Escrow payment introduced by MSEDCL for Shil-Mumbra-Kalwa

Our earlier blog covered the 'Technical' and 'Financial' criteria of Shil-Mumbra-Kalwa, followed by listing of key performance parameters.

MSEDCL, from its past bid experience, is facing payment recovery issues from few operating distribution franchisee companies. In a recent development, MSEDCL has enforced strict performance requirements from existing franchisee to participate in its latest bid at Shil-Mumbra-Kalwa. This is by way of the following two clauses which have been added freshly:

• A certificate of 'No Outstanding Dues' of utility (licensee) has been made mandatory for operating distribution franchisees.
• Recovery of six months average billing amount in advance from future franchisee.

The above first condition will further increase pressure on existing franchisees to clear dues in case they wish to participate in new bids. The latter condition will ensure that only serious bidders with strong appetite to bear initial costs will participate in the future DF bids.

A slight change in QR is made, allowing any Distribution Licensee to participate irrespective of the customer base and no limitation of 40K customers.

Another interesting piece to further strengthen DF model is being experimented in this bid, with start of Escrow account, to derisk the Licensee from non-payment by DF operator.

The Shil-Mumbra-Kalwa bid process is through e-tendering and the revised RFP can be downloaded from the following website of Mahadiscom: http://works.mahadiscom.in/eTender/etender. A non-refundable fee of Rs. 2 lacs as tender purchase fee is to be paid online. This practice of MSEDCL of charging fees on RFP downloading is getting rightly challenged by bidders, resulting into risk of lower bid participation, fearing which RFP sale date has been extended to 20th June. (Please take a quick poll to register your vote to agree/disagree on this issue, and help set right practices to improve bidding procedures)

See revised Corrigendum.

Posted by: Kunjan Bagdia @ pManifold

MSEDCL released revised RFP of Shil-Mumbra-Kalwa

Maharashtra State Electricity Distribution Company Limited (MSEDCL), after a long slumber has come into action back again, keeping up its leadership in the Power Distribution Franchisee (DF) segment, with already 4 operating DF models. The company has recently released the RFP for Shil-Mumbra-Kalwa, which comes under Thane Urban Circle, after having scrapped the earlier bidding that started in Dec. 2010.

Qualification criteria for the bidder company are as follows:

• Technical Capability Criteria
• Experience in handling consumer base
• The Bidder Company must have a minimum of 2 years of experience in serving at least 40,000 consumers. A consumer is defined as any entity that acquires goods or services for direct use or ownership as well as for resale or use in production and manufacturing.
• For Operational Distribution Franchisee of Utility
• The existing operational  Distribution Franchisee of Utility must have no outstanding dues excluding disputed amount if any, the current payable invoice and preceding payable invoice. A certificate of NO outstanding dues of  utility  except as mentioned above have to be submitted along with the bid. 

• Financial Capability Criteria
• Net worth
• Net worth as on March 31, 2011 should be at least Rs 70 Crore (Rupees  Seventy  Crore). Net worth is defined as Paid up Equity Share Capital plus Equity Share Premium plus General Reserves and other free reserves plus credit balance in profit and loss account less Accumulated losses less intangible assets less Miscellaneous expenditure to the extent not written off.
• Intangible assets are identifiable non-monetary assets, without physical substance, held for use in the production or supply of goods or services, for rental to others, or for administrative purposes. Net worth excludes statutory reserves and revaluation reserves. 
• Cash Accruals
• Average Cash Accruals, (defined as the sum of Profit after Tax plus depreciation) in the last two years (i.e. FY 2009-10  & FY 2010-11), should be at least Rs. 35 Crore (Rupees Thirty Five Crore).
• Public Limited Company
• The bidder company should be a public limited company as defined in section 3 of Companies Act, 1956.

The Bidder  must satisfy all the above-mentioned criteria to be qualified for evaluation of Financial Proposal.

Key performance parameters of the RFP and its associated weight-age are indicated below:

Parameters	Units	FY 2010-11
Input Energy	MUs	442.6
Sales (Metered)	MUs	263.64
Demand (Inc Subsidy)	Rs. Cr.	135.53
Collection	Rs. Cr.	109.30
Overall AT&C Losses (HT & LT together)	%	40.43
AT&C Loss (only LT side)	%	44.56
Loss Quantum	MUs	178.96
Collection Efficiency	%	80.77
Connected Load	MVA	122
No. of consumers	No.	1,57,699

The revised RFP for Shil Mumbra & Kalwa region is uploaded on website of Mahadiscom:

http://works.mahadiscom.in/eTender/etender. Contrary to other states DF bids, there is a downloadable price to access the RFP online and apply. The complete process will be through e-tendering.

Pre-bid date: 21st June
Bid close date: 21st July

Old RFP, which was released in Dec 2010, can be downloaded from the following link:

http://www.mahadiscom.in/RFP_DFA_JSHIL-MUMBRA-KALWA_21-12-2010.pdf

Post by: Kunjan Bagdia @ pManifold