UP discom invites fresh bids after cancelling Adani Group’s smart meter bid

The bid cancellation has emerged at a time when the entire Adani Group has been plunged into a crisis following a report by US-based Hindenburg Research, which alleged gaps in the group's financials.

Uttar Pradesh’s power distribution company (discom), Madhyanchal Vidyut Vitran Nigam (MVVNL), has invited fresh bids for its prepaid smart meter project after it cancelled the bid won by the Adani Group over “technical reasons”, senior officials of the power utility told Moneycontrol on February 6.

On February 4, MVVNL cancelled Adani Group’s bid worth nearly Rs 5,400 crore to supply 75,28,737 consumer smart meters to the discom. These were to be installed in all 19 districts under the jurisdiction of MVNNL.

The cancellation of Adani Group’s bid comes against the backdrop of objections raised by the All India Power Engineers Federation (AIPEF) and UP State Power Consumers Council that the per meter rate quoted by Adani, despite being the lowest bidder in the tender, was nearly 67 percent higher than the price (Rs 6,000 per meter) standardised by REC Limited, a public sector undertaking (PSU) that promotes and finances power projects in India.

Queries sent by Moneycontrol to the Adani Group went unanswered. This copy shall be updated if the Adani Group comments on the matter.

Moneycontrol asked at least two senior officials of MVVNL the reason for cancelling the bid now when the process took place in October last year (2022). One official requesting anonymity said, “But we did not award the work. Evaluation takes time.”

The second official said the last date for submission of the requisite tender documents is now February 27 and the tender opening date will be February 28.

The AIPEF, while welcoming the cancellation of tender for the purchase of smart meters by MVVNL, demanded that all tenders for the purchase of smart meters in Uttar Pradesh be cancelled. “Uttar Pradesh Power Corporation Limited had decided to buy 2.5 crore smart meters in UP by spending Rs 25,000 crore. The Federation was opposing it from the beginning. Four companies Adani, GMR, L&T, and Intellismart Infra had put tenders and in connivance with each other, they had entered into cartelisation during the process of tendering. Instead of unnecessarily spending Rs 25,000 crore on smart meters, it should be spent on strengthening the distribution network of Uttar Pradesh, which would go a long way in preventing theft of electricity and avoiding unnecessary wastage,” said Shailendra Dubey, chairperson, AIPEF.

UP discoms — including Madhyanchal, Dakshinanchal, Purvanchal and Paschimanchal — representing different regions, had floated tenders for the supply of more than 25 million smart meters. The combined bid value was estimated at Rs 25,000 crore.

The tenders were part of India’s push to bring down Aggregate Technical and Commercial (AT&C) losses by infusing reforms through the Revamped Distribution Sector Scheme (RDSS) which was launched on July 30, 2022, by Prime Minister Narendra Modi. India has set a target to bring down AT&C losses to 12-15 percent by 2024-25 and cut the cost-revenue gap to zero.

On December 22, Union power minister RK Singh told the Parliament that AT&C losses of distribution companies (discoms) have declined to 17 percent in FY 2022 from 22 percent in FY 2021. This, he said, was based on the preliminary analysis of data from 56 discoms, which contribute more than 96 percent of the country's input energy.

The bid cancellation has emerged at a time when the entire Adani Group has been plunged into a crisis following a report by US-based Hindenburg Research, which alleged gaps in the group's financials, high debt burden, and overvaluation. The result has been a collapse in the share prices of the group's companies, which forced the group to cancel its Rs 20,000-crore follow-on share sale.

Since the release of the Hindenburg report on January 24, Gautam Adani's conglomerate has erased at least $117 billion in market cap, one of the worst in history. This is almost half of the group's combined market value.