Page 1 of 22

BEFORE THE UTTAR PRADESH ELECTRICITY REGULATORY COMMISSION LUCKNOW

Petition No. 632/2009

IN THE MATTER OF : Approval of Request for Proposal (RFP) & RFP Project documents - Transmission Service Agreement (TSA), Share Purchase Agreement (SPA) & Connection Agreement (CA) for selection of developer to establish “765KV Mainpuri - Bara line with 765KV/400KV AIS at Mainpuri and associated schemes/works (Package-1)” through tariff based competitive bidding process.

AND IN THE MATTER OF : Uttar Pradesh Power Transmission Corporation Ltd., 11th Floor, Shakti Bhawan Extension, 14-Ashok Marg, Lucknow – 226 001 :Petitioner AND Petition No. 633/2009

IN THE MATTER OF : Approval of Request for Proposal (RFP) & RFP Project

documents - Transmission Service Agreement (TSA), Share Purchase Agreement (SPA) & Connection Agreement (CA) for selection of developer to establish “765KV S/C Mainpuri - Hapur & Mainpuri – Greater Noida lines with 765KV/400KV AIS at Hapur & Greater Noida and associated schemes/works (Package-2)” through tariff based competitive bidding process.

AND IN THE MATTER OF : Uttar Pradesh Power Transmission Corporation Ltd., 11th Floor, Shakti Bhawan Extension, 14-Ashok Marg, Lucknow – 226 001 :Petitioner

The following were present :

1. Shri S. K. Agarwal, Director (Finance), UPPTCL 2. Shri E. R. Rizvi, Chief Engineer(Projects), UPPTCL 3. Shri P.K. Gupta, Superintendent Engineer, UPPTCL 4. Shri Vineet Kumar, Executive Engineer, UPPTCL 5. Shri Siddharth Mehta, Crisil Ltd. (UPPTCL’s Consultant ) 6. Shri Amit Goenka, Crisil Ltd. (UPPTCL’s Consultant ) 7. Shri H. Dassani, Isolux Corsan

Page 2 of 22

8. Shri Lalchand, Isolux Corsan 9. Shri Himanshu Chaudhary, Cobra, S.A. 10. Shri B. Srinivasa Reddy, Cobra, S.A. 11. Shri N. Thirupathi Rao, Cobra, S.A. 12. Shri Vinay Ahuja, Cobra, S.A.

DETAILED ORDER

(Date of hearing 08th June, 2010)

(1) U.P. Power Transmission Corporation Ltd., (UPPTCL) has

been authorized to act as Bid Process Coordinator (BPC) by the

Energy Task Force (ETF) of GoUP and in that capacity it had filed

certain documents, clarifications and point-wise replies of the

bidders’ queries as per the directions of the Commission vide order

dated 25-05-10 and 03-06-10. These documents and clarifications

were broadly based on the issues discussed in the public hearing

held on 18-05-10 and the replies were in response to the queries

raised by both the bidders through written submissions to the BPC in

the matter of RFP & RFP Project Documents. These have been

submitted by BPC in continuation to the modified RFP & RFP Project

Documents submitted earlier in the above referred petitions. All the

above documents are in partial deviation to the Standard Bid

Documents available for selection of Transmission Service Provider

(TSP) to develop the following on Build, Own, Operate & Maintain

and Transfer (BOOT) basis :

(a) “765KV Mainpuri - Bara line with 765KV/400KV AIS at Mainpuri

and associated schemes/works”, called Package-1, which

consists of 765/400 KV lines/LILO and 765/400 or 400/220 or

132 KV substations and

(b) “765KV Mainpuri - Hapur & Mainpuri – Greater Noida lines with

765KV/400KV AIS at Hapur & Greater Noida and associated

schemes/works”, called Package-2, which consists of 765/400 KV

lines/LILO and 765/400 or 400/220 or 132 KV substations.

The deviations in these documents for both the petitions are

similar and common in nature. Two-stage bidding process for tariff

Page 3 of 22

based competitive bidding under guidelines issued by GOI is being

followed under these petitions.

(2) The RFQ documents in the both the petitions have already

been approved by the Commission vide orders dated 15-10-09 &

20-10-09 following the public hearing held on 07-10-09. The RFP

documents were not taken up during the hearing on 07-10-09 since

the petitioner had not submitted the RFP Project documents by that

time.

