 400/132 kV Sub-station 3. 400/220kV, 2x500MVA ICTs along with associated bays (220kV bays in GIS and 400kV bays in AIS) 4. 2 nos. of 220kV GIS line bays at Banka (POWERGRID) for termination of Banka (POWERGRID) - Goradih (Sabour New) 220 kV D/C line of BSPTCL Future provision : Space for future 220 kV GIS bays : 6 no. 5. Upgradation of existing 132 kV Namsai (POWERGRID) S/s to 220 kV (with 220 kV side as GIS) 36 Elements at S. Nos. 5, 6 & 7 are required to be commissioned simultaneously as their utilization is dependent on commissioning of each other. 6. Kathalguri (NEEPCO) - Namsai (POWERGRID) 220kV D/c line 7. Extension at Kathalguri (NEEPCO) switchyard : 2 nos. of GIS line bays for termination of Kathalguri (NEEPCO) - Namsai
18. For the purpose of evaluation of bids, the Bid Evaluation Committee (BEC) comprising of the following was constituted:
1. Shri Umesh Kumar Madan, Head, SBI Capital Market Chairman 2. Shri T.K. Tara, SE (Trans), Department of Power, Government of Arunachal Pradesh Member 3. Shri Hare Ram Pandey, Director (Project), Bihar State Power Transmission Company Limited Member 4. Shri Y.K. Swarnkar, Director, PSETD Division, Central Electricity Authority Member 5. Ms. Manjari Chaturvedi, Director, PSPA-I Division, Central Electricity Authority Member 6. Shri Kuldeep Rai, Chairman, ER NER Transmission Limited Convener-Member
19. RECPDCL appointed a Consultant, namely M/s Mazars Advisory LLP (MALLP) and Singhania & Partner LLP (S&P) (in short ‘Consultant’) for providing consultancy services in the process of selection of the developer for the Project through tariff based competitive bidding process. Responses to RfP were received from the five bidders as per details given below:
Sr. No. Name of Bidders 1 Adani Transmission Limited 2 2 Power Grid Corporation of India Limited 3 3 Megha Engineering and Infrastructures Limited 4 4 Sterlite Grid 8 Limited 5 5 Techno Electric & Engineering Company Limited
20. The responses of the Bidders (list as per table above) were opened on 25.7.2022 in the presence of the Bidders' representatives. Based on the recommendation of the Bid Evaluation Committee (BEC), the RfP (Financial) Bids-Initial Price Offer of the five bidders were opened on 17.8.2022. Lowest Initial Price Offer discovered (Best Deal) at MSTC portal was Rs. 350.00 million per annum which was the initial ceiling for quoting the final offer during e-reverse auction. The following prices were quoted in initial offer by the bidders:
S. No. Name of Bidder Quoted Transmission Charges (Rs. in Million) Rank 1. Power Grid Corporation of India Limited 350.00 L-1 2. Sterlite Grid 8 Limited 493.80 L-2 3. Adani Transmission Limited 505.00 L-3 4. Megha Engineering and Infrastructure Limited 554.00 L-4 5. Techno Electric & Engineering Company Limited 670.00 L-5
21. As per the provisions of RfP documents, BEC recommended four qualified bidders, namely, Power Grid Corporation of India Limited, Sterlite Grid 8 Limited, Adani Transmission Limited and Megha Engineering and Infrastructure Limited to participate in the electronic reverse auction stage and submit their final offer.
22. E-reverse auction was carried out at MSTC portal on 18.8.2022 in the presence of members of BEC after intimating to above four bidders regarding lowest initial price offer. After e-reverse auction, the transmission charges for four bidders (in ascending order) emerged as under:
S. No. Name of Bidder Quoted Transmission Charges from the Final Offer (Rs.in Million) Rank 1. Power Grid Corporation of India Limited 350.00 L-1 2. Sterlite Grid 8 Limited 493.80 L-2 3. Adani Transmission Limited 505.00 L-3 4. Megha Engineering and Infrastructure Limited 554.00 L-4
23. Based on e-reverse bidding, BEC in its meeting held on 25.8.2022 recommended Power Grid Corporation of India Limited (PGCIL) with the lowest transmission charges of Rs. 350 million as the successful bidder. BEC, vide its certificate dated 25.8.2022, has certified that entire bid process has been carried out in accordance with the Guidelines issued by the Ministry of Power under Section 63 of the Act. BEC has further certified that the transmission charges discovered through e-reverse auction is acceptable.
