CSE investigation exposes corporate malpractice in prestigious and much needed National Solar Mission | Centre for Science and Environment


CSE investigation exposes corporate malpractice in prestigious and much needed National Solar Mission

Finds one company walking away with 40 per cent of projects – in contravention of one project-one proponent norm

  • Investigations by Centre for Science and Environment point to nine projects under the National Solar Mission being grabbed by one company

  • Raises questions whether bids were rigged in the first phase of the Solar Mission – CSE wants further investigation into the role of government agencies

  • Calls for transparent and fair processes; says India’s National Solar Mission is too important to let dubious deals hijack it

New Delhi, February 1, 2012: India's ambitious Jawaharlal Nehru National Solar Mission aims at installing 20,000 megawatt (MW) of grid-connected solar power by 2022. Of this, 1,000 MW will be installed in the Mission’s first phase -- by 2013. In the first batch of the projects were to be equitably distributed among companies so that it not only fosters competition but also provides room for innovation and growth. The Ministry of New and Renewable Energy set the rules for distribution of projects.

An investigation by Centre for Science and Environment (CSE) researchers has stumbled upon a corporate scam, which could well destroy the working of this project of national importance. Says Sunita Narain, CSE’s director general: “We need clean energy. Solar is the option for the future. But clean energy cannot be built on dirty corporate practices. This is why we are exposing this dubious deal. We hope it will lead to better governance and regulation of this energy source of the future.”

The latest issue of Down To Earth, the science and environment fortnightly, carries the detailed investigation on the how one industry used unfair practices to corner lucrative projects under the first phase of the National Solar Mission Mission and its web of deceit, fraud and secrecy ( to see the story online, just visit www.downtoearth.org.in).

One company takes it all
In July 2010, the Union ministry of new and renewable energy (MNRE) had issued guidelines for the selection of solar power projects. According to these, the ministry will accept only one application for one 5 MW solar PV project “per Company, including its Parent, Affiliate or Ultimate Parent or any Group Company…”. In the case of solar thermal projects, the guidelines specify “total capacity of solar thermal projects to be allocated to a Company… shall be limited to 100 MW”.

As per the guidelines, therefore, one company was allowed to bid for and win one 100 MW solar thermal and one 5 MW solar PV project. In totality, one company was eligible to get 105 MW worth of projects.

CSE and Down To Earth’s investigations have revealed that these guidelines were blatantly flouted by LANCO Infratech. This company floated front companies and grabbed no less than nine projects worth 235 MW. This is about 40 per cent of the 620 MW worth of projects auctioned by the government during the first batch of the first phase of the Solar Mission.

LANCO Infratech is the flagship company of the LANCO group. Based on the guaranteed feed-in tariff being paid to solar projects in the first phase, the company will get assured revenue of Rs 13,000 crore from these projects over a period of 25 years, says CSE.

The company has initiated work on these nine projects on 1,000 hectares at Askandara village in Jaisalmer, Rajasthan. In the winning bids for solar thermal projects, LANCO’s name appears only in the case of Diwakar Solar Projects, which has bagged a 100 MW solar thermal contract. Another LANCO subsidiary, Khaya Solar Projects, appears on the approved list of 5 MW solar PV project proponents.

But on investigation, CSE found that seven more companies had direct links with LANCO -- some have LANCO employees and their family members as directors, while others have strong commercial ties to the company. LANCO’s own annual report indicates that all the seven are firmly in its control.

All seven companies had Rs 1 lakh or Rs 10 lakh in equity, no assets or reserves from the past; all were created for the bidding process; all companies increased their authorized amount of shares and then issued preference shares on the same day (December 31, 2010); the shares did not go to LANCO directly, but show up in its annual report. Then all LANCO and front companies bid for the PV projects in a unified fashion, quoting similar tariffs with 5 paise jump between each bid.

The DPR of all projects are almost identical – word for word, page by page. Even the land that has been agreements for the legally distinct and differently owned projects has been signed by one person – a LANCO employee.

Says Chandra Bhushan, CSE’s deputy director general and head of its renewable energy team: “LANCO has bought compulsorily convertible preference shares of the front companies that will give it guaranteed ownership in future. This helps the company bypass the Mission guidelines.” (See the Down To Earth story for the complete list of these companies.)

What is the government’s response to this?
CSE investigators point out that LANCO could pull this off because neither the ministry, nor the NTPC Vidyut Vyapar Nigam (which is responsible for the contracting, buying and selling of solar power), have a mechanism to monitor the activities of companies that win a contract. The two agencies do not even provide the details of the projects and company addresses. 

While the MNRE has been at pains to explain how it has warned companies at fault, CSE’s efforts to get information have been stonewalled by both the ministry and NTPC. An RTI application to the ministry was forwarded to the NTPC Vidyut Vyapar Nigam, which refused to give out the information on the ground that it was not in “public interest”.

Solar Mission too important to be made a victim to bureaucratic bungling
“Not in public interest?” asks Chandra Bhushan. “The Mission’s 20,000 MW target will cost Rs 2 lakh crore of public money between 2012 and 2047. It is the world’s most expensive solar energy programme being funded by public money. Why are the ministry and other agencies so secretive about it?”

The ministry’s non-transparent processes are responsible for the lapses in the renewable energy programme, say CSE investigators. This has resulted in LANCO winning the bids by unfair means. In doing so, LANCO throttled the competition and stopped genuine players from entering the market.

Says Chandra Bhushan: “India will be spending lakhs of crores in promoting renewable energy, especially solar energy, but all this will go down the drain if it does not put transparent and fair laws in place that promote competitiveness, innovation and attract serious businesses. With the bad market practices and non-transparency that prevail today, energy security and sustainable energy will remain a dream.”

 

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