For Sasan, RPower included domestic appliances as assets

To make the bid for the Sasan power better its rivals', Reliance Power (RPL) included several innovative items as fixed assets. These included "refrigerators and other domestic appliances" that supplemented its experience of running power projects when it bid for the 4,000 MW project.

The items were shown among a host of similar expenditure made by RPL, including electricity fittings in offices and plants, furniture and fixtures and also vehicles to add up the numbers to qualify as a bidder. The bid process for the project has recently run into an audit storm.

Bid process management consultant Ernst & Young had found it difficult to accept some of these numbers as valid experience of developing power projects and rejected Rs 721 crore claimed by RPL in 2006 (which was then known as Reliance Energy Generation Ltd) from the total Rs 2,254 crore of fixed assets submitted by it.

But the ministry of power found nothing amiss in refrigerators and furniture being lumped as part of the experience of the bidder and reinserted them in the qualifying stage.

In response to an email from The Indian Express, an RPL spokesperson replied "In case of Sasan UMPP, Reliance Power Ltd had claimed an experience of Rs 4,416.6 crore (aggregate capital cost), which is more than the bid requirement of Rs 3,000 crore. We have furnished all the details that were required from us including certificates from our Statutory Auditors. The evaluation process was overseen by various committees headed by eminent persons...It was a multi-tier evaluation process which was appreciated by all stakeholders".

As it turns out RPL claimed it had an experience of Rs 4,416 crore from which the auditors questioned the admissibility of Rs 3,124 crore. The sum allowed was Rs 1,292 crore only, dipping it far less than the qualifying standard of Rs 3,000 crore. So how each element of the asset was treated was quite crucial to the bid.

... contd.

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