24. Letter of Intent was issued by the BPC on 30.8.2022 to the successful bidder i.e. Power Grid Corporation of India Limited. In accordance with Clause 12.3 of the Guidelines, the BPC has hosted on the website of RECPDCL, the final result of the evaluation of the bids for selection of developer for the Project.
25. In accordance with the provisions of the bid documents and upon issuance of LoI to the successful bidder (Power Grid Corporation of India Ltd.) and acquisition of SPV (the Petitioner) by the successful bidder, the Petitioner has prayed for adoption of transmission charges for the Project which has been discovered through the process of competitive bidding.
26. In accordance with Clause 2.15.2 of RfP, the selected bidder shall within ten (10) days of issue of the Letter of Intent, accomplish the following tasks:
(a) Provide the Contract Performance Guarantee in favour of the Nodal Agency;
(b) Execute the Share Purchase Agreement and the Transmission Service Agreement;
(c) Acquire, for the Acquisition Price, one hundred percent (100%) equity shareholding of ER NER Transmission Limited from REC Power Development and Consultancy Limited, along with all its related assets and liabilities;
27. In accordance with Clause 2.15.4 of RfP, the selected bidder shall within five (5) working days of the issue of the acquisition of the SPV by the Successful Bidder, the TSP shall apply to the Commission for grant of Transmission Licence and make an application to the Commission for the adoption of Transmission Charges, as required under Section 63 of Act.
28. The proviso to Clause 2.15.2 of the RfP provides that “if for any reason attributable to the BPC, the above activities are not completed by the Selected Bidder within the above period of ten (10) days as mentioned in this clause, such period of 10 days shall be extended, on a day for day basis till the end of the Bid validity period”. Though LoI was issued on 30.8.2022, BPC, vide its letters dated 9.9.2022, 19.9.2022, 29.9.2022 and 7.10.2022 in terms of Clauses 2.15.2 of RfP extended the date upto 17.10.2022 for completion of all activities by the successful bidder. The selected bidder furnished the Contract Performance Guarantee in favour of Nodal Agency (CTUIL) for an amount of Rs. 6.84 crore and has acquired hundred percent equity-holding in the applicant company on 10.10.2022 after execution of the Share Purchase Agreement. As per clause 2.15.4 of the RfP, TSP is required to apply to the Commission for grant of transmission licence within five (05) working days of the issue of the acquisition of the SPV by the successful bidder. Successful bidder, namely, PGCIL acquired the SPV on 10.10.2022. Accordingly, the TSP has filed the instant Petition through e-filing for grant of transmission licence on 14.10.2022.
29. The Petitioner has approached the Commission by a separate application for grant of transmission license. The Commission vide order dated 8.1.2023 in Petition No. 316/TL/2022 on being satisfied that the Petitioner, prime facie, qualifies for grant of transmission license as prayed for, directed publication of notices under clause (a) of sub-section (5) of Section 15 of the Act, inviting suggestions/objections to the proposal of the Commission. Accordingly, notices have been published.
30. In accordance with the Guidelines, BEC has to certify that the tariff has been discovered through a transparent process of bidding and the tariff discovered is in line with prevailing market prices. In the minutes of fourth Meeting of Bid Evaluation Committee meeting held on 25.8.2022, the following has been recorded:
“2. The Bid Evaluation Committee had met earlier on 17.8.2022 where the Initial Offers were opened and following was recommended:
• As per provisions of RFP document, following four (4) bidders were qualified to participate in the electronic reverse auction stage and submit their Final Offer:
Sr. No. Name of the Bidder Transmission Charges from the Initial Offer (in Rs. Million) Rank 1. Power Grid Corporation of India Limited 350.00 L1 2. Sterlite Grid 8 Limited 493.80 L2 3. Adani Transmission Limited 505.00 L3 4. Megha Engineering and Infrastructure Limited 554.00 L4
• To start e-reverse auction on 18.8.2022 at 1100 Hrs (IST) after intimation to all the four (4) qualified bidders regarding lowest initial price offer.
3. Pursuant to the above, BPC confirmed to BEC that all the above four (4) qualified bidders were informed on 17.8.2022 regarding the e-reverse Auction start time and lowest initial offer.
4. The e-Reverse Auction started on 18.8.2022 at 1100 Hrs (IST) on MSTC portal and during the initial period of 2 hours for conducting the e-reverse auction, no bidder placed its bid.
