BSEB's
(hereafter referred as Bihar State Power (Holding) Company Limited (BSPHCL)) organized
pre-bid meeting on revised Bihar Distribution Franchisee on 16th Nov. 2012 saw good
participation from around 10+ companies. The companies that participated are Reliance
Infrastructure, Tata Power, Direct Media Distribution Pvt Ltd, Supreme
Infrastructures, Spanco Ltd, Delhi, SPML, CESC, Pan India Network Ltd., Shyam
Indus Pvt Ltd, etc.
This
is the third attempt by BSEB to privatize the power distribution in its areas
of Patna, Muzaffarpur, Bhagalpur & Gaya. Earlier in 2009, Glodyne
Power Limited and CESC were the highest bidder and second highest bidders
respectively. Later, CESC became highest bidder as Glodyne was held ineligible
for participating in the bid after its partner stepped out of the consortium. In
June 2011, BSEB cancelled CESC's bid, saying that it would lose heavily if
it awards bid to CESC as the tender was floated in 2009 on the basis of tariff
rate of 2007-08. In second attempt, only Essar Power submitted and others
refrained from submitting bids due to certain issues on Minimum Benchmarking
Price, but as Essar has not submitted formal acceptance within timescale, LOA
was cancelled.
Some
key points that were discussed in the pre-bid meeting and BSPHCL responses in
the revised amendments are as follows:
- Clarity
on geographical areas for DF – RFP mentions indicative map representing
divisions/block within each area. Bidders sought to have more clarity on
DF areas and its boundaries. In addition to approx map provided, a hand
marked image with its boundaries could be useful for better understanding
of the areas. Also, RFP does not mention the areas in Sq. Km.
Amendments – In a revised document, BSPHCL has provided with tentative
blocks/villages coming under each Franchisee area. A map indicating the
surroundings areas of each area is provided for better understanding of the
Franchisee area.
- Definition of following Technical Proposal
- Organized Retail sector – One
of the technical qualifications was that the Bidders should have
experience of handling consumers in organised
retail sector. Bidders need more clarity on what actually means ‘Organized Retail’.
Amendments – Consumers in ‘Organized Retail Sector’ shall means ‘Consumers of all organized retail sector’ and not specific in
electricity distribution business
- Average
Internal Resource Generation (AIRG) – Bidders were of the opinion that AIRG qualification needs to be
relaxed or be deleted.
Amendments –
As per revised amendments, there is no change in
the above qualification except that the word ‘Internal Resource Generation’ is
replaced with ‘Gross Cash Accural’
- High Minimum
Bench-marking rates – Average bench-marking rates of all the
areas in Bihar is fairly high compared to previous DF bids. Most bidders
raised concerns on high benchmarking rates and requested to reassess or
lower the rates
Amendments – Benchmark rates has been revised based on the data audited by
Independent Auditor for Bhagalpur and Muzaffarpur Towns, and there is no change
for PESU and Gaya towns. Min Benchmark Levelized Input Price has changed significantly for Bhagalpur, while for others it remains same (See below chart).
- Input
Power Deficit: Few bidders raised questions that ‘Who will purchase extra power
in case of input-deficit’? Bidders need clarification on the timelines for
obtaining necessary approvals (As
per clause 5.4.2 in the DFA, mentions that the franchisee may request BSEB
for additional power from identified open market. BSEB will get the prior
approval of BERC and will enter into tri-partite PPAs with Franchisee as
one of the Parties. The required quantum of additional power shall be
allocated to the franchisee area)
Amendments – Further to clarify, that the cost of such additional power shall be
borne by the Distribution Licensee as per the provision of Article 5.4.2 of
Distribution Franchise Agreement.
- AT&C Loss Level Reduction – BSEB didn’t set any rigid loss reduction trajectory. This is definitely favourable to bidders
- No
Consortium Bidding - Unlike other recent MP bids, and/or Jharkhand bids, BSEB stands
of allowing no consortium bidding in its areas. Bidders suggested that it
should be allowed.
Amendments – No consortium
allowed in revised documents
- Extension of bid submission date - Bidders requested sufficient time
extension for bid submission primarily for on-field due diligence to gather
more information on the areas and its specific.
Amendments – No extension of bid dates
- Minimum
mandated capex investments - The RFP has requirement for 50% of base
year billed revenue equivalent mandated capex investment in first 5 years.
For PESU area, it is Rs. 375 Cr, which is fairly high compared to
all previous DF RFPs. Bidders requested to reduce the amount or reconsider
it.
Amendments – No change in the revised document
- ABR – Average
Billing Rate is fairly high compared to others. A potential increase in
high ABR could have been due to increased tariff last year. Bidders
requested to specify the audited base year ABR figure.
Amendments - The audited value of ABR for the Franchisee Area for Base Year (FY
2011-12) is annexed as Annexure-D in the revised document
Standard RFP and DFA documents have been used this time. Also, BSPHCL
and their transaction advisory team have made good attempts to engage and
promptly address bidders concern. We wish success to their sincere efforts to
raise effective DF in defined timelines.
Revised amendment document can be downloaded from here: Corrigendum
Last date of bid submission has been extended to 31st Dec, 2012. See revised dates here.
Last date of bid submission has been extended to 31st Dec, 2012. See revised dates here.
Posted by: Kunjan Bagdia @ pManifold
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