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Cover Story

The truth about solar mission

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Feb 15, 2012 | From the print edition

For the Government of India the first phase of the national solar mission has been a grand success. It not only managed to attract industry to invest in the generation of an energy considered costly, but also dramatically drove down the cost of producing this energy. In its celebration, little did the government realise that a major conglomerate had subverted rules to acquire a stake in the solar mission much larger than allowed legally. Like the big telecom players in the 2G scam, here a company called LANCO Infratech set up front companies that bid for solar power projects under Jawaharlal Nehru National Solar Mission. When the government has adopted a policy of one-project-per-proponent under the mission to encourage competition, LANCO managed to get nine. At the end of the first phase of the solar mission, LANCO has got its hands over 235 MW of allocation, almost a quarter of the total 1,000 MW to be derived from solar radiation under the first phase. And with this it has cornered an assured revenue of about Rs 13,000 crore. The Ministry of New and Renewable Energy and power purchaser NTPC Vidyut Vyapar Nigam could not check this. Their monitoring mechanisms are either not present or have been switched off after the bidding for the first phase. Chandra Bhushan, assisted by Jonas Hamberg, explains how LANCO bypassed ministry rules and where the solar sector is headed

lanco

The first phase of the national solar mission is to test the waters. Of the total capacity of 20,000 MW of grid-connected solar power targeted by 2022 under Jawaharlal Nehru National Solar Mission (JNNSM), 1,000 MW is to be achieved by 2013. The first batch projects were planned to be equitably distributed among companies so that it not only fosters competition and brings down prices but also manures a sprouting sector. The Ministry of New and Renewable Energy (MNRE) set the rules for the distribution of projects and used reverse bidding to reduce tariff.

imageThe ministry reasoned that it was better to start with baby steps and, therefore, divided the first phase into two batches.

The first batch of 470 MW of solar thermal and 150 MW of solar photovoltaic (PV) was auctioned in November 2010. The second batch of 350 MW of solar photovoltaic was auctioned in December 2011.

The remaining quota was filled by migrating solar PV and solar thermal projects that existed before the mission.

While the policy and handling of the mission lie with MNRE, the mission document states that the contracting, buying and selling of the solar power are to be handled by public sector undertaking NTPC Vidyut Vyapar Nigam under the Ministry of Power.

But even with two ministries overseeing the solar mission, a big chunk of the first batch of solar projects in the first phase has been undeservedly awarded to one company.

Holdings of LANCO
 

Khaya and Diwakar are 100% subsidiaries of LANCO. LANCO has 49% equity shares in KVK and 26% each in DDE and Electromech. LANCO has 100% of the preference shares in all projects which is equal to the net worth requirement for applying for bids under solar mission. The preference shares represent almost all capital infused into the projects. The preference shares are compulsorily convertible, which means they must be converted into equity shares in future.

When converted the preference shares will give LANCO a 99% ownership in each project. Each share gives a 0.001% dividend, so except for future ownership these shares give almost no benefit to LANCO

Smell a rat

The list of the winners of solar projects in the first batch seems innocuous apart from the fact that most of the companies that bagged these projects are unheard of—even the trusted Google could not locate some of them. When MNRE could not provide the details of the projects and company addresses, Delhi non-profit Centre for Science and Environment (CSE) visited the Rajasthan Renewable Energy Corporation (RREC) since Rajasthan is a favourite destination for solar projects. An officer at the corporation pointed to a bunch of projects being built at Askandara village in Jaisalmer and said LANCO was the engineering-procurement-construction contractor for all of them.

The LANCO story
 

LANCO Infratech is the flagship company of LANCO Group. It was founded in 1986 by Rajagopal Lagadapati, the current MP from Vijayawada in Andhra Pradesh. Lagadapati is LANCO’s chairperson, his brother Lagadapati Madhusudan Rao is the executive chairperson and frontman of the company. LANCO began with construction contracts and later ventured into infrastructure and power. LANCO Infratech is competing with Tata Power for the title of the largest private power producer in India.

LANCO has multiple subsidiaries involved in solar in India and abroad. LANCO Solar Energy seems to be the main subsidiary holding other subsidiaries that are owning, operating or contracting solar plants. It has also begun a solar panel manufacturing unit in Chhattisgarh.

In 2006, LANCO, along with Globoleq Singapore, won the government contract to construct the ultra-mega thermal power station at Sasan in Madhya Pradesh at a record low Rs 1.196 per kWh. Soon after bidding when LANCO and Jindal Steel acquired Globoleq Singapore, radically changing the ownership structure, the other bidders cried foul because LANCO’s bid was dependent on the financial strength of Globoleq’s balance sheet. LANCO was disqualified.