(3) During the hearing held on 18-05-10 the Commission directed the

petitioner to submit certain documents and clarifications along with

the point-wise reply to the written submissions of M/s Isolux Corsan

Concesiones, SA and M/s Cobra Instalaciones, SA, the two bidders,

before the next date of hearing in the matter scheduled at 11:00 hrs

on 03-06-10. The Commission also directed the petitioner to present

himself in person during the next hearing on 03-06-10 so that the

vital issues could be discussed thoroughly. The Commission also

observed that the affidavits of Sri A.K. Singh, Chief Engineer,

submitted by BPC during the hearing on 18-05-10 mentioned about

RFP Project Documents only and nothing about RFP documents.

Therefore the petitioner was directed to file revised affidavits

incorporating the necessary corrections. .

(4) During the hearing held on 03-06-10 the Commission

observed that neither the petitioner nor any of their representatives

were present and no reply to the written submissions of the bidders

was submitted by the petitioner. The Commission took a very serious

view over the matter and directed the petitioner to file the point-wise

replies of the written submissions of both the bidders within ten days

of the order dated 03-06-10 with a copy to the bidders and the

bidders to file their rejoinders within seven days thereafter. The

Commission decided that the next hearing in the matter would be

Page 4 of 22

held after the petitioner files their reply and the bidders file their

rejoinders.

(5) The petitioner submitted the clarifications and other relevant

documents along with their reply vide letter no. 586 dated 03-06-10

in compliance to Commission’s orders dated 25-05-10 and 03-06-10,

and was received in the Commission on 03-06-10 evening after the

Commission had already passed orders on the proceedings held on

03-06-10. Later, the petitioner, vide fax letter dated 04-06-10,

requested the Commission for an early hearing in the matter and

intimated that the reply had also been sent to the bidders.

In view of the request of the petitioner for an early hearing

and with an intention that the comments of the bidders on the reply

of the petitioner could be heard during the next hearing, the

Commission issued notices vide UPERC/Secy/JD(T)/2010/066 dated

04-06-10 and UPERC/Secy/JD(T)/2010/067 dated 04-06-10 to

UPPTCL and to M/s Isolux Corsan Concesiones, SA and M/s Cobra

Instalaciones, SA, the two bidders, for hearing in the matter of RFP

& RFP Project Documents on 08-06-10 at 10:30 hrs. The petitioner

was directed to put the above mentioned petitions along with

relevant RFP & RFP Project documents on its website and also

make hard copies of the same available in its office for inspection of

the concerned persons.

(6) The said documents, clarifications and the replies to bidders’

queries in both the petitions have been submitted by BPC under the

signature of Shri E. R. Rizvi, Chief Engineer (Projects), UPPTCL,

who, along with the above submissions, also filed an affidavit on his

behalf, as a petitioner for the above petitions.

(7) Accordingly in the hearing on 08.06.10, the documents,

clarifications and replies of the bidders’ queries, submitted by

UPPTCL in both the petitions, were considered for discussion.

Page 5 of 22

Since the deviations are similar in nature, both petitions

have been decided by this common order.

(8) M/s Cobra Instalaciones and M/s Isolux Corsan had submitted

their written comments to BPC earlier and their copies were

submitted to the Commission during the hearing on 18-05-10.

(9) The documents submitted by BPC, as mentioned in

paragraph-5 above, consist of the following :-

(i) Copy of UPPTCL’s letter no 569 dated 31-05-10 sent to

Director (SP&PA), CEA (annexure-1 of written submission),

for technical clearance of the transmission scheme, in

reference to an earlier letter dated 06-06-08 of CEA vide

which it had sent the previous studies to UPPTCL.

(ii) Revised Allocated Project Capacity of the four distribution

companies, DVVNL, MVVNL, PVVNL & PuVVNL (annexure-2

of written submission).

(iii) Point-wise replies of the written submissions of M/s Isolux

Corsan Concesiones, SA and M/s Cobra Instalaciones, SA,

the two bidders, (annexure-3 of written submission).

(iv) Copy of letter no 15/01/2010/Trans dated 07-05-10 of Ministry

of Power (annexure-4 of written submission) vide which they

have made amendments in the Standard Bid Documents of

Request For Proposal (RFP) & Transmission Service

Agreement (TSA) for procurement of Transmission Services

through tariff based competitive bidding. The amendment

basically pertains to enhancement in the term of transmission

services agreement from twenty five (25) years to thirty five

(35) years.

