The Kerala State Electricity Regulatory Commission (KSERC) has asked the Kerala State Electricity Board (KSEB) to take up the issue of the purchase preference for micro, small, and medium enterprises (MSMEs) in the 200 MW rooftop tender under the ‘Soura Subsidy Program’ with the Ministry of New and Renewable Energy (MNRE).

The Commission asked KSEB not to finalize the tender without getting clarification from MNRE.

The Kerala Renewable Energy Entrepreneurs and Promoters Association (KREEPA) had filed a petition with the Commission requesting it to issue directions to KSEB to finalize the 200 MW rooftop solar tender only after considering the government order dated September 18, 2020.

According to the government order, a new preferential policy for procurement from local MSMEs and state public sector units (PSUs) was to be implemented to revive them in the current difficult economic situation arising from the pandemic.

Further, all state PSUs and local MSMEs in the state were to get a price preference up to 15% in all procurement of state government departments. This means wherever state PSUs or local MSMEs quote a rate within a 15% price range of the lowest bidder, the state PSU or local MSMEs either singly or jointly as the case may be, would be entitled to get up to 50% of the order quantity at the lowest rate quoted among them. If there are multiple state PSUs and local MSME vendors in this category, they would be given equal proportions of this 50% order.

Background

In February this year, KSEB had invited bids for empanelment of contractors for implementing the grid-connected rooftop solar projects of various capacities aggregating to 200 MW under the ‘Soura Subsidy Program’ in line with the Phase-II subsidy program of the MNRE.

The ‘Soura Program’ is being implemented by KSEB and the Agency for Non-conventional Energy and Rural Technology (ANERT), the state nodal agency for renewable projects. The state aims to develop 1,000 MW of solar projects under the program.

On September 18, 2020, the state government had issued an order extending the benefits of a public procurement policy for MSMEs and public sector undertakings in the state.

However, the tender floated by KSEB had not considered the government order for giving the price and purchase preference to MSMEs.

KREEPA, in its submission, said that MSMEs were willing to participate in this tender, as it was the largest of its kind in Kerala. They said that rooftop solar systems needed long-term servicing, which would be possible only by local MSMEs.

The petitioner took up the issue with KSEB during the pre-bid meeting held on February 25, 2021, but KSEB informed that the petitioner’s request could not be considered.

KSEB, in its reply, said that the association had not cited any provisions in the regulations of the Electricity Act, 2003, under which the KREEPA had filed the petition.

The DISCOM said that since the project is partly funded through a subsidy from MNRE and the tender conditions are based on MNRE guidelines, the disputes are to be referred to MNRE. Such a dispute was beyond the Commission’s jurisdiction.

The DISCOM added that KREEPA’s request to consider the government order dated September 18, 2020, regarding the purchase and price preference, was contrary to the guidelines issued by the MNRE.

“The order refers to the price and purchase preference related to the procurement of goods by central or state government agencies and public sector undertakings, whereas the tender of KSEB is for empanelment of solar developers,” KSEB said.

The DISCOM noted that as per MNRE, the allotted quantum of 200 MW capacity must be implemented by February 2022 for the consumers to avail the subsidy benefits of about ₹4 billion (~$53.29 million). If the project is not completed on time, Kerala’s consumers would be deprived of the benefits.

The association argued that as per the order of the Ministry of Commerce and Industry on June 4, 2020, a purchase preference of 50% should be given to local suppliers whose goods, services, or works are offered for procurement and has local content equal to or more than 50%. However, KSEB cited the MNRE guidelines and said that it would not implement the state government’s order.

The Commission observed that the order of the Ministry of Commerce and Industry on price and purchase preference to MSMEs applies to all ministries of the government including the MNRE. The Commission asked KSEB to write to the MNRE immediately and get a clarification. Until then, KSEB is not allowed to finalize the tender.

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