RfPs of RE projects sans benchmark tariff: Nepra allows KEL to conduct bidding
ISLAMABAD: The National Electric Power Regulatory Authority (NEPRA) has allowed K-Electric Limited (KEL) to conduct competitive bidding for Request for Proposals (RfPs) of renewable energy projects without benchmark tariff for the subject projects.
KEL was directed to include the criteria for rejection of the bids, in case the lowest bid is considered imprudent on the basis of the criteria detailed in the decision.
Criteria for Prudence and Assessment of Bid: KEL will evaluate the prudency of the successful bid based on prevailing equipment cost, combined with the cost of funds.
Additionally, the analysis for the confirmation of displacement analysis as per IGCEP and PAP shall also be carried out. Moreover, the assessment of the bid shall be carried out on the overall tariff including transmission/wheeling charges.
KEL shall have powers for the rejection of the bid in case it is found imprudent, based on the mentioned criteria. If the bid is found to be prudent, these assessments will be included in the Bid Evaluation Report, to be submitted for approval to the Authority. The Authority shall reserve the right to reject the Bid Evaluation report of the successful bidder if found imprudent and unreasonable.
Rationale for Selection of Hybrid Project: The rationale provided by KEL for the selection of the hybrid project is justified. Regarding synergies as a result of hybrid projects, the Authority noted that in open competitive bidding, the potential synergies, i.e. the percentage of wind and solar in the project, will be evident from the bids to be submitted by the bidders.
Equity Participation of KEL: KEL is allowed to hold a non-controlling equity share in the SPV. However, the successful bidder will decide if they want KEL to be part of the equity shareholding in the SPV. For clarity, KEL shall declare upfront its desired equity share percentage, capped at up to 25%. Furthermore, KEL shall specify the terms and conditions in the SPA, and the same shall be made part of RFP documents when floated to the potential bidders.
Evaluation of Bids on Combined Generation and Transmission Tariff: The submissions of KEL regarding the evaluation of bids based on combined generation and transmission tariff are justified. Accordingly, the Authority decided to approve the transmission cost component of Rs. 0.56/kWh/km for the first 5km, and then Rs. 0.03/kWh for every additional km for evaluation purposes.
KEL has been directed to make the RFP documents publicly available for the other interested parties and prospective bidders at large. The pre-qualification criteria for new prospective bidders shall be made part of the technical evaluation process. However, the previously prequalified bidders shall not be required to undergo the prequalification process again, their earlier qualification is deemed valid.
The Authority has allowed the development of the Project under the BOO regime. The qualified bidders shall account for the cost of land in their bid. The Authority decided to approve KELs proposed technical and financial evaluation criteria.
The Authority also decided to direct KEL to finalize the independent member/consultant in accordance with the provisions of the NCBTR. KEL was further directed that the members selected internally from KEL shall have no direct interest in the project and an internal cross-functional team shall be selected for this purpose.
The Authority decided to approve the subject RFP without approving any schedule for the conduct of the bidding while leaving the discretion to KEL to complete all the auctions as per the timelines stipulated in the relevant regulatory framework.
However, Mathar Niaz Rana, one of the Authority members, in his additional note stated that the pre-qualification process for the project was done earlier prior to allowing open competitive bidding process so it is not relevant now as the earlier model of procurement has changed.
Now placing the pre-qualification criteria in the technical evaluation part may provide an edge to the already pre-qualified bidders in terms of negotiating with the potential lenders and suppliers before bids submission as compared to those bidders who will undertake the prequalification through technical bid after submission of the same along with financial bid in the bidding process.
Therefore, fresh prequalification under the guidelines given in the section 15 of Public Procurement Rules 2004 may be done. So all prequalified firms may submit technical and financial bids on equal footing.
Copyright Business Recorder, 2024
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