(10) In response to the clarifications sought by the Commission vide

order dated 25-5-10, UPPTCL submitted the following through their

written submission dated 03-06-10 :-

Page 6 of 22

1. Regarding paragraph 11(a) of the order dated 25-05-10 in

respect to filing of affidavits of Sri A.K. Singh, Chief Engineer,

after due correction, the petitioner explained that w.e.f.

21-04-10 the post of Chief Engineer, Transmission of

UPPTCL has been segregated into two independent posts of

Chief Engineer (Operations) and Chief Engineer (Projects)

who now head the respective departments of Operations and

Projects. Therefore the revised affidavits have been submitted

by Chief Engineer (Projects) as the PPP transmission bidding

comes under the Projects department. However, the

Commission pointed out that the earlier affidavits filed by Shri

A.K. Singh did not mention about RFP documents and

directed the petitioner to make necessary corrections and

submit the same within ten (10) days of this order.

2. Regarding paragraph 11(b) of the order dated 25-05-10 in

respect to technical clearance of CEA and approval of BOD &

ETF for the revised transmission scheme and the clarification

sought by the Commission as to how in absence of any

approval of TWC, BOD or ETF, the changes have been made

in the original transmission scheme, the petitioner mentioned

in their written submission that the transmission scheme had

been revised in view of some technical reasons viz. long

length of LILO, evacuation of power from Parichha power

station, problems of ROW and land acquisition etc.. BPC

further submitted that Load Flow Studies were carried out by

UPPTCL with the above modifications and the revised

transmission proposal was found technically in order.

However, a letter has been sent to director (SP&PA), CEA on

31-05-10 for obtaining the technical clearance of the modified

transmission scheme, as per the directions of the

Commission.

Page 7 of 22

3. Regarding paragraph 11(c) of the order dated 25-05-10 in

respect to adoption of Swiss Challenge Method (SCM) in the

bidding process; introduced in clause 3.4.1.5 of the RFP

documents, the petitioner was directed to clarify that in the

event of the lowest bidder in the fresh bidding under SCM

process refuses to honour his bid, after original lowest bidder

has not exercised his right of first refusal, and there are other

bidders in the fresh bidding under SCM whose quoted price is

lower than that of original lowest bidder then how can the

original lowest bidder be considered for award of work at their

original higher quoted price. The Commission opined that

SCM mentioned in clause 3.4.1.5 of the modified RFPs is not

acceptable and directed the petitioner to modify the clause

suitably so that the objective of fairness in the bidding process

could be achieved.

The petitioner, in their written submission dated

03-06-10, mentioned that in view of the directions of the

Commission, they have revised the Swiss Challenge Method

as per the following details :-

• If the Govt. does not find the bids competitive then the Govt. of UP may apply Swiss Challenge Method. The lowest original financial bid, received by the BPC would continue to remain valid till the conclusion of Swiss Challenge Method process. The BPC under this process would issue a public notice inviting challenge in the nature of fresh bids with same terms of eligibility under the relevant condition as were applicable under the original bid except the amount of Bid Bond that would be double the amount as per original bidding process. The lowest financial bid received shall be disclosed and a period of 30-45 days would be given for due-diligence and submission of fresh bids. The fresh bids under this process cannot be more than the disclosed lowest original financial bid received. All bidders excluding the original lowest bidder shall be eligible to submit the fresh bid under this process.

Page 8 of 22

• As per Swiss Challenge Method, the original lowest bidder shall have the right of first refusal by matching the lowest financial bid received in the fresh bidding process under Swiss Challenge Method. In case the right of first refusal is not exercised by the original lowest bidder, the lowest bidder in the fresh bidding process under Swiss Challenge Method shall have the right to award of the contract / assignment. The original lowest bidder would have to exercise the right of first refusal within a period of 15 days from the date of receipt of notice from BPC. In case no fresh bid is received under this process; The Govt. of UP may consider the bid of original lowest bidder even though it was higher than the expected price.

• In case the lowest bidder in fresh bidding under Swiss

Challenge Method process refuses to honour his bid, after the original lowest bidder has not exercised his right of first refusal, the bid bond of the lowest bidder in fresh bidding under Swiss Challenge Method shall be forfeited.

