Why was winning bid cancelled?


India canceled a winning bid by Lanco Infratech and Globeleq to build a 4,000-megawatt power plant at Sasan in the central state of Madhya Pradesh.

A panel of ministers tasked with approving the project said the bid was “void,” India's Ministry of Power said in an e- mailed statement, without giving any reason. The Business Standard newspaper reported that the bid had failed because of a change in partners.

Lanco and Globeleq secured the contract under the first round of bidding to develop large power projects. The government wants investments from non-state-run companies to boost electricity generation and reduce shortages, which affects cities including Mumbai and New Delhi.

“The bids will be called again or be given to the second- best bidder,” said Shyam Wadhera, director of projects at the state-run Power Finance, which picks the winners of the power projects.

Lanco had won in December the bid for one of the four so- called ultra-mega power projects developed to meet India's growing electricity demand. India wants to build at least four large plants of 4,000 megawatts each to begin production by 2012.

Globeleq in February sold its stake in the Sasan power project to Jindal Steel & Power and Prince Stone Investments, the holding company of Lanco.

Phone calls to Lanco's office in the Southern Indian city of Hyderabad and New Delhi office didn't elicit a response. D.V. Rao, joint managing director of Lanco Infratech, hasn't responded to an e-mail.

Power Finance had received 16 bids from companies including NTPC, Tata Power, Reliance Energy, Essar Power, Larsen & Toubro, Jindal Steel & Power, Sterlite Industries and the Adani Group.

Are there other reasons why the bid was declared void?