LANCO’s Amarkantak thermal power plant in Haryana and Kondapalli plant in Andhra Pradesh were accused of improprieties. Kondapalli for having a faulty power purchase deal and Amarkantak for selling power at a high price.

In March 2007, G Venkatesh Babu, MD of LANCO Infratech, was stopped when entering Hyderabad Airport with unaccounted for Rs 34 lakh.

LANCO Hills real estate project near Hyderabad has been taken to court for encroaching on dargah land. Lately, LANCO has seen its stock price fall, partly because it is seen as having too much debt compared to equity and partly because of court cases.

 

A visit to Askandara strengthened suspicion. Over 1,000 hectares were being prepared for solar power projects to be set up by LANCO. Nine projects were grouped at one huge site. There was no mention or board of any other company. Everyone working there said they were working for LANCO. Even records at RREC had one cell phone number for the nine companies.

In the winning bids for solar thermal, LANCO’s name appears at only one place, under Diwakar Solar Projects, which has bagged a 100 MW project. Another subsidiary of LANCO, called Khaya Solar Projects, appears on the list of 5MW PV projects approved under JNNSM (although LANCO is not specifically named).

If LANCO followed the rules it could have owned only these two projects worth 105 MW. Did it acquire the other seven projects—accounting for 130 MW—through shell companies? A CSE investigation revealed LANCO employees or their family members were directors of some of these companies. Others were set up by companies with strong commercial ties with LANCO.

A few of them changed hands several times; directors walked in and marched out. But at the end of the day, as LANCO’s own annual report shows, the energy conglomerate had a firm grip over the seven companies. In a few years LANCO could own up to 99 per cent stake in all of these firms (see ‘How front companies operate’).

Complex web of links

Take the example of DDE Renewable Energy (DDERE), which won a 5 MW solar PV plant. The company was set up by Krishan Lalit Bansal and three of his family members on November 17, 2009. Each of them became a director and owned a quarter of the company’s Rs 1 lakh equity. Bansal owned another company called DEE Development Engineers, which made pipes for thermal power plants, a business that forms the core of LANCO’s empire.

DDERE’s balance sheet for the financial year 2010, uploaded on the Ministry of Corporate Affairs’ website on October 8, 2010, lists the original members as it’s directors without any change in capital or shareholding pattern. Its bank balance was a mere Rs 99,850.

This was after September 24, the last day for submission of request for selection (RFS) documents. The RFS guidelines were clear that for a company to qualify for the mission, its net worth had to be at least Rs 15 crore a week before the RFS deadline. DDERE showed the balance sheet of DEE Development Engineers and qualified for bidding.

On November 16, when the bids were opened, it bagged 5MW solar PV project and on December 13, NTPC Vidyut Vyapar Nigam issued it the letter of intent.

A few days later on December 31, DDERE issued Rs 15.2 crore worth of preference shares to DEE Development Engineers, Bansal’s other company. But strangely enough in LANCO Infratech’s Annual Report of 2010-2011, these preference shares worth Rs 15.2 crore are shown to be in LANCO’s possession.

Reworking of company books did not stop there. On January 10, 2011, DDERE signed a power purchase agreement with NTPC Vidyut Vyapar Nigam. Less than a month later, on February 8, the company retroactively changed its balance sheets for the financial year 2009-2010, indicating a change in shareholders. In the new document, the company’s equity shares (implying ownership) had changed.

Bansal now held 23 per cent and the remainder 77 per cent was held by an unnamed corporate entity. On the same day two new persons, twins aged 21 years, Premchand Kurumoju and Sahithi Kurumoju, took over as directors of DDERE. The names of Bansal’s family members, apart from the grand patriarch, disappeared from the company rota. On March 31, ministry of corporate affairs documents show two companies now owned DDERE, one of them being Nice Infracon with majority stakes. Krishan Lalit Bansal no longer held shares.

On the face of it the entry of the Kurumojus should not raise eyebrows. But as LANCO’s in-house magazine reveals, they are children of Subhramanyam Kurumoju, a LANCO employee since 1983. The magazine glorifies Subhramanyam as a “loyal” and “devoted” employee of the company. He is currently attached to the LANCO chairperson’s office, says the company’s PR department.