• Subsequently, the bid of the second lowest bidder in

the fresh bidding shall be considered. The original lowest bidder shall again have the right of first refusal by matching the second lowest financial bid received in the fresh bidding process. In case the right of first refusal is not exercised by the original lowest bidder, the second lowest bidder in the fresh bidding process shall have the right to award of the contract/ assignment. In case the second lowest bidder refuses to honour his bid, after the original lowest bidder has not exercised his right of first refusal, the bid bond of the second lowest bidder in fresh bidding process shall be forfeited. This process will be continued till a final bidder is selected from the fresh bidding under the Swiss Challenge Method.

4. Regarding paragraph 11(d) of the order dated 25-05-10 for

‘Allocated Project Capacity’ of each DISCOM. The

Commission sought the clarification on revising the figures of

Allocated Project Capacity of each LTTC and why the existing

state / other generating stations, in which the LTTCs have

shares and whose scheduling is to be coordinated by SLDC,

should not be taken for computation of Allocated Project

Page 9 of 22

Capacity of LTTCs, as per the provisions contained in the

definitions of ‘Allocated Project Capacity’ and ‘SGS’ of RFPs.

The petitioner mentioned in their written submission

that the Allocated Project Capacity has been re-worked out as

per annexure-2 of the submission. The revised Allocated

Project Capacity, stated by the petitioner, is as follows :-

DISCOM Allocated Project Capacity

Dhakshinanchal (DVVNL) 23%

Madhyanchal (MVVNL) 17%

Paschimanchal (PVVNL) 38%

Poorvanchal (PuVVNL) 22%

The petitioner further clarified that the revised allocated

project capacity of the DISCOMs has been worked out on the

basis of energy allocation to different DISCOMs proposed by

them and approved by the Commission in its Tariff order for

FY 2009-10.

5. Regarding paragraph 11(e) of the order dated 25-05-10 for

modification in RFPs & RFP Project Documents; the petitioner

intimated through their written submission that the definition of

‘Long Term Transmission Customer’ has been amended as

per Standard Bid Document and the date of issuance of RFP

documents has been revised to 9th March, 2010, which was

earlier 10th August, 2009. The petitioner had also incorporated

the details of the transmission lines and substations in the

connection agreement as per annexure-5 of their written

submission. However, the petitioner clarified that clause 1.6 of

RFPs cannot be revised in line with SBD as MOP is not

involved in the whole process. The petitioner further clarified

that the relevant note specified in the clause 2.15.1 is not

applicable to the RFP documents as the proposed

Page 10 of 22

transmission lines/substations under both the petitions are the

part of intra-state transmission network.

(11) The oral submissions made in the hearing by the UPPTCL and M/s

Isolux Corsan and M/s Cobra, the two bidders, were broadly based

on the recent amendment made by Ministry of Power in Standard

Bid Documents, clarifications sought by the Commission vide its

order dated 25-05-10 and the queries raised by the two bidders.

These submissions are summarized as below.

a) In view of the amendment made in Standard Bid Documents

by Ministry of Power vide letter 15/01/2010/Trans dated 07-05-10

regarding increase in the term of transmission service agreement to

thirty five (35) years, UPPTCL requested the Commission that the

contract years for the transmission licensee mentioned in the RFP &

RFP Project Documents may be allowed to be amended from twenty

five (25) years to thirty five (35) years and accordingly the bidders

are required to quote the transmission charges for a period of thirty

five (35) years commencing from COD.

b) The petitioner submitted that the revised transmission scheme

has been sent to CEA for technical clearance vide letter dated

31-05-10 and its copy has been submitted to the Commission. The

petitioner further stated that the matter of revised transmission

scheme has also been simultaneously moved to BOD of the

transmission company for its approval. However the approval of ETF

for the revised transmission scheme shall be obtained as and when

the strategy for the transmission system is finally approved by the

Commission.

On the clarification sought by the Commission vide order

dated 25-05-10, as to how in absence of any approval of TWC, BOD

or ETF the changes have been made by BPC in the revised

transmission scheme Director (Finance), UPPTCL admitted that the

transmission scheme should not have been changed without

obtaining the approval of Transmission Works Committee (TWC);

Page 11 of 22

however he clarified that the Planning department of UPPTCL, which

at present looks after the work of Transmission Planning, has expert

officers equipped with the latest software for the purpose of load flow

studies etc. The revised transmission scheme had been sent to the

Planning department first who, after conducting the studies and

finding the revised proposal technically in order, gave their clearance

to the revisions. After obtaining the technical clearance of the

Planning department the proposal was sent to Transmission Works

Committee (TWC) for its approval. Director (Finance) admitted that

although the revised transmission scheme has now been approved

by TWC, this approval should have been sought before filing it in the

Commission. He also assured that the approval of CEA, board of

transmission company and ETF shall be taken for the revised

transmission scheme in due course of time.

c) On the adoption of Swiss challenge method (SCM), Director

(Finance), UPPTCL explained that it has been revised in such a way

that it takes care of the problem pointed out by the Commission in its

order dated 25-05-10 and eliminates the chances of losing an

opportunity of lowest bid in case the bids are not competitive and

SCM is adopted.

