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Page 1 of 13 BEFORE the UTTAR PRADESH ELECTRICITY

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Page 1 of 13 BEFORE the UTTAR PRADESH ELECTRICITY BEFORE THE UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION LUCKNOW Petition No. 632/2009 IN THE MATTER OF : Approval of Request for Proposal (RFP) & RFP Project documents - Transmission Service Agreement (TSA), Share Purchase Agreement (SPA) & Connection Agreement (CA) for selection of developer to establish “765KV Mainpuri - Bara line with 765KV/400KV AIS at Mainpuri and associated schemes/works (Package-1)” through tariff based competitive bidding process. AND IN THE MATTER OF : Uttar Pradesh Power Transmission Corporation Ltd., 11th Floor, Shakti Bhawan Extension, 14-Ashok Marg, Lucknow – 226 001 :Petitioner AND Petition No. 633/2009 IN THE MATTER OF : Approval of Request for Proposal (RFP) & RFP Project documents - Transmission Service Agreement (TSA), Share Purchase Agreement (SPA) & Connection Agreement (CA) for selection of developer to establish “765KV S/C Mainpuri - Hapur & Mainpuri – Greater Noida lines with 765KV/400KV AIS at Hapur & Greater Noida and associated schemes/works (Package-2)” through tariff based competitive bidding process. AND IN THE MATTER OF : Uttar Pradesh Power Transmission Corporation Ltd., 11th Floor, Shakti Bhawan Extension, 14-Ashok Marg, Lucknow – 226 001 :Petitioner The following were present : 1. Shri Ashok Kumar, Executive Director (Transmission), UPPTCL 2. Shri A.K. Singh, Chief Engineer, UPPTCL 3. Shri P.K. Gupta, Superintendent Engineer, UPPTCL 4. Shri Munish Kumar, DVVNL, Agra 5. Shri A.N. Gupta, Assistant Engineer, UPPTCL 6. Shri Siddharth Mehta, Crisil Ltd. (UPPTCL’s Consultant ) 7. Shri Amit Goenka, Crisil Ltd. (UPPTCL’s Consultant ) Page 1 of 13 8. Shri Ignacio Campos, Isolux Corsan 9. Shri Alfonso Perez, Isolux Corsan 10. Shri R.R. Aiyer, Isolux Corsan 11. Shri Lalchand, Isolux Corsan 12. Shri Naveen Bansal, Cobra Instalaciones, S.A. ORDER (Date of hearing 18 th March, 2010) (1) U.P. Power Transmission Corporation Ltd., (UPPTCL) has been authorized to act as Bid Process Coordinator (BPC) by the Energy Task Force (ETF) of GOUP and in that capacity it has filed three corrigenda of RFP documents (corrigendum-1, 2 & 3) along with RFP Project Documents consisting of Transmission Service Agreement (TSA), Share Purchase Agreement (SPA) and Connection Agreement (CA) for the approval of the Commission. These documents have been submitted in continuation to the previously submitted RFP documents in the same petitions. The RFP & TSA documents are made in deviations to Standard Bid Documents, for selection of Transmission Service Provider (TSP) to develop the following on Build, Own, Operate & Maintain and Transfer (BOOT) basis : (a) “765KV Mainpuri - Bara line with 765KV/400KV AIS at Mainpuri and associated schemes/works”, called Package-1, which consists of thirteen 765/400 KV lines/LILO and five 765/400 or 400/220 or 132 KV substations and (b) “765KV Mainpuri - Hapur & Mainpuri – Greater Noida lines with 765KV/400KV AIS at Hapur & Greater Noida and associated schemes/works”, called Package-2, which consists of twelve 765/400 KV lines/LILO and seven 765/400 or 400/220 or 132 KV substations. Two-stage bidding process for tariff based competitive bidding under guidelines issued by GOI is being followed under these petitions. The Petitioner has made deviations in RFP and TSA documents from ‘Tariff Based Competitive Bidding Guidelines for Transmission Service’ and ‘Guidelines for Encouraging Competition Page 2 of 13 in Development of Transmission Projects’ dt.13.4.06 of GOI (hereinafter referred to as Guidelines) and the Standard Bid Documents made there under by the Central Government. The deviations in these documents for both the petitions are similar and common in nature and put up for approval of the Commission as annexure-D of the RFP documents, annexure-1 of the TSA documents and RFP corrigendum-1, 2 & 3. RFQ documents, in the same petitions, have already been approved by the Commission vide order dated 15-10-09 through a public hearing dated 07-10-09. The modified RFQ documents have been issued by the petitioner according to the decisions and directions of the Commission. The Commission had not taken up the matter of RFP documents in the hearing of 07-10-09 as the petitioner did not submit the RFP Project documents by that time. The Petitioner has formed two Special Purpose Vehicles (SPVs), namely South East U.P. Power Transmission Company Ltd. for development of Package-1 and Western U.P. Power Transmission Company Ltd. for development of Package-2, which shall be transferred to the successful bidders. (2) The Commission published Public Notices, No. UPERC/JD(T)/Secy/2010/1654 dt.19-02-10 and UPERC/JD(T)/Secy /2010/1659 dt.19-02-10 in the newspapers for inviting comments /objections/suggestions in writing from all stakeholders and interested parties for hearing in the matter of