Sifting through documents uploaded on the corporate affairs ministry website revealed that the Kurumoju twins were also directors of Nice Infracon, the holding company of DDERE. Which is the other stakeholder? LANCO Infratech’s annual report ending March 31, 2011, provides the answer. It states the company has bought 26 per cent stake in DDERE, which has a face value of Rs 26,000, but strangely enough paid Rs 16 lakh for it. So Nice Infracon controlled 74 per cent stake in the company.

  LANCO has bought preference shares of front companies that will give it ownership in future. This helps it bypass mission guidelines  
 
 

LANCO then came one step closer to controlling Nice Infracon. On December 16, 2011, Premchand and Sahithi resigned as directors of Nice and were replaced by three other directors, Ravinder Singh, Kalyan Kumar Jagarlamudi and Anitha Jagarlamudi. Ravinder Singh was also appointed managing director of DDERE. On enquiry CSE was able to confirm that Ravinder Singh is an employee of LANCO Solar.

LANCO has also been sloppy while filing company information on the corporate affairs ministry website. The official email for DDERE has been filled as parveshkheterpal@lancogroup.com. Kheterpal also happens to be the “Head of Legal and Secretarial of LANCO Solar Divison at LANCO Group”, according to LinkedIn. In another case, it seems documents giving details of Electromech Maritech, another front company of LANCO, were attached to DDERE on the ministry website, implying same people handled both the companies.

Pattern repeats

Six other companies apart from DDERE were used as front by LANCO (see ‘The LANCO story’) to win solar projects. All these companies had Rs 1 lakh or Rs 10 lakh in equity and no assets or reserves from the past. They were created for the bidding process. They solely relied on their promoter’s net worth to qualify for the bidding because the JNNSM guidelines were clear that the bidding company had to be worth Rs 15 crore for solar PV and Rs 220 crore for solar thermal.

MNRE guidelines that were flouted
 

Guidelines for selection of solar power projects issued on July 2010

 

(2.4) Number of applications by a company bidding for solar PV “... to have wider participation from Solar Power Developers, only one application per Company including its Parent, Affiliate or Ultimate Parent-or any Group Company shall be permitted for development of one project of 5 MW …”

 

(3.4) Number of applications by a company bidding for solar thermal “The total capacity of Solar Thermal Projects to be allocated to a Company including its Parent, Affiliate or Ultimate Parent-or any Group Company shall be limited to 100 MW. The Company, including its Parent, Affiliate or Ultimate Parent-or any Group Company may submit appli cation for multiple projects at different locations subject to total maximum of 100 MW.”

 

(2.11) Minimum equity to be held by the promoter “No change in the shareholding in the Company developing the Project shall be permitted from the date of submitting an RfS [request for selection] till the execution of the PPA [power purchase agreement]. However, this condition will not be applicable if a listed company is developing the Project.

 

After execution of PPA, the controlling shareholding (controlling shareholding shall mean at least 26% of the voting rights) in the Company developing the project shall be maintained for a period of (1) one year after commencement of supply of power.”

 

Even though preference shares worth Rs 15.2 crore were sold by each of the PV companies and Rs 221.7 crore by the solar thermal company, none of it shows up in their cash reserves or bank balances. They are referred to as “loans or advances” in documents submitted to the corporate affairs ministry.

Most of the transfers took place in December 2010 just as the power purchase agreements were to be signed. The pattern of share transfer remains almost the same throughout. All the companies increased their authorised amount of shares and then issued preference shares worth Rs 15.2 crore (for solar thermal company, KVK, it was Rs 221.7 crore), on the same day, December 31, 2010. The shares did not directly go to LANCO. But by March 31, 2011, LANCO Infratech’s annual report shows it is in possession of the shares.

As a chartered accountant, who requested not to be named, explained “preference shares get paid dividend before normal equity shares but do not count as voting rights”. These shares were compulsorily convertible. “Compulsorily convertible means at some point they will have to be changed into normal shares and LANCO will get significant influence in these companies. It is as if LANCO bought the bus ticket and boarded but did not take a seat yet; at some point it will get a seat. LANCO has bought tickets on every bus there is,” the chartered accountant explained.

The preference shares when converted will give LANCO around 99 per cent ownership in the companies. In one instance, in the case of Electromech Maritech, documents uploaded on the corporate affairs ministry website suggest that the conversion of the shares will happen in the next three years. This strategy of future ownership suits LANCO; it helps it bypass JNNSM guidelines, which say that the original controlling shareholder has to remain for one year after the commissioning of the plant (see ‘MNRE guidelines that were flouted’). In the guidelines the controlling shareholder is defined as having at least 26 per cent of the voting rights. LANCO has ensured that in three other instances, KVK Energy Ventures, DDERE and Electromech Maritech, it controls the equity shares of the company as well.