M/s Isolux objected to the adoption of SCM and submitted

that after qualifying, the efforts and time put in over a long period of

time and the appreciable cost incurred in studies, survey etc. will go

waste if opportunity is given to another bidder who has the

advantage of knowing the L – 1 bidder’s prices in advance and can

accordingly reduce its prices marginally to secure the contract.

M/s Cobra apprehended that if SCM is adopted the parties

who did not have the qualification earlier when the tenders were

called might qualify at the SCM stage and further suggested that the

problem of non-competitive bids could be resolved by mentioning the

words ‘appropriate measures shall be taken by BPC’ instead of the

words ‘adoption of Swiss Challenge Method’ in RFP documents.

Page 12 of 22

Director (Finance), UPPTCL, ruled out the suggestion of M/s

Cobra by saying that BPC is legally bound to disclose the bid

process proposed to be adopted. He explained that Swiss Challenge

Method is proposed to be adopted in view of the limited competition

existing on account of only two bidders qualifying at the RFP stage.

In case the lowest bid obtained is not a competitive bid then the BPC

may have to resort to rebidding which would be a time consuming

process leading to difficulties in matching the time lines set for

commissioning the transmission system and make it available for the

upcoming generation plants of Bara, Karchana, Meja etc. He

emphasized that SCM is a method which cuts short the time involved

in rebidding and at the same time provides an opportunity to get

competitive prices.

The Commission sought the clarification from the petitioner

that under what circumstances the bids will be treated as

non-competitive. Director (Finance) explained that BPC has set a

benchmark price, and if the lowest quoted price is above the

benchmark price then the BPC shall adopt SCM to find a lower price.

He added that the benchmark price cannot be mentioned in the RFP

documents because every bidder will then quote its price just below

the benchmark price and the real spirit of bidding process shall be

lost. He however said that the benchmark price will be submitted to

the Commission.

Replying to a query of the Commission, Director (Finance)

confirmed that although SCM has been adopted in the state of UP

recently and is approved by Supreme Court of India who has

examined this method thoroughly from legal angle and from the point

of view of public interest. A copy of the judgment of the apex court in

this regard was handed over to the Commission during the hearing.

The representatives of M/s Isolux and Cobra were asked if

they had any objection to the adoption of Swiss Challenge Method

after hearing to the arguments of the petitioner, none of them made

any objection. Having heard the deliberations of BPC and both the

Page 13 of 22

bidders, the Commission decided that in the light of the fact that

there being very limited competition there is a likelihood of receiving

unreasonably priced RFP bids. Therefore the adoption of the Swiss

Challenge Method of bidding as explained in the foregoing

paragraphs is being permitted specifically in this particular case

Further the Commission observed that the revised format of

SCM does not restrict the bidders whose quoted price is same as

that of original lowest bidder. In view of this the Commission directs

the petitioner to modify the first paragraph of cl.3.4.1.5 of the revised

Swiss Challenge Method submitted by the petitioner vide letter

no.586 dated 03.06.10, as per the details below:

Existing paragraph-1

“….. The fresh bids under this process cannot be more than the

disclosed lowest original financial bid received …..”

Proposed paragraph-1

“….. The fresh bids under this process must be less than the

disclosed lowest original financial bid received …..”

The Commission also directs the petitioner to submit the

benchmark prices along with the detailed calculation to the

Commission after receipt of bids but prior to opening of the

bids.

d) In view of Commission’s remark that the affidavits of Sri A.K.

Singh, Chief Engineer, submitted by BPC earlier, does not mention

anything about RFP documents, the petitioner agreed to submit

fresh affidavits of Sri A.K. Singh with due correction.

e) Regarding Allocated Project Capacity of LTTCs, the petitioner

submitted that they have adopted the same allocation which they

have proposed in their ARR of FY 2009 – 10 and has been approved

by the Commission through its Tariff order of FY 2009-10. The

revised Allocated Project Capacity stated by the petitioner is as

mentioned in paragraph-10(4) above.

