The Hindu : National : Kerala Cabinet decides to annul contract with South Korean firm

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National

Kerala Cabinet decides to annul contract with South Korean firm

Special Correspondent

Following allegations that Kerala State Electricity Board favoured it

‘I felt that the issue needed to be examined seriously'
First phase of project estimated to cost Rs. 240 crore

V.S. Achuthanandan

THIRUVANANTHAPURAM: The Kerala Cabinet on Wednesday decided to annul the tendering process that led to the grant of a contract to a South Korean company by the Kerala State Electricity Board (KSEB) for the first phase (Part A) of the Restructured Accelerated Power Development and Reforms Programme funded by the Union government.

The decision follows criticism by the Opposition and others of irregularities in the award of the contract.

Chief Minister V. S. Achuthanandan announced after the Cabinet meeting that works under the project would be retendered.

Chandy's letter

The decision was taken in view of complaints about award of the contract to a Korean Company from several quarters, including Leader of the Opposition Oommen Chandy. Mr. Chandy had written to him in that regard. “I felt that the issue needed to be examined seriously,” the Chief Minister told journalists.

The first phase, estimated to cost Rs. 240 crore, aimed at reducing transmission and distribution (T&D) losses and power pilferage.

It involved the establishment of a data centre and computer network, connecting the offices of the Board, modernisation of the billing procedure, asset mapping and installation of power metres at feeder points.

Tender

The Board floated the tender in March 2010. Though 22 companies initially evinced interest in participating in the bid, 14 of them backed out because of stipulations such as use of free software.

Free software

However, the requirement of free software was allegedly given a go-by later. Those who participated in the bid included Indian IT majors such as Infosys, Tata Consultancy Services and Wipro, but the contract went to KEPCO Data Network of South Korea.

It was alleged that the Board favoured the company while the lowest bidders were eliminated citing technical reasons.

The Leader of the Opposition had alleged that the State stood to loss more than Rs. 50 crore in the deal.

He cited in this context the alleged loss of Rs. 374.5 crore suffered in the award of contracts for renovation of power projects to Canadian company SNC-Lavalin in the past. That deal is the subject of ongoing litigation and investigations.

Leading firms excluded

Leading companies were excluded so as to award the contract to the Korean company, Mr. Chandy had said, alleging the involvement of the leadership of the Communist Party of India (Marxist).

T&D losses constitute an area of priority for the KSEB: energy losses for 2008-09 was 20.45 per cent.

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