Tie Up with At Least Three Manufacturers Before Bidding: Gujarat Tells Wind Developers

GUVNL has proposed amendments in two clauses relating to technical eligibility criteria and early commissioning

March 1, 2019


The Gujarat Electricity Regulatory Commission (GERC) has asked bidders of wind auction to declare pre-bid tie-up with at least three equipment manufacturers or engineering, procurement, and construction (EPC) contractors for the execution of the project.

The commission feels that a tie-up with only one manufacturer may lead to a situation where the bidder may get affected due to the failure of the manufacturer to provide the wind turbine on time. This would also limit the flexibility of the bidder who will not be able to commission the project in time. Therefore, a bidder should have an option to fall back on more than one manufacturer according to the commission.

Many respondents have argued that per-bid tie-up will protect the interest of the wind turbine manufacturers and will restrict the competition in the bidding process. It is also anti-competitive, discriminatory, arbitrary, and contrary to the principles of competitive bidding.

However, the Commission does not concur with this view and feels that it will not dilute the competition as flexibility would be available to the bidders to tie-up with more than one manufacturer. On the contrary, the bidder would also have the bargaining power to get the most economical and competitive bids and provide equal opportunities to all the bidders to stand in competition.

The Commission noted that any condition in the contract should be allowed in such a manner that not only the interests of both the parties are safeguarded, but at the same time the interest of the consumer is also protected.

Earlier, The Gujarat Urja Vikas Nigam Limited (GUVNL)  had proposed amendments in two clauses relating to technical eligibility criteria and early commissioning in its bid document.

The GUVNL has proposed in the earlier power purchase agreement that the successful bidder would be permitted for full commissioning as well as part commissioning of the project before the scheduled commissioning date with a provision for payment of 75 percent of PPA tariff in case of early part commissioning of the project.

However, it amended this clause stating that wind turbine manufacturers had expressed their distress that setting up of wind projects involves several uncertainties which cannot be accurately predicted. Accordingly, if the project is commissioned early, the procurement of power should be at 100 percent of PPA tariff and not restricted to 75 percent of PPA tariff.

The generator willing to expedite and commission the project before the commissioning date would get incentivized. The 100 percent PPA tariff will motivate the generators to achieve the commissioning of the project before the date as it will enable to earn higher and early revenue from the project.

The commission accepted the GUVNL’s premise for incentivizing generation by permitting to commission projects before the commissioning date. However, the commission feels that since this condition will affect the consumers’ tariff. Therefore, to strike a balance between the interest of generators and consumers, it says-

“The successful bidder will be permitted for full commissioning as well as part commissioning of the project even prior the date, subject to the condition that earlier commissioning is limited to three months prior to SCOD, for the purposes of availing 100 percent PPA tariff, and 75 percent PPA tariff would be available for the period of earlier commissioning beyond three months from the SCOD.”

In November 2018, GERC had approved Torrent Power’s petitions for the acceptance of deviations from the Ministry of Power (MoP)’s guidelines for the procurement of solar and wind power.