Old tactics

KVK Energy Ventures was incorporated in May 13, 2009, with issued equity share of Rs 1 lakh. Two people, Kalindi Vijay Kumar (KVK), who is also the managing director of KVK Energy and Infrastructure Limited, and his son, had equal stakes in the company. On December 20, 2010, the authorised capital was changed from Rs 1 lakh to Rs 300 crore. Of this Rs 299.99 crore was in preference shares and the rest in equity. Sometime before March 31, 2011, preference shares worth Rs 221.7 crore were issued, and as LANCO Infratech’s report states, it has acquired them. Equity was still Rs 1 lakh, meaning voting rights rested fully with the KVK family.

image

However, on October 29, 2011, equity shares worth Rs 4.87 crore were allotted to LANCO Solar Energy, a direct subsidiary of LANCO Infratech, and Rs 5.07 crore to MMS Steel and Power, a gas power project of KVK Energy and Infrastructure. This meant that MMS Steel and Power got 50.95 per cent voting rights and LANCO 48.95 per cent. The original project developer KVK was left with only 0.1 per cent voting rights.

Shifting of shares has happened in the past. Nearly a decade ago LANCO took over a company named KVK Energy. Two years later its name was changed to LANCO Amarkantak Power, which is building the 1,200 MW Amarkantak power plant in Haryana. Its shareholding pattern kept changing and in 2006 LANCO had the majority stake in the company.

  LANCO’s employees signed contracts with Rajasthan on behalf of front companies  
 
 

LANCO dealings with DDERE and Electromech are direct breach of the MNRE guidelines. Dealings of the other projects breach if not the letter than at least the intent of the guidelines.

The national solar mission is clear in its guidelines that shareholding pattern is not allowed to change at all between submission of the request for selection and signing of the power purchase agreement. The controlling shareholder is also not allowed to change from the time of signing the power purchase agreement to a year after the project is commissioned. Changes can happen only in 2013 as all the projects had a commissioning deadline of January 2012. These rules have not been followed. Issuing preference shares changes shareholding pattern—and this was done in December 2010, between submission of the request for selection and signing of the power purchase agreement. In the case of Electromech and DDERE the controlling shareholder has also changed, according to official corporate affairs ministry forms.

More evidence

LANCO and its fronts bid for the PV projects in a unified fashion, quoting similar tariffs with 5 paise jump between each bid. The Detailed Project Reports—giving technical and financial details of the proposed projects—are almost identical for the seven PV projects and the two solar thermal projects. They use the same text and graphs with only slight modification. In the project reports of KVK and Diwakar Solar Thermal one can see adjustments made in the same handwriting—one person must have prepared both the reports. According to documents from the Jodhpur Discom, all of the seven PV projects are financed by Axis Bank.

image

LANCO has also been given a wide power of attorney by these companies and has signed lease agreements for the land. Documents at the colonisation department office in Bikaner show the contracts are signed by LANCO employees on behalf of the companies with the Government of Rajasthan. An official, when asked for more information on these companies, said, “You won’t find any. These are sister companies set up by LANCO because they could not otherwise bid for this much”.

LANCO could pull off this stunt only because MNRE and NTPC Vidyut Vyapar Nigam do not have a mechanism to monitor the activities of the companies that won the contracts. There were signs. Six of the projects now under LANCO had shown their locations at the same village in bid documents. After they won the bids, they together changed the location to another village, although changing location was discouraged by MNRE.

Detailed questionnaires were sent to LANCO, MNRE and NTPC Vidyut Vyapar Nigam both by hand and fax and were followed up with confirmations on phone. Till this issue went to press only MNRE had responded. According to Tarun Kapoor, joint secretary in the ministry, changes in the controlling stake of a company that has won a project in the mission are not allowed and can attract disqualification. “We had come across a company where preferential shares were given, and we had taken a legal opinion on this as at some point of time in the future preferential shares will be converted into equity, and had directed the company not to issue the shares,” he said. But if the controlling equity of the company changes hands, then it will be disqualified, he added. On signing land agreements for the projects, Kapoor said, “We have warned a company in one instance where they were buying land on behalf of another project and they backed off.” He did not name any company.

