Over the past two months or so, there has been inexplicable delay in routine processes associated with transmission projects awarded under the tariff-based competitive bidding (TBCB) route.
Consider this, during FY25 so far (April 1, 2024 to around July 25, 2024), only three project SPVs related to ISTS-TBCB schemes have been formally transferred to successful developers.
Power Grid Corporation of India Ltd (PGCIL) was awarded the letter of intent (LoI) for at least four ISTS-TBCB schemes during April and May 2024. These four SPVs have not yet been formally acquired by PGCIL. This is intriguing because the standard bid documents (SBD) states that the acquisition/transfer of project special purpose vehicle (SPV) has to take place, in normal course, within ten days of awarding the LoI.
Why is the transfer of SPV important? TBCB schemes have an envisaged implementation period, which is calculated from the date of SPV transfer. Delay in SPV transfer could therefore vitiate the project implementation schedule.
Interestingly, there are at least two recent formal announcements of EPC contracts related to ISTS-TBCB schemes. Jyoti Structures reported the winning of a contract from Adani Energy Solutions that strongly appears to be part of an ISTS-TBCB scheme housed under “Khavda IV A Power Transmission Ltd.” Similarly, Bajel Projects said that it has won an EPC contract from PGCIL for a project element of an ISTS-TBCB scheme to be developed under “Beawar-Mandsaur Transmission Ltd,” which is one of the four ISTS-TBCB schemes of PGCIL where the project SPV is pending formal transfer.
It is reliably learnt that Adani Energy Solutions (formerly Adani Transmission Ltd) is L1 for the Khavda IV A project but there is no formal communication about the transfer of project SPV.
As part of the standard procedure, bid process coordinators (usually RECPDCL and PFCCL) incorporate a project SPV wholly-owned subsidiary to develop a transmission scheme (ISTS or InSTS) where the bidder selection is done using the TBCB modality. Once the bidder is selected, this project SPV is formally acquired by the selected developer.
Now, all formalities regarding project SPVs are communicated by BPCs to stock exchanges, as these developments come under SEBI’s Listing Obligations & Disclosure Requirements. Hence, RECPDCL and PFCCL intimate to stock exchanges about incorporation of SPVs and their formal acquisition by selected bidders. In fact, BPCs also intimate stock exchanges about board resolutions approving the creation of project SPVs.
Neither RECPDCL nor PFCCL has formally notified transfer of SPVs to successful developers, over the past two months. This delay is rather intriguing.
Nevertheless, selected developers, like PGCIL and AESL discussed above, are doing well to start awarding EPC contracts without waiting for the formal SPV acquisition.
Speaking only of ISTS projects, there are at least 40 schemes in various stages of bidding under the TBCB mechanism. Bid submission dates are experiencing multiple extensions. While this is uncontrollable due to factors related to bidders, there should be no delay in completing formalities like project SPV transfer that falls completely in the responsibility area of the BPC.
The author of this story, Venugopal Pillai, is Editor, T&D India, and may b reached on venugopal.pillai@tndindia.com. Views are personal.