Questions circulate Welspun Energy and Accad Power

The BEST committee approved Wednesday signing of two agreements, worth up to Rs 963 crore, with private companies to procure solar energy for 25 years.

Congress and MNS members on the committee, however, questioned the haste with which chairman Ashok Patil cleared the contracts, and walked out.

They wanted the plan deferred to gather more information about the companies. They also wanted a copy of the power purchase agreement to be signed, to understand its nuances.

“We cannot approve signing of contracts for 25 years when we don’t have even basic information about the companies. The way the chairman was acting today, it was obvious corruption has taken place,” said Ravi Raja of Congress.

While BEST had circulated a draft of its memorandum of understanding with Welspun Energy for procuring 20 MW, there was no documentation for the agreement with the second company, Accad Power.

The decision to procure additional 10 MW from Accad was an amendment to the Welspun proposal.

“We have been given time till March-end to show we are taking steps to meet our solar energy obligation. These companies will take time to set up plants and the rate they are offering us is much below the market rate,” Patil said.

BEST had earlier signed a solar power purchase agreement with MahaGenco for 10 MW at Rs 15.61 a unit. The company, however, failed to meet the supply deadline and also declined to renegotiate as per the latest rate of Rs 11.16 per unit approved by Maharashtra Electricity Regulatory Commission (MERC).

BEST decided to annul the contract.

Meanwhile, it invited expressions of interest from power generators for a long-term contract to sell solar energy.

Of the 13 bids the public utility received, Welspun’s was the lowest cost.

Late last month, Accad, which had also expressed interest, wrote to BEST that it was willing to match the Welspun price. The size of the Welspun contract would be roughly Rs 642 crore for procurement of 20 MW at Rs 8.56 per unit, while the contract with Accad would be worth Rs 321 crore.

As per MERC norms, BEST has to procure eight per cent of its energy requirement from renewable sources, of which .25 per cent should be solar.

The public undertaking has not been able to achieve its solar energy targets for the past two years and has only partially hit targets for non-solar renewable energy.

Last month, MERC directed BEST to overcome the shortfall before March 2013. The regulator may not take a lenient view and may levy penalties for future failures.