With contributions from Swati Singh Sambyal, Sharat Trehan, Sunanda Mehta, M Suchitra, Ankur Paliwal and Arnab Pratim Dutta

AddThis

Sensational.

but that is all that it is.

1> good that someone is able to bring down the cost of expensive solar power. I hope that is not what people are complaining about.

2> economies of scale bringing the levelised cost over 25 years Down. Economies of scale in a depressed panel market and a depressed steel markets sounds interesting. One shoul point out here that the biggest sensitivity to levelised cost is ROI and ROE, depending on debt equity ratio. So what economies of scale might have done is reduced the bank risk an thereby brought down the ROI enough to win bids. Subtle but major difference.

anyway why the fuss? we are paying less for expensive power no? and that is the larger point. Systems must assure lowest average price and installation. Lanco going for 40% will also mean they cant afford not to put up the systems because now the total money they will lose if they fail to set up the system is substantial.

these are the positive points of what is happening

1 February 2012
Posted by
Anonymous

It's a scam. Laws were broken. This couldn't have happened without MNRE and NVVN connivance. These projects should be cancelled

2 February 2012
Posted by
Anonymous

I agree on above.

I wonder why the magazine is writing "Cornering the Public Money" when the projects were allocated to people after bidding, which means lowest bid- so public money actually saved.

It gets really sad when magazines try to sensationalize something pretty irrelevant just get eye balls.

By the way, I'll be very interested to know how do you keep your magazine afloat - definitely the circulation cannot bring in the money to employ 105 people full time. Do you accept donations or did u accept donations from "unnamed corporate entity" to publish this?

PS: I am sure there are bigger and genuine scoops where you could concentrate your resources. Try Gujarat, you can make a case for genuine cornering of public money by a "unnamed corporate entity" :-)

1 February 2012
Posted by
Anonymous

What will the MNRE and the NTPC gain out of going ahead with this scandal? Considering there indeed were obvious signs of illegality that could have been checked by them but weren't.

1 February 2012
Posted by
Anonymous

It is important to put the solar scam issue into perspective. We need solar energy, we need affordable solar energy, but we also need clean and regulated solar energy companies so that we can build a sector which is capable of innovation and healthy competition. In this case, we have found that LANCO has violated all guidelines and worse, has used the most offensive of corporate practices -- everything from forming shell companies to deceit -- to get the projects sanctioned. 
The question is how did this happen? Why were government agencies not vigilant enough to check this malpractice? Does this mean that these agencies will turn a blind eye or actively connive even on other matters that concern solar energy? How will this then build an energy system for the future? Will it? Our investigation also shows that these companies rigged the tendering process by bidding rates with a difference of just 5 paise between all projects. This is not about bringing prices down. This is about corporate malpractice. It is also important to note that even tilltoday, the government agencies concerned have not put addresses of the companies who have been awarded these projects in the public domain. Is this because these addresses do not exist? Or is it because these companies do not exist? This is too serious a matter to be dismissed saying that we need solar power and companies who can provide it. We are strong proponents of solar energy. But we do not want an energy system for the future, built on the dirty practices of the past.

 

 

2 February 2012


Posted by
Chandra Bhushan

I agree with Bhushan. As it is, I do not believe that the Solar Energy is really clean.Even if it is presumed be so,I wouldn't accept it if it is promoted using 'Dirty' tricks.
There is need for investigating how the Solar Energy Generation has become so cheap all of a sudden? Are there hidden benefits to the promoters? Will there be another scam taking place to pay the promoters for non-existent generation of solar energy?
Matter is really very very serious.

Sunil Sood
07739802112
sunilsolar@yahoo.co.in

4 February 2012
Posted by
Sunil Sood

sorry to state your ignorance Mr Sood. Solar is the only clean and viable renewable technology with minimal maintenance, and optimal generation. Prices went down purely due excess supply across markets in lieu of expanding demand (just that capacity got ahead of actual demand). And prices being quoted lower in each successive bid round is due to expectations of falling prices on modules (imported), and not so much due to expected economies of scale of Lanco (due inappropriate policies) which others could have followed - to the unfortunate distress of the industry as a whole. We can now all witness the calamity in matured telecom industry - and we still receive poor services/standards despite increased prices and enrichment of a few supposedly privileged members of community without the right to do so!

10 February 2012
Posted by
Anonymous

Dear Mr Anonymous,
I have over 20 years of exposure in Solar Field! ( My ID itself has the word 'solar'
I busy exposing misdeeds in Bureau of Energy Efficiency and do not have much time to expose the Solar PV technology scams (MNRE and Solar PV promoters are lucky!) .If you are willing to disclose your ID, I would be happy to have a separate debate on the issue.