Page 14 of 22

f) Regarding details of other technical specifications and

parameters, Director (Finance), UPPTCL submitted that it shall be

the responsibility of the successful bidder to provide uninterrupted

services for which they shall decide on the other technical

specifications & parameters to be adopted. Both the bidders agreed

with the argument of the petitioner.

g) The Commission, during the hearing, gave an opportunity to

UPPTCL, M/s Isolux and M/s Cobra to discuss the queries raised by

both the bidders and the replies filed by BPC. Various issues were

discussed by the parties and finally the bidders agreed to the reply of

BPC on most of them. The issues which could not be resolved

through mutual discussion were taken up by the Commission as per

the following details :-

(i) The bidders emphasized to increase the time period of six

months mentioned in clause 3.1.3 ‘Conditions Subsequent’ of

TSAs. Director (Finance), UPPTCL submitted that if the

commissioning date remains the same, they are not

concerned with the time period of ‘Conditions Subsequent’.

The Commission directed the petitioner to amend clause

3.1.3, 3.2 and 3.3 as per the provision of the Standard Bid

document.

(ii) In clause 2.14.4 of RFPs regarding minimum equity holding /

equity lock-in; the bidders requested that it may be as per the

Standard Bid document; however BPC objected to it and

submitted that the intent of equity locking of the lead member

is to ensure that the technical & financial expertise should

remain in place through the lead member till the end of expiry

of TSA. M/s Cobra highlighted that such type of projects

consist of two different areas - technical expertise and

controlling & financial expertise and after the successful

commissioning of the project when requirement of the

technical expertise diminishes, there might be better people

available in the industry who could run the system in a more

Page 15 of 22

efficient manner. Further, the Commission is of the view that

the persons associated with the making of the Standard Bid

documents also must have taken this into account and

therefore directs the petitioner to align this clause as per the

provisions of SBD and accordingly modify clause 19.2 of

TSAs.

(iii) In view of the fact that the terms & conditions, mentioned

under Article-12 (Change in Law) of SBD also fulfill

UPPTCL’s conditions, the Commission directs the petitioner

to align Article-12 of TSAs as per the provision of Standard

Bid documents.

(iv) In view of the submission of the bidders that the last

paragraph of Schedule-11 of TSAs provides for Contract

Performance Guarantee with an indefinite extension of

validity period and normally no bank provides an open-ended

guarantee, the Commission directs the petitioner to amend it

in such a way that the validity of the guarantee may be

extended up to three (3) months after actual COD.

(v) In view of the request of the bidders and the consent given

by the petitioner regarding revocation of transmission license

mentioned under Article-13 of TSAs, the Commission

directed to align it with Sec-20 of Electricity Act, 2003.

(vi) Regarding mismatch in RFP and TSA documents, the

Commission directed the petitioner to eliminate them to

ensure the complete synchronism between them.

(vii) Regarding issues related with land acquisition, mechanism of

termination payment and liabilities of SPV, the Commission

directed the petitioner that these issues may be discussed

and resolved in the pre bid meeting.

(12) All the deviations listed in Annexure-D of RFP documents,

Annexure-1 of TSA documents and RFP corrigendum-1, 2 & 3 had

been merged by the petitioner into the modified documents,

submitted to the Commission on 27-04-10. Since the deviations are

Page 16 of 22

similar in nature both petitions are being decided by this common

order. Having heard the deliberations of UPPTCL and both the

bidders, the Commission approves some of the deviations of RFP

and TSA documents as listed below. The remaining deviations of

RFPs and TSAs shall be aligned as per the provisions of Standard

Bid Documents.

(i) In view of amendment made by Ministry of Power, GOI in

Standard Bid Documents of Request For Proposal (RFP) &

Transmission Service Agreement (TSA) for procurement of

Transmission Services through tariff based competitive

bidding vide letter no 15/01/2010/Trans dated 07-05-10

regarding enhancement of the term of the transmission

service agreement from twenty five years to thirty five years

and the request made by the UPPTCL during the hearing,

the Commission directs the petitioner to align the clauses

and annexure of RFP & RFP Project documents

accordingly as per the amendment.

(ii) The Commission observed that UPPTCL had revised the

originally proposed transmission scheme substantially

without obtaining the approval of the Competent Authorities

and the changes made by them were not of minor nature.

