Lanco Group granted incorrect commissioning certificates for seven solar power plants as part of JNNSM Phase 1 Batch 1

In a major scam, seven associates of the Lanco Group, an infrastructure company owned by Congress MP Rajagopal Lagadapati, were granted commissioning certificates in January by a Rajasthan government body for seven 5 MW solar power plants each in Askandra village, Jaisalmer, even though the projects were nowhere near completion. The projects, part of the National Solar Mission (NSM), were to be completed by January 9. The Rajasthan Renewable Energy Corporation Limited (RRECL), given the task of monitoring the completion of the JNNSM projects in Rajasthan, issued the fraudulent certificates.

Little work was visible at the Askandra site when India Today visited it between February 4-7, well after the deadline had lapsed. Instead of 1,70,000 solar panels needed to generate 35 MW of power, less than 1,000, mostly non-functional ones, were found at the site.
Lagadapati, 48, a second-time MP from Vijayawada in Andhra Pradesh, has Rs 299 crore in assets according to an affidavit filed before the Election Commission. Market estimates put the worth of Lanco Group at Rs 5,000 crore. Its companies were able to acquire 40 per cent of the solar power projects under the NSM in Rajasthan in the first phase of bidding in 2010.
Lanco had deposited a bank guarantee of Rs 85 crore for the projects. A delay beyond January 9 and till February 9 would have resulted in the forfeiture of 20 per cent of this guarantee. Delay beyond February 9 and extending till March 9 would have meant a penalty of 40 per cent of the amount. The project agreement stipulated forfeiture of the entire guarantee in the event of Lanco not completing it by March 10. In other words, the company has effectively saved Rs 85 crore.
Moreover, a penalty of Rs 1 lakh per MW of power for each day of delay beyond March 10 is to be levied. In fact, in case of non-completion by March 31, the project would become unviable for Lanco since it then has to sell power to the government-owned Vidyut Vyapar Nigam Ltd (NWN) at a price much lower than that quoted in the contract.
Three commissioning certificates were issued by RRECL on January 9 and one on January 7. Wrongly assuming the deadline to be January 10, it issued three more certificates that day too. But even in early February there were no signs of power generation. Many equipment boxes were of recent vintage, bearing shipment dates of January 23 and 29. There was no fencing, levelling was still being done. The power sub-station was incomplete; transmission towers were still being raised. The 1,000 solar panels at the project site in Askandra had wires hanging loose.
India Today confronted NWN with the evidence on February 13. Officials admitted that they had taken the certificates at face value and hence did not impose any penalty. NVVN issued a press statement on February 19: “We have encashed Rs 7 crore of three Lanco-linked companies and 11 others that missed the first deadline on January 9.” India Today found that the three Lanco-linked companies that were penalised were the ones that got the certificates on January 10. NWN is yet to penalise the four other Lanco-linked companies despite evidence that they met the January 9 deadline only on paper.
Now, RRECL is trying to wash its hands of the certificates by saying that “commissioning” for it meant that the logistics for power generation were in place and does not necessarily mean power was being generated. Director (Technical) RRECL M.M. Vijayavergia told India Today on February 19, “Since we have now learnt that all panels were not installed, we are informing NWN that these are partial commissioning certificates,” he said. But Anil Aggarwal, CEO of NWN, insists that “commissioning means full completion and readiness to generate power”.
Only two of the nine Lanco-linked companies are actually owned by it. The others were controlled by Lanco through their shareholding pattern. This was done to bypass nsm rules which stipulate that one company can get only one contract. “The entire conspiracy has been exposed and now the authorities are trying to cover up,” says Dushyant Singh, son of former Rajasthan chief minister Vasundhara Raje and BJP MP from Jhalawar in Rajasthan. In September 2011, he had sought information about the shareholding pattern of companies that got the solar energy projects. On February 3, Girish B. Pradhan, secretary in the Ministry of New and Renewable Energy, ordered a probe by a three-member committee, including director (investigations) from the Union Ministry of Corporate Affairs, to check if Lanco had indeed used seven front companies, besides two of its own, to corner 40 per cent of solar power contracts under nsm in 2010. The panel is yet to submit its report.
The two companies owned by Lanco and seven backed by it were able to corner nine solar power projects in the first phase of bidding under NSM. India Today has learnt that Lanco got 100 per cent preferential holding in these seven companies after they signed the contracts, a clear violation of NSM rules which bar any change in the shareholding pattern for one year after project commissioning. NWN says that in July 2011, while going through the closure sheets of the companies, it detected a change in the shareholding pattern. It said, “We issued notice for termination of contracts to all nine Lanco companies in August 2011. By December 2011, the issue was settled as Lanco agreed to restore control to the parent companies”.
India Today’s visit to Askandra revealed that all companies were working under the same umbrella and were located in a cluster. On February 16, Lanco responded to India Today queries sent on February 9: “Projects are grid connected and generating power.” The company also said it has equity participation within permissible limits in other companies it was being accused of using as a front. A Lagadapati aide clarified: “The MP is not directly involved in the functioning of Lanco.” On March 5, Union Ministry of New and Renewable Energy said that after India Today’s queries, it has sent a team to verify all solar projects in the country.
January saw Rajasthan and Gujarat chief ministers spar over who was ahead on solar power generation. On January 9, during the Pravasi Bharatiya Divas, Narendra Modi said his state was far ahead of Rajasthan. Ashok Gehlot reacted on January 12 by saying that his state would beat Gujarat in it. The Lanco affair lays bare the hollowness of Gehlot’s claims.

Source: India Today

About Ritesh Pothan

Ritesh Pothan, is an accomplished speaker and visionary in the Solar Energy space in India. Ritesh is from an Engineering Background with a Master’s Degree in Technology and had spent more than a decade as the Infrastructure Head for a public limited company with the last 9 years dedicated to Solar and Renewable Energy. He also runs the 2 largest India focused renewable energy groups on LinkedIn - Solar - India and Renewables - India
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2 Responses to Lanco Group granted incorrect commissioning certificates for seven solar power plants as part of JNNSM Phase 1 Batch 1

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