5. As per provisions of RFP, if no bid is received during the e-reverse bidding stage then the Bidder with lowest quoted initial offer during e-bidding stage shall be declared as the Successful Bidder. Accordingly, M/s Power Grid Corporation of India Limited emerged as the successful bidder after the conclusion of e-reverse auction with the lowest annual transmission charges of Rs. 350.00 million which is also the Final Offer.
6. BPC, in their evaluation report has confirmed the following:
a) The estimated annual transmission charges for this period has been computed based on the estimated cost as communicated by cost committee constituted by National Committee on Transmission (NCT) and as per prevailing CERC norms which works out to be Rs. 545.49 Million.
b) As per provisions of RFP Document, successful bidder i.e. M/s Power Grid Corporation of India Limited has submitted original hard copies of Annexure 3 and Annexure 14A and the same are found to be in order.
c) The entire bid process has been carried out in accordance with the “Tariff based Competitive Bidding Guidelines for Transmission Service” and the “Guidelines for encouraging competition in development of the Transmission Projects” issued by Ministry of Power, Govt. of India under Section 63 of the Electricity Act, 2003 as amended from time to time.
7. After detailed discussions on the evaluation report prepared by BPC, the Bid Evaluation Committee decided the following:
(a) M/s Power Grid Corporation of India Limited, with the lowest annual transmission charges of Rs. 350.00 million, is the successful Bidder after the conclusion of the e-reverse auction.
(b) The transmission charges discovered after e-reverse auction is lower than the transmission charges estimated by BPC (para 6 (a) and is acceptable.
(c) In view of (a) to (b) above, M/s Power Grid Corporation of India Limited may be issued Letter of Intent (LOI).
8. The certificate by BPC to be forwarded to CERC for adoption of tariff in terms of Section 63 of the Electricity Act, 2003.”
31. Bid Evaluation Committee (BEC) vide its certificate dated 25.8.2022 certified as under:
“It is hereby certified that:
a. The entire bid process has been carried out in accordance with the “Tariff based Competitive Bidding Guidelines for Transmission Service” and “Guidelines for encouraging competition in development of the Transmission Projects” issued by Ministry of Power, Govt. of India under Section 63 of the Electricity Act, 2003 as amended from time to time.
b. M/s Power Grid Corporation of India Limited, with the lowest annual transmission charges of Rs. 350.00 million, emerged as the successful Bidder after the conclusion of the e-reverse auction.
c. The transmission charges of Rs. 350.00 million discovered after e-reverse auction is acceptable.”
32. In the light of the discussions in preceding paragraphs, it emerges that selection of the successful bidder and the discovery of the annual transmission charges of the Project has been carried out by the BPC through a transparent process of competitive bidding in accordance with the Guidelines issued by the Ministry of Power, Government of India under Section 63 of the Act. BEC has certified that the process is in conformity with the Ministry of Power Guidelines. BEC in its certificate dated 25.8.2022 has certified that Power Grid Corporation of India Limited has emerged as the successful bidder after conclusion of e-reverse auction with lowest annual transmission charges of Rs. 350 million. BEC has further certified that the transmission charges computed on the basis of rates quoted by the successful bidder, during e-reverse auction, is lower than the transmission charges calculated based on CERC norms. Based on the certification of the BEC, we approve and adopt the single annual transmission charges of Rs. 350 million (Rupees Three Hundred Fifty million only) subject to grant of transmission licence to the Petitioner. The transmission charges shall remain valid throughout the period covered in the TSA.
33. The sharing of the transmission charges by the designated ISTS customers (DICs) shall be governed by the provisions of the Central Electricity Regulatory Commission (Sharing of inter - State Transmission Charges and Losses) Regulations, 2020 as amended from time to time.
34. The Petitioner, vide its affidavit dated 15.12.2022, has informed that the name of the Petitioner company has been changed from ‘ER NER Transmission Limited’ to ‘POWERGRID ER NER Transmission Limited’ with effect from 14.12.2022. The certificate of change of name from ‘ER NER Transmission Limited’ to ‘POWERGRID ER NER Transmission Limited’ dated 14.12.2022 issued by Registrar of Companies, Delhi has been placed on record. Accordingly, the name of the Petitioner has been changed to ‘POWERGRID ER NER Transmission Limited’ on the record of the Commission.
35. Let an extract copy of this order be sent to the Nodal Agency, CTUIL.
36. The Petition No. 317/AT/2022 is disposed of in terms of the above.