In view of such major changes and in order to ensure the

development of technically optimal transmission scheme

capable of evacuating the power of upcoming generating

stations the Commission opined that there was a need to

review the load flow studies carried out by CEA earlier and

directed the petitioner to obtain technical clearance of CEA

for the revised transmission scheme vide order dated

25-05-10. It was also directed that the petitioner shall also

submit the approval of BOD and ETF for the same. The

Commission took up the issue of the revised list of works

during the hearing of 18-03-10 and 18-05-10 and issued

Page 17 of 22

necessary directions to the petitioner vide orders dated

25-03-10 and 25-05-10. In view of the above the

Commission approves the revised list of works, mentioned

in clause 1.2 of the modified RFP documents, subject to the

technical clearance of CEA and the approval of BOD of the

transmission company and ETF. The Commission further

directs the petitioner that in case of any inconsistency

between the revised transmission scheme proposed by the

petitioner and that recommended by CEA, necessary

amendments shall be made in RFP & RFP Project

documents if it is received before the issue of final RFP and

RFP Project documents. In case the recommendations of

CEA are received after the issue of final RFP and RFP

Project documents then the same shall be adopted during

the implementation stage and the financial implications if

any arising out of this shall be resolved through mutual

discussions with the successful bidder / TSP. The

transmission scheme if revised after review by CEA shall

be submitted by the petitioner to the Commission for its

records.

(iii) The transmission system, mentioned in package-1 & 2, is

proposed to be established by TSP on Build, Own, Operate

& Maintain and Transfer (BOOT) basis instead of Build,

Own, Operate and Maintain basis (BOOM), mentioned in

the Standard Bid Documents. Such deviation was also

sought by the petitioner at RFQ stage which got approved

by the Commission vide order dated 15-10-09.

(iv) List of Long Term Transmission Customers and their

Allocated Project Capacities shall be taken as per

annexure-2 of petitioner’s letter dated 03-06-10 and the

annexure-1 of RFPs shall be modified accordingly.

(v) The calculation of the Contract Performance Guarantee,

Bid Bond and the liquidation damages, mentioned at clause

Page 18 of 22

3.3.3 of TSA documents has been done on the basis of the

project cost, which includes the lines and the substations

both; whereas in the Standard Bid Documents, the estimate

is prepared on kilometer length of line basis only without

the cost of substations. In view of the fact that a major

fraction of the project cost is to be incurred for the

construction of substations in both the packages, the

Commission allows the petitioner to consider the cost of

these substations as well while deciding the amount of the

Contract Performance Guarantee, Bid Bond and the

liquidation damages mentioned above. The Commission

has approved the similar criterion for computing the

technical and financial requirement of the bidders at RFQ

stage vide order dated 15-10-09.

(vi) In view of the fact that the transmission scheme under

package-1 & 2, is proposed to be established on Build,

Own, Operate & Maintain and Transfer (BOOT) basis, the

Commission approves the inclusion of clause 1.4 in the

RFP documents which mentions that at the expiry of the

TSA, all assets of SPV including substations, transmission

lines and other physical assets will be transferred to the

permitted nominee of the State Govt. at zero value.

(vii) The clause 2.14.1.1(6) of RFPs requires more than fifty

percent equity holding of the bidding company or member

of a consortium in technically / financially evaluated entities

for exemption of any undertaking from these entities

against a minimum of 26% specified in Standard Bid

Document. The Commission noted that the transmission

scheme under these petitions involving huge cost, is linked

to the commissioning of generation projects and only

serious players of sound technical experience and strong

financial capability should participate. Any delay in

commissioning of transmission projects would entail huge

Page 19 of 22

liquidated damages on long term transmission customers.

In view of above the Commission allows the amendment in

the above clause of the RFPs. The deviations made in

defining ‘Affiliate’, ‘Parent company’ and ‘Ultimate Parent

company’ are also approved by the Commission in view of

similar grounds. This was also approved at RFQ stage vide

order dated 15-10-09.

