BBMP chief follows up on CM’s warning, terminates LED street light contract with Shapoorji Pallonji-led consortium

The civic chief’s bold move has been lauded by the political class for not compromising on the city’s street light requirements. Gupta has now asked his team members, among whom are fellow-IAS officers, and the electrical team to pull up their socks and prepare estimates on the changeover to LED street lights at BBMP’s own expenditure.

Bommai gives free hand to Gupta

Sources close to the Chief Minister told TheBengaluruLive that the BBMP chief met Bommai and briefed him about the contract’s termination. The sources also said the Chief Minister has given a free hand to Gupta to undertake the replacement of the existing street lights to LED.

On Saturday, Gupta chaired a virtual meeting and said, “The contract with Shapoorji Pallonji has been terminated. No area in Bengaluru should be in the dark. It is the responsibility of all senior officers to see that there is no negligence towards the street lights system. The Chief Minister himself is monitoring the issue and everyone has been asked to prepare estimates on replacing the existing lights.”

On December 3, Gupta signed a termination notice issued to M/S Bangalore Streetlighting Private Limited, stating that the Energy Performance Contract (EPC) dated 01.03.2019 executed between BBMP and BSPL for the project, titled ‘Implementation of Energy Efficiency Measures in Public Street Lighting System in Bangalore under a Shared Savings Framework’, has been terminated.

Nearly four show-cause notices were served to the Shapoorji Pallonji-led consortium after it failed to execute the project in Bengaluru in the given timeframe.

Extensions were given

The notice read: “This is with reference to the Energy Performance Contract executed between BBMP and the consortium of Shapoorji Pallonji and Company Pvt Ltd, SMC Infrastructures Pvt Ltd and Samudra Electronic System Pvt Ltd on 1 March, 2019 to implement energy efficiency measures in the public street lighting network in Bengaluru under a shared savings framework (project) and the novation agreement executed on 13 June, 2019 to novate the EPC in favour of BSPL.”

The notice added: “Under Clause 12.1.1(a) of the EPC, BSPL was required to achieve financial closure of the project and submit financing documents to BBMP within 180 days of the effective date. The effective date of the EPC was 18 June, 2020 and, therefore, the financial closure ought to have been achieved by BSPL by 15 December, 2020. Based on the representations made by BSPL