Impact on Karnataka tender for Bidadi power plant

Vol 8, PW 4 (19 May 04) People & Policy

Later this month, bidders for Karnataka Power Corporations Bidadi power station gas tender will pack their bags to travel to Bangalore for discussions on the tender terms.

Karnataka has been closely monitoring the NTPC tender for Kawas and Gandhar. Now that we know the price NTPC has got, we can speed up our work, says a Karnataka state government source.

We learn KPCL has begun an internal evaluation of the techno-commercial bids submitted and opened on 24th March by three bidders: Reliance (natural gas), Indian Oil-Petronas (LNG) and an alliance of Petronet-LNG, ONGC and Bharat Petroleum (LNG). Still under discussion are deviations to KPCLs terms proposed by the bidders.

Once the evaluation is complete, KPCL will begin negotiations over the deviations. With just three bidders, this exercise wont take much time.

Next will be publication of KPCLs amendments to the RFP documents after negotiations with bidders. Price bids are expected by 30th June and KPCL has set end-July as the date to sign the gas supply contract.

Sources in the Karnataka state capital Bangalore tell PETROWATCH the key issues likely to emerge during discussions with bidders are: take-or-pay, guarantees, most favoured customer treatment and the make-up period for shortfall in gas supply. On most issues, KPCL will seek inspiration from NTPC in its negotiations over Kawas and Gandhar.

NTPC is our big brother who has set the trend. We may not entirely agree with the terms theyve set but most of our terms will be similar to theirs.

Like NTPC we are a government-owned company which is venturing into this business (gas purchase by tender for electricity generation) for the first time. KPCL knows it must agree a take-or-pay contract for the entire quantity of gas it buys during the 15-year contract.

It also knows it might have to follow NTPC on issues such as bid bond, development guarantee and contract performance guarantee.