SB Energy denies allegations of cartelisation
Seeks fair play from Govt, but committed to invest in India’s future solar projects
MUMBAI: SB Energy, a joint venture between Japan’s SoftBank, Taiwan’s Foxconn Technology Group and Bharti Enterprise, urged the government to act fairly and address the concerns of the international investors, even as it denied allegations of cartelisation to drive up solar power tariffs at the auction for developing 3,000 MW solar projects conducted by Solar Energy Corporation of India (SECI) in July.
The company, however, clarified that this episode will not dampen its commitment to invest in future solar projects in the country.
“We respect the open and transparent bidding process set by the Ministry of New and Renewable Energy. We have always followed this process of the reverse auction since 2015 when it was initiated. As a global corporation, we abide by the stringent norms of governance and compliance with all the applicable laws and always practice ethical norms across the world,” an SB Energy spokesperson said on Sunday. In 2015, SoftBank pledged to invest $20 billion in Indian solar projects with a goal of generating 20 gigawatts (GW) of energy as the majority partner in a joint venture with India’s Bharti Enterprises and Taiwan’s Foxconn.
“We request the government to act fairly and address the concerns of the international investors,” the spokesperson added.
BusinessLine had reported that RK Singh, Minister of State (Independent Charge) for Power and New & Renewable Energy, in a letter to the Prime Minister’s Office, NITI Aayog Vice-Chairman and the Finance Minister alleged “there was an attempt for cartelisation” by SB Energy to keep the tariff high.
The auction, except for one bid, was cancelled by SECI partly without any formal reason, but according to industry sources, most of the bids were scrapped as the government reckoned that the bids were too high. The winning bids for 2,400 MW of the 3,000 MW projects were cancelled. Only Acme Solar, which won a bid for 600 MW by quoting the lowest tariff of ₹2.44 a unit, was awarded a project. The bids that were rejected included SB Energy’s bid for developing 1,100 MW at ₹2.71 a unit. Following the cancellation, the Softbank-backed company wrote to the Centre seeking clarity on why its bid was rejected but is yet to get a response.
According to industry sources, the cancellation of bids raises questions over the sanctity of the entire process. “I think the government is following the most transparent bidding process, which is globally accepted. But one has to allow the market forces to play out. Every auction will lead to different dynamics based on how interested the players are,” said an industry executive.
In the past few months, several solar auctions were cancelled on account of higher bids received, including State auctions in Gujarat and Uttar Pradesh. In August, MNRE has directed the Solar Energy Corporation of India (SECI) to fix the maximum permissible tariff at ₹2.68 per unit (including 18 paise for safeguard duty) or ₹2.5 per unit if the developer has not paid the duty.
New bidding activity
Solar developers warn that introducing the cap on solar tariff may hamper new bidding activity as current rupee-dollar exchange rate, increased interest costs and GST have had a serious impact on the solar tariff.