Is SECI Part Of A Proxy War Against RPower?

There is no better corporate strategy than hurting your opponent via a proxy war. Names of a handful big players in India's power sector is an open secret and in the war for establishing supremacy, RPower (Reliance Power) may have become a soft target for a large Gujarat based rival due to the past perception surrounding the company.

For the past few days, the Solar Energy Corporation of India (SECI) has created a spectacle by targeting RPower for submitting alleged fake Bank Guarantee (BG) for a tender and debarred the company from participating in future projects for three years. But a closer look at the events leading up to the opening of the tender, reveals that SECI may be responsible for subverting the tender process and allowing the situation to balloon, just to attack RPower that had no role in arranging the documents.

Instead of rejecting the bid submitted by Maharashtra Energy Generation Ltd rechristened as Reliance NU BESS Ltd, a subsidiary of RPower, for tender related discrepancies at the initial stage, the SECI, most likely deliberately, laid a trap and kept digging a larger pit for RPower, the parent company. RPower has nearly 5 million shareholders and is now made to bear the brunt of fraud by a third party vendor (of its subsidiary), who was tasked with the job to arrange the BGs. A criminal complaint has been filed by Reliance NU against the vendor Biswal Tradelink Pvt. Ltd. and its directors Partha Sarthi Biswal and Manoj Kumar Biswal.

Behind The Scene

SECI, a government enterprise under the Ministry of New And Renewable Energy, had come out with a tender for 1 gigawatt (GW) of solar with 2 GW of standalone battery energy storage system. The five bidders included JSW Energy, Gensole, Avaada Group, Ingrid and RPower. SECI has said that it detected the irregularities only after the bidding was done, forcing it to cancel the tender at an advanced stage. Is it true?

Reliance NU, the subsidiary of RPower, had first submitted its online bid on August 12, 2024, along with the copy of the BG issued by ACE Investment Bank Ltd. (Malaysian bank).  One of the requirements was to submit a BG issuance message transmitted by the issuing bank through Structured Financial Messaging System (SFMS) directly from the bidder’s bank to the designated bank of SECI, which was IDFC First Bank, New Delhi.  This requirement was not complied by Reliance NU.  SECI was aware of this non-compliance, which is most important and critical for accepting the bid as a responsive bid.  At this first stage itself, the SECI was supposed to reject the bid by Reliance NU, since the last date for the submission of hard copy of original BG was August 14 but the company submitted the same on August 27 by overshooting the tender deadline by 13 days.

What was the reason for SECI to give a long rope to Reliance NU and allow it an extended deadline? Is it not a clear case of SECI having manipulated the tender process? There is a long list of such subversion of tender process by the SECI, which led to the situation to balloon, so that RPower could be banned from all future tenders - a proxy war that only helps the rivals.

When BGs are issued, a confirmation message is issued by the issuing bank via Structured Financial Messaging System (SFMS), a global banking protocol. At the second stage too, the SECI ignored the fact that no message was issued by the bank confirming the issuance of BG. Then too, the SECI did not reject the bid by Reliance NU. Just so that at a later date, it can completely debar RPower?

Another blatant violation of the tender process by SECI came on September 3, when SECI gave further concessions to Reliance NU. SECI told the company that the Malaysia BG was not acceptable; since it was not issued by a Scheduled Commercial Bank. But the regulator gave Reliance NU further time to submit a substitute BG. Why the benevolence? So that it could later debar RPower from all future projects.

Even in the case of the substitute BG, bearing no. FRIB24.0809SOL issued by FirstRand Bank, Philippines, for which an endorsement dated September 9 was done by the State Bank of India, CAG branch, Delhi (SBI), no confirmation via SFMS message was received by the SECI. But SECI turned a blind eye to this too and again subverted the tender process. Why?

On September 12, an SFMS copy, duly endorsed by SBI, CAG branch, Delhi was submitted by Reliance NU to SECI. In terms of Clause 19.8 of RFS (tender document), the SECI should not have accepted a physical copy of SFMS. There cannot be a physical copy of the SFMS message and accepting the same was SECI's fourth violation of the tender process. The target was clear - RPower.

What was the fifth violation? On September 13, the SECI communicated (via email at 3:16 PM) to Reliance NU about the e-Reverse Auction under RFS to be held on the same day at 5:00 PM. Considering the above events related to the BG (non-transmission of SFMS from bidder’s bank to SECI’s designated bank) and overshooting of the tender deadline, was it not obvious that the SECI should have never invited Reliance NU to participate in the e-reverse Auction? Since, in absence of BG (non responsive) and SFMS, was the bid submitted by the company not non-est and invalid at ab-initio (void from the beginning)? But SECI had a different agenda? Tender process violation number five.

On September 13, as Reliance NU was allowed by the SECI (without any objection) to participate in the e-Reverse Auction, the company tentatively emerged as one of the successful bidders for 500 MW/1000 MWh capacity. This was SECI's tender process violation number six.

Then, on September 17, the original copy of Philippines BG was submitted to SECI by Reliance NU. Such extension in submission of original BG cannot be granted by SECI as per the tender rules on deadline. SECI's violation number seven.

Not Allowing Valid BG

SECI let the drama play out until it knew that the BG may be allegedly non genuine or fake. But, as soon as Reliance NU submitted an authentic BG issued by an Indian bank, SECI woke-up and rejected it.

On September 26, based on verbal intimation from SECI about concerns over genuineness of BG endorsement by SBI on 10th September 2024, Reliance NU arranged an alternate BG for Rs 68.20 crores and SFMS message from IDBI Bank bearing number 240126IBGB00074 was received by SECI (IDFC First Bank Ltd) on the same day that demonstrated Reliance NU’s genuineness and commitment towards the Bid process. Surprisingly, the same SECI that kept accepting a BG with no confirmation from the bank well beyond the deadline, refused to accept a BG backed by confirmation and SFMS.

Since SECI had voluntarily given an opportunity to Reliance NU to furnish another BG in lieu of Malaysia BG, why did it back off when Reliance NU submitted a valid BG issued by IDBI Bank? Was SECI working with any pre-planned agenda to debar RPower, the parent company and its subsidiaries? Why did SECI not consider the "Principle of legitimate expectation comes into play?”  This was violation number eight of the tender process by SECI.

Based on the complaint filed by Reliance NU with the Economic Offences Wing (EOW), New Delhi, an FIR bearing No.0131 of 2024 dated 11th November 2024, has been registered and the same is under investigation.

Thus, when SECI holds Reliance NU and RPower guilty of submission of alleged fake / forged endorsement from SBI, is SECI also not guilty and absolutely culpable in giving unwarranted concessions to the company and inviting it for e-Reverse Auction in absence of original BG and SFMS and fully knowing that Reliance NU’s bid is non-responsive from the beginning?

SECI's unilateral and arbitrary deviation from mandatory terms of the tender process, gross negligence and ignorance of the rules appear much severe. In that, its agenda of attacking the parent company RPower and its subsidiaries, reeks of vested interest and being a participant to a proxy war against RPower and its subsidiaries.