Sunil Sood
07739802112
sunilsolar@yahoo.co.in

17 February 2012
Posted by
Sunil Sood

The Jawaharlal National solar Mission is outdated and it should be revised with current facts. The Solar photovoltaic panels price has fallen from $4 per watt to $1 per watt due to Photovoltaic grade silicon price falling from $470 per KG to less than $34 per KG. The old price of Rs 20 crore per MW has to be revised to Rs 5 per MW. This pricing means that the subsidy alone will be able to meet the cost of the panels to be set up by vendors. Hence the whole exercise should be done again and a new national solar mission documents made.
The Government if it imports the solar photovoltaic panels now and distributes even without subsidy many small users like households will be able to install solar power and get benefit. For the amount of deposit with Electricity Board a flat buyer can easily install complete solar energy panels and generate his own energy. In view of the quantum change I request you to completely rework the solar strategy.

3 February 2012
Posted by
F W Jesudas

  Dear F W Jesudas. 

You add some important depth. Earlier reports have shown that solar is now cheaper than diesel in India. Although it takes some time to make back the money (7 years according to one report) as buying the solar panel means all cost up front as compared to buying diesel over a longer time period. (http://www.newscientist.com/article/mg21328505.000-indias-panel-price-crash-could-spark-solar-revolution.html)

India should not however have to import solar panels. The domestic production in India needs support as it is, to be able to compete against US panels getting cheap government loans from their Ex-Im bank and against Chinese getting export financing and cheap loans as well.

Although module prices have fallen dramatically (to a quarter of the price in 2008, as you rightly state) the module only make up for roughly half of the installation cost. Therefore the construction cost would be more in the range of 10-15 crore per MW for utility scale plants. We have been following the global prices the last month (pvinsights.com) and the trend is now of a flattening price and even rising prices of back-end materials such as poly-silicon, ingots and wafers.

The first phase of the National Solar Mission is already awarded but we can now move to making sure that the second phase is more transparent and fairer to all involved. It is important to look over the whole structure as to avoid any missteps of the kind that has happened in Spain and UK the last years where prices were too generous. The bidding model as such has been effective in that manner - in bringing prices down but it needs to be proven that the projects are coming up on time and that state utilities can pay.

With hopes for an India running on Solar Power,

Jonas Hamberg

 

3 February 2012


Posted by
Jonas Hamberg

Dear Joanas,
Now the solar installations cost has come down to Rs 5 to 6 crores per MW. companies in tamilnadu have actually installed them.
F.W.Jesudas

20 December 2013
Posted by
F.W.Jesudas

Though this would have been a shocking news elsewhere, in India obviously such investigation findings are not at all astonishing as much larger scams have regularly been unearthed day in and out. However, the team who unravelled this scam deserve kudos as they have done a service to the Nation. Perhaps, it would not be too late when someone would dare to challenge the matter before the High Court/Supreme Court and we will be able to hear a replay of the 2-G Spectrum verdict soon. It is high time for the Government of India and all Political Parties in the country to read the writings on the wall and take effective corrective steps to see that Government business is conducted in highly transparent and honest manner without giving any ground for corruption, favouratism and nepotism. I join the fellow countrymen in thanking the CSE team who took great pains in digging out to make the entire scam public. Keep up. With best wishes.

3 February 2012
Posted by
AIKKARAKANAYIL AUGUSTINE JOSE

Great job done by the investigating team...Just goes to show what a crooked company LANCO is!

These guys should be hauled over the coals and made to pay exemplary damages. A penalty like the SC has awarded to the Telcos in the 2G scam is needed.

Surely the bureaucrats and politicians in the Rajasthan government have also acted in connivance with the Lanco officials.

To the CSE team...superb work and keep it up!!

4 February 2012
Posted by
Bappu Deshmukh

Great work by CSE team again. But who are the big bosses behind the Lanco !! What happened to the solar panels distributed in northeastern states!! I have seen panels converted into a good sleeping cot also. Lanco story was unknown to many of us and it helped a lot for awareness of the activist groups.