(viii) Important time lines, mentioned in clause 2.16.2 of modified

RFPs are to be adhered to subject to the revised date of

issuance of RFP Documents as per the reply of the

petitioner vide letter dated 03-06-10. The Commission

observes that thirty (30) days time period has been given to

the bidders for submission of RFP bids from the date of

issue of final RFP Documents and it is as per the provision

of Standard Bid Document. The time lines for opening of

financial bid, selection of successful bidder and issue of

LOI have been reduced marginally; however time allotted

for signing of RFP Project documents and transfer of SPV

is reduced to eight (08) days against thirty (30) days,

specified in SBD. The Commission allows the above time

lines of different events to ensure commissioning of

transmission Package-1&2 in synchronism with the

commissioning of upcoming generating projects. The

clauses 2.22.1 and 2.16.1 of RFPs shall be modified

accordingly.

(ix) In view of the fact that no fix date needs to be mentioned

for scheduled COD of the project, the Commission allows

that scheduled COD for the overall project shall be thirty

(30) months from the date of award of work to the

successful bidder, and directed the petitioner to amend

clause 2.15.1 of RFPs accordingly.

Page 20 of 22

(x) In view of the overall interest of the project, the

Commission allows the deviations made in clause 1.5 and

2.17.1 of RFPs regarding survey report to the bidders and

validity of bids respectively.

(xi) Inclusion of clauses 1.10, 1.11 & 1.12 in RFP documents

mentioning about the obligation of TSP regarding details of

works, broad specifications & technical parameters to be

followed, substation automation system, reactive power

management etc. the Commission decides that these may

be decided by the successful bidder provided it does it

under the supervision of UPPTCL.

(xii) Deviation in mentioning ‘Nominee of Long Term

Transmission Customers’ in RFP & RFP Project documents

in place of ‘Lead Long Term Transmission Customer’

specified in Standard Bid Documents.

(xiii) All the deviations sought by the petitioner in RFP & TSA

documents which are related with ‘intra-state’ system of UP

State.

(xiv) The Commission allows the clause 3.4.1.5, introduced in

the RFP documents for adopting Swiss Challenge Method

(SCM) of bidding as per its revised format subject to the

amendment directed by the Commission as per paragraph

11(c) of this order.

(xv) The Commission allows the clauses 2.3.3, 4.1(h) and

Article-16, introduced in TSAs in view of the proposed

transmission scheme being established on Build, Own,

Operate & Maintain and Transfer (BOOT) basis.

Page 21 of 22

(xvi) Deviations in clause 4.4.2 & 6.4.2 of TSAs are allowed in

view of the fact that the transmission system under these

petitions is linked to the commissioning of generation

projects and any delay in commissioning of transmission

projects would entail huge liquidated damages on long term

transmission customers.

(xvii) Deviation in clause 5.8 of TSAs is allowed in view of the

fact that the proposed transmission system under both the

petitions are for the state of UP (intra-state) and STU, being

responsible for planning of transmission system in the

state, should also monitor the performance of TSP during

the construction.

(xviii) Deviations in clause 6.1.2, 10.7(a), 10.7(c) & 10.8.1 of

TSAs are allowed to give the benefit to the end consumers

and deviation in clause 10.11.1(c)(i) of TSAs is allowed in

view of standard practice followed by UPPTCL in PGCIL’s

bills as mentioned by the petitioner.

(13) The Commission heard the matter of RFQ, RFP & RFP Project

Documents under both the petitions during five hearings held on

07-10-09, 18-03-10, 18-05-10, 03-06-10 and 08-06-10 and passed

orders on 15-10-09, 20-10-09, 25-03-10, 25-05-10, 03-06-10 and

08-06-10. The directions of the Commission, contained in these

orders, shall remain effective and are to be complied with by the

petitioner even though they are not being mentioned here to avoid

repetition.

(14) The petitioner shall remove the inconsistencies between RFP & RFP

Project documents and the modified RFP & RFP Project documents

shall be aligned with the approved RFQ documents.

Page 22 of 22

(15) The petitioner must ensure that each deviation in the RFP & RFP

Project documents from the Standard Bid documents are approved

by ETF prior to issue of final RFP and RFP Project documents.

(16) The RFP & RFP Project Documents under the above mentioned

petitions shall be modified according to the decisions and directions

of the Commission. The modified documents shall be issued to both

the bidders, M/s Cobra Instalaciones and M/s Isolux Corsan, within

seven (7) days of this order and thereafter the RFP bids shall be

submitted by both the bidders in next thirty (30) days.

(17) Copies of modified RFP & RFP Project Documents shall be

submitted to the Commission for information and records.

(18) The petitions are disposed of.

(Rajesh Awasthi) Chairman

Lucknow; Dated 2nd July 2010