New Delhi: The government-owned Solar Energy Corporation of India (SECI) has said bidders for renewable energy contracts can reduce their tariffs if they find there are no buyers.
This assumes significance in light of the US indictment of Gautam Adani and seven others, which said Adani and Azure Power executives allegedly stepped in to promise bribes to state government officials after SECI failed to find buyers at a high price.
The implication of this is that both Adani Green Energy and Azure Power—the winners of the SECI contracts mentioned in the US indictment—had the option of reducing their tariffs in order to attract buyers.
SECI Monday published a note on its website “in view of ambiguity regarding SECI’s business model”, detailing the company’s role in setting up renewable energy projects in India.
SECI is one of four Renewable Energy Implementing Agencies (REIAs) designated by the Ministry of New and Renewable Energy (MNRE), which are tasked with floating tenders for renewable energy projects and also with acting as intermediaries between renewable power producers and purchasers. The other three REIAs are NTPC, NHPC, and SJVN.
Under the established model, MNRE and the Ministry of Power issue standard bidding guidelines for solar, wind, hybrid, and other forms of renewable energy tenders. The REIAs floats tenders based on these guidelines “using transparent electronic bidding method wherein all private/public parties are allowed to participate”.
Through the e-bidding and e-reverse auction process, the lowest tariffs are “discovered”. A reverse auction is when the lowest bid wins. That is, the renewable energy power producer that promises to supply power at the lowest tariffs wins the bid, under this system. This tariff is called the “discovered” tariff.
The bid results and the capacity on offer is then offered to the state power distribution companies (DISCOM). The discoms then approach the REIAs about their requirements. If no DISCOM approaches the REIA, then the process has a way out there too.
“In some cases, bidders also suo-moto reduce the discovered tariff if subsequent to the bidding process, tariffs have come down and no DISCOM is willing to buy at discovered tariff,” SECI’s note added.
US indictment alleges Adanis & Azure chose different route
According to the US Department of Justice indictment, between December 2019 and July 2020, Azure Power and Adani Green Energy were awarded a tender by SECI, under which Azure Power was to supply 4 GW of solar power and Adani Green Energy 8 GW to SECI.
This has been independently verified through statements made at the time by the companies. Under the agreement, SECI was to find state electricity distribution companies that would purchase the 12 gigawatts of power that was being supplied by Azure Power and Adani Green Energy.
However, it immediately faced trouble, according to the indictment.
“The high energy prices contemplated in the LOAs (letters of award) made it difficult for SECI to find Indian state buyers of energy under the manufacturing linked project,” the indictment said, adding that SECI “unsuccessfully” sought out Indian state governments and the Union government to purchase the power.
The indictment added that unless SECI could secure a power sales agreement (PSA) with a government buyer, it would not be able to go ahead with the power purchase agreement (PPA) it had agreed with Adani Green Energy and Azure Power.
This, it said “jeopardised the lucrative LOAs, and corresponding revenue” that the two companies anticipated to receive from the SECI contract.
It went on to allege that following this failure on SECI’s part, the executives of Adani Green Energy and Azure Power conspired to pay bribes to state government officials to encourage them to buy power from SECI.
(Edited by Tikli Basu)
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