6 February 2012
Posted by
Mrinal Devburman. India

It should be noted here that the MNRE had decided the price per unit at around Rs 17 where as the actual price at which the 1000MW were awarded was around Rs 12, hence govt saved Rs 5 per unit. Lanco got 40% of the total 1000Mw by elligal means but if this 40 % would have been given to 4-5 different companies than also the price would not have gone bilow Rs 12 , maybe it would have increased as it is mentioned that Lanco used economy of scale to quote lower prices. So I dont think it caused any additional financial burden ,it only give more share of profit to one Company.
Government is aproaching this Solar mission at very precautionary manner, auctioning step by step. The second round of Auction saw prices going further doun to around 7.75 per unit. this will help in learning from past mistakes and improving Auction system and also getting benifit from decreasing prices of solar modules.

6 February 2012
Posted by
GG

Dear GG,

As a technical note the benchmark price was set by CERC - The Central Electricity Regulatory Commission. Not the MNRE. MNRE has set the rules for the bidding. I believe the rest of your argument is met in the article. 

Regards

6 February 2012


Posted by
Jonas Hamberg

Another scam from the promoters of Lanco, who seem to have a history of fraud going back several years and several business ventures:

http://www.andhrabuzz.com/viewnews.php?newsid=1407&category=Andhrabuzz

6 February 2012
Posted by
Shivani

A very well researched and analysed editorial. Wow what a start ..!! Strangely, this is what happens when we talk about healthy or sustainable development. As far as developmental issues, policies and schemes are considered, they have always been well conceptualised and highly doctored in INDIA, when it came to implementation. The whole issue could not have been come up,had there been a consistent monitoring. At every level LANCO tried to forge the rules. When authoritis like MNRE sets rules, how can it exempt itself from monitoring it. JNNSM is a crucial step towards building a clean energy system for our future and indeed a great deal for a developing country like india, but the entire governance web goes for a toss and puts the functioning of the system in ambiguity when Giant players like LANCO , here, takes the system for a ride.Creating fromt companies with preferential shares to further ake over the front comanies in due course of time, seems to be a well planned strategy with a full understanding of the existing weak system that can be doctored easily.
Here is a clear example of a weak institution with extravagant targets, where power wins over development.

13 February 2012
Posted by
Aditi Phansalkar

Thanks CSE for sharing a well researched report.

This collusion of capacity happened due to relaxation of the bidding guidelines at the last moment by MNRE/NVVN.

JNNSM Phase 1 objective was successful deployment of commercial grid scale solar technology in India to establish performance standards and kick start of a vibrant ecosystem

In the first set of guidelines (RFS) released by NVVN and MNRE, there were three qualification requirements for submission of applications

1. Ownership/lease of land: Land acquisition is one of the key challenge
2. Technical tie up: This was to ensure deployment of successful commercial technologies in first phase.
3. Financial criteria: Net worth and Bank Guarantees

However the top two requirements were taken out resulting in last minute applications by big companies with opportunistic play.

I think argument that aggressive bidding resulted in lower tariffs is not valid given the objectives laid out for first phase. It is important to note that success of first phase would play a key factor in the outcome of 19000 MW of solar capacity by 2020. Here is the scenario

1. What if the quality of plants are not world standard due to cost cutting resulting in higher degradation or lower output? Do people blame solar radiation?

2. What if 100 MW solar thermal plants dont get built (Lanco, KVK, Reliance) as they will be first in the world for such size. Does this kill the solar thermal technology

13 February 2012
Posted by
A

 Thanks for your comments Aditi and A,

The future does look very unclear for Solar Thermal. I am myself a big fan of the technology as it can provide storage of energy. 

For those reading the comments and wondering Solar Thermal, or Concentrated Solar Power as it is also called, works by using mirrors to focus the sun's rays to heat a liquid the same way you can burn a leaf using a magnifiying glass. The heated liquid then heats steam that drives a turbine and generator, the same way as in a coal power plant.

The issue for Solar Thermal is that when people bid there was almost no capacity on the ground in India so few knew the real price. There is one 2.5 MW plant in Bikaner and there are test plants in Gurgaon south of Delhi.

The doubt now is if the measurements for solar radiation are correct - even a small error can cause there to be not enough sunshine to make it economical. Solar Thermal needs direct sunlight (which hasn't bounced of anything on the way down through the atmosphere) measured as DNI (Direct Normal Irradiance) and the problem is that in India even though there is much sunshine a lot of it gets reflected away by the dust, sand and smog in the air. 

If it means that plants cannot produce enough then companies cannot make back the money they spent on building the plants, and in that case they wont build them at all. There is still more than a year left to find out if it will work or not and I am hoping they will succeed. 

