Lanco-Globeleq ownership was disputed by AG

NEW DELHI: It’s now official. Attorney general Milon K Banerjee had held that the change in ownership of Lanco-Globeleq consortium was not permissible under the bidding norms for Sasan Power, the 4,000-MW ultra mega power project. However, with the law ministry refusing to give a verdict on the case, the matter is now set to be decided by June 30 by when the Group of Ministers (GoM) has to submit a report.

The consortium has been given a bid deadline extension till July 5 for the deal. The AG in his opinion over the issue said the change in the membership of the consortium (Sasan-Globeleq) is not permissible under the terms of the bid documents, especially as the change has been informed much after bid deadline was over and letter of intent for award of the project was issued, an official source said.

The AG’s views were sought by PFC that has been appointed as the nodal agency for implementation of the ultra mega power initiative. With even the law ministry refusing to give its verdict on the case, the ball is in the court of the GoM, which would have to reach some decision by June 30, the source said. The government has time till July 5 to resolve the matter as the extended period of the bid ends the next day.

The GoM is headed by external affairs minister Pranab Mukherjee and includes finance minister P Chidambaram, power minister Sushilkumar Shinde, law minister HR Bhardwaj, among others.

The government has decided to extend the bid of winning bidder and all other companies in the fray for the Madhya Pradesh-based project by a month to buy time to reach a decision. All original bids expired on Wednesday. Along with Lanco Infratech, three companies, Reliance Energy, Jaiprakash Associates and NTPC, have chosen to extend their bids. The extensions would give Lanco one more month to have control over the project, while government through its SPV Sasan Power would have time to opt for another bidder if a decision is taken to disqualify the winning bidder.

The controversy mainly is over the change of membership of the consortium of the Hyderabad-based Lanco and Globeleq Singapore, a subsidiary of Houston-based Globeleq after the expiry of bid deadline. Globeleq decided to sell some part of its global business, including the Singapore operations that had been bought over by Jindal Steel and Power Ltd, another bidder for the Sasan project.

This change of structure was contested by other bidders in the fray. Questions were also raised about the claims made by the winning bidder in the bid document over their expertise, financial strength to handle such a large project.