Both Mumbra-Shil-Kalwa and Jharkhand Distribution Franchisee (DF) bids are pending for bid opening for more than a month. SAIL has only recently open the Bhilai bid, while other 3 areas are still pending. There seems no check on the utilities to monitor governance on the bid process, and be responsible to its bidders. One likely inferred reason for this delayed response from DISCOM is its perceived risk of non-performance from following:
There are increasing risks of Mumbra bid getting scrapped, looking at continuing delays of bid opening date, and previous legacy of bid scrapping with 5 bidders that time. Similar is the case with Jharkhand, with 2 bids received each for Ranchi and Jamshedpur, and only one for Dhanbad. It is understood, that the overall market confidence on DF model is low at the moment, mainly because of reported contractual non-performance at Nagpur and Aurangabad DFs. Also there has been no recent success story on DF model post Torrent at Bhiwandi. These apprehensions of high risk of another failure with a new player is what is likely leading the utility to consider bid scrapping.
While above utility apprehensions might have some grounds, the opposite of it i.e. 'an established & experienced player will do good' has also examples, that were found untrue. For example:
- Few number of bids received
- Mumbra: 3 out of 11 RFP purchasing companies
- Jharkhand: 2 out of 6 only qualified companies
- Most new entrants, with no prior experience in the Distribution business
- Mumbra: Konark, Saicare InfoSystem (SIS) and Supreme Infra
- Jharkhand: JV of Essel & Enzen and CESC
There are increasing risks of Mumbra bid getting scrapped, looking at continuing delays of bid opening date, and previous legacy of bid scrapping with 5 bidders that time. Similar is the case with Jharkhand, with 2 bids received each for Ranchi and Jamshedpur, and only one for Dhanbad. It is understood, that the overall market confidence on DF model is low at the moment, mainly because of reported contractual non-performance at Nagpur and Aurangabad DFs. Also there has been no recent success story on DF model post Torrent at Bhiwandi. These apprehensions of high risk of another failure with a new player is what is likely leading the utility to consider bid scrapping.
While above utility apprehensions might have some grounds, the opposite of it i.e. 'an established & experienced player will do good' has also examples, that were found untrue. For example:
- same Torrent, is struggling to stabilise the Agra model
- Reliance continue to struggle with Orissa, and has itself invited different versions of DF models with limited success
So it is not the limited experience of new players, that is causing current slow down in DF, but its the Model characteristics & its resulting forced dynamics from lack of proper planning, and non-involvement of relevant stakeholders during the design phase. The non-attractiveness of the DF model in its existing form to bankers is not only SPANCO's and GTL's problem, but it's a high risk to all other bidders as well.