Two plants under the migration phase of 10MW each have so far stalled although it is not clear exactly why. One was probably financial and the other because the technology provider went out of business. Globally the US interest have cooled for Solar Thermal but instead more plants are being built in the Mediterranean region.

Solar Thermal is however one of the areas of Renewable Energy where much of technology choices are still up in the air and where there is an open market that can be grabbed by Indian manufacturing if the will was there. Mirrors, tubes, special turbines, molten salts for storage of heat could all be made in India.

15 February 2012


Posted by
Jonas Hamberg

ultimately, anyway the public can be self-sufficient and not pay big utility companies is dangerous.
Research and development will go on as with small government schemes, but we wait and see how this will ultimately pan out.

21 March 2012

Hi , What i Understand from the above mentioned information, It should Be a fair play ,unethical and wrong practice should never be entertained in any which way.In other countries they are using it for so many years ..what were we doing till recent , Importing from other countries trade balance ,foreign exchange concerns and Till now we are a dump yard for their out dated technologies and product,we are a Market for them !!!??? . its better we promote and encourage Domestic Produce Create employment etc for our selves, at marginal/nominal profit and try to latch on and adopt the latest , economical and best suited Way for us to live in the same level as the other Developed Nations , move on with time ,Control and Dominate our Economy Rather than THE FII etc kick our economics like a foot ball Dollar goes up stock Market Falls Gold Price Go up, Government has to give subsidy etc .. we have to cut on crude import , petrol will cost Rs 100 per liter in next 3/4 years ..for how long are we going to live this way ... Let us DO IT .. Promote solar ,Nuclear & bio energy is Essential you have come empty handed and shall not take anything with you when u perish all in dust ... its only your deeds / Brand / Name thats alive
Whilst alive make this world a better place for every one to live your future generation will be Proud of You... .. No Offence advice as a Friend
Thank you

18 May 2012
Posted by
Allan Becks

Solar energy is the future in India. The country which is already reeling under power outrage, must consider some alternative energy sources.

25 March 2013
Posted by
free solar energy

The Ministry of New and Renewable Energy (MNRE) set the rules for the distribution of projects and used reverse bidding to reduce tariff. The first batch projects were planned to be equitably distributed among companies so that it not only fosters competition and brings down prices but also manures a sprouting sector.

11 June 2013
Posted by
peri menopause

Solar Panels & Equipments required to produce SOlar energy prices in India need to be put under investigation microscope. MNRE approved rates are very high compared to international and domestic market open rates. It seems that there is some nexus between Manufacturer/supplier and officials approving the price. Materials that are available in open market have been benchmarked with MNRE @3 times the actual price. Some vested interests are working behind scene and there is scope to unearth the scam. This has resulted in huge price difference in energy production costs estimated (Rs. 15-17 per unit) by MNRE 3 time the realistic market costs (Rs.5-6 per unit). If this scam is exposed and real market rates are applied, corrected Solar energy costs in real terms will be (Rs. 4-6 per unit)comparable to Other renewable energy sources like wind power (Rs. 3-5 per unit)and hydro power ( Rs. 3-4 per Unit).

14 July 2013
Posted by
Anonymous

How cab solar energy be produced at competitive cost for the welfare of people at large? Presently, what is the status of its use in India?
|Why can solar energy be not used everywhere? Is it very expensive to tap it?
|How solar energy can be produced at competitive cost for the welfare of people at large?Presently what is the status of its use in india?
|Is there any way we can store solar energy into compression of spring and later release springs when we want to run vehicle. Is there any way we can use compressed springs to run motor.

16 July 2013
Posted by
Rais Bilal

Today, there is a raging debate in the Indian solar industry. While the domestic cell and module manufacturers want some protection, the solar project developers are totally opposed to it. I am totally confused about this structure at first but this article ‘the truth about solar mission’ helped me a lot to understand what all are happening in Indian Solar Industry.

19 July 2013
Posted by
solar panel

The national solar mission could have done much better with the full backing of the state, but in a country as diverse and populated as India, there should have been a solid homework before launching a program like this. I am proud to be part of the organization. Thumbs up. Keep up the good work Lanco.

23 November 2013
Posted by
Shane Watson

Good work by Down to earth team & this is really an issue of malpractice and poor policies to help few corporate,s more richer. This is serious corporate governing issue & must be taken like that. More transparent Policies must be lay down & LANCO like companies must be banned from the country. People who are silent or appreciating these practices are actually not seeing the larger picture of this scam & indirectly becoming a supporter of all wrong doings

18 February 2014
Posted by
Vinish Singh

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