RFP and RFP Project Documents. The petitioner, UPPTCL, was directed to put the above mention petitions along with relevant RFP and RFP Project documents on its website and also make hard copies of the same available in its office for inspection of any person. (3) Accordingly in the hearing on 18.03.10, RFP and RFP Project Documents for both the petitions were considered for discussion. The deviations made in making RFP & TSA documents have been Page 3 of 13 listed in Annexure-D of RFP documents, Annexure-1 of TSA documents and RFP corrigendum-1, 2 & 3. Since deviations are similar in nature as such same for both petitions would be decided by this common Order. (4) The petitioner intimated the Commission vide letter dated 09-03-10 that on the basis of recommendations of Bid Evaluation Committee, ETF has shortlisted the two bidders M/s Isolux Corsan Concesiones, SA and M/s Cobra Instalaciones, SA for issue of RFP documents and proposed to introduce a provision in RFPs to adopt “Swiss Challenge Method”, in case, the financial bids are not found competitive. (5) The bidders M/s Isolux Corsan and M/s Cobra Instalaciones have not submitted any written comments to the Commission during or before the hearing, except a fax message dated 17-03-10 from M/s Cobra, requesting the Commission to postpone the hearing of 18-03-10 and fix another date as they need time to study the fresh RFP corrigendum-2 & 3, received from the petitioner, just one day before. (6) The oral submissions made in the hearing are summarized as below- (I) Shri Siddharth Mehta made submissions on behalf of t he Petitioner. Shri Mehta made the following submissions :- a) After the issue of RFQs/RFPs, UPPTCL has come out with draft TSA documents, which is a major contract between the two parties, the developer and the Long Term Transmission Customers. The draft TSA documents have been made with certain deviations considering the complex nature of the project and certain amendments proposed by ETF, and for that purpose with the approval of ETF. Certain modifications were also made in the RFQ documents according to the decisions and directions Page 4 of 13 of the Commission vide order dated 15-10-09. In order to align the RFP documents with deviations of TSAs and modifications of RFQs, some more deviations were made in RFP documents, which have been communicated through corrigendum-1, 2 & 3. b) A new clause has been added in the RFP documents vide corrigendum-3, according to which “Method to Ensure Competitiveness of Bids” (MECB) can be applicable, in case, the financial bids, submitted by the bidders are found to be non- competitive and the bidders shall not have any objections for implementation of MECB. Shri Mehta explained MECB method which is summarized as under :- If the State Govt. does not find the price bids competitive then it may apply MECB. The lowest original financial bid, received by BPC, would continue to remain valid till the conclusion of MECB process. The BPC under this process would issue a public notice inviting fresh bids with the same terms of eligibility as were applicable under the original bid. Any party, except the original lowest bidder, shall be eligible to submit the fresh bid under this process. The original lowest bidder shall have the right of first refusal for adopting the lowest financial bid received through fresh bidding process under MECB. In case the right of first refusal is not exercised by the original lowest bidder, the lowest bidder in the fresh bidding process under MECB shall have the right to award of the contract. In case he refuses to honour his bid, the bid bond shall be forfeited and the original lowest bidder, prior to MECB process, will be awarded the contract at original quoted rates. c) The Contract Performance Guarantee and the Bid Bond for the two packages were increased appreciably and while deciding them, weightage of substations have also been considered whereas in the Standard Bid Documents, the estimate is prepared on kilometer length of line basis only without the cost of substations. The calculation of the Contract Performance Guarantee and the Bid Bond in the two petitions has been done Page 5 of 13 on the basis of the project cost, which includes the lines and the substations both and taken as 2.5% and 1.3% of the project cost respectively. d) Clause 1.4 of RFP documents has been amended through corrigendum-1 which proposed that all the assets of SPV including S/S, lines and other related physical assets will be transferred to the permitted nominee of the State Government at zero value at the expiry of the TSA, instead of transferring them to Long term Transmission Customer(s) or nominee of Long term Transmission Customer(s) at the depreciated value, proposed earlier. Shri Mehta intimated that ETF has come out with this proposal in view of unpredictable status of the distribution companies after twenty five years, which might go for privatization in the future.
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