Reliance, Tatas May Shell Out More As Bid Bond For Tilaiya

NEW DELHI: Reliance Power and Tata Power may have to pay more as bid bond for the Tilaiya project as the Centre may impose revised standard bidding norms for UMPPs for this project. Under the changed bidding norms, companies applying for second or third projects need to pay up to twice the existing bond. If the bid is won, companies would have to shell out extra money as performance bond. The new norms apply to companies that have already won a UMPP.

“The power ministry has sought the law ministry’s opinion on whether the changes in the bidding parameters as approved by an empowered group of ministers (eGoM) should be included for the Tilaiya project also or should it be left only for future projects. If the law ministry advises that new norms should be made applicable with immediate effect, the standard bid document for Tilaiya would have to be modified. This could delay award of the project and change the bids of 13 interested companies who have submitted requests for qualification (RFQ) documents,” an official of the power ministry said.

The changed norms would mainly impact Reliance Power that has already won two UMPPs at Sasan and Krishnapatnam, and Tata Power that has won the Mundra project. Under the new norms, while Reliance Power would have to shell out Rs 240 crore as bid bond and Rs 600 crore as performance bond (only if the project is won by the company), Tata Power may have to pay Rs 180 crore as bid bond and Rs 450 crore as performance bond.

At present, initial bids for UMPP are backed by a bid bond of about Rs 120 crore, which is replaced by a performance guarantee of Rs 300 crore by the winning bidder. Under the revised norms, eGoM has decided that the bid bond would increase to Rs 180 crore for the second project and to Rs 300 crore for third project. Similarly, performance bond would also increase from Rs 300 crore to Rs 450 crore and finally to Rs 600 crore.

Moreover, under the changed norms, PFC (the UMPP implementing agency) would only be able to invite request for proposal documents if it has secured land clearance for the project and applied to authorities for getting environmental and forest clearances. Moreover, it would also have to ensure that adequate data is available for project developers to conduct a detailed feasibility report. Compliance with all this expected to delay the Tilaiya project where price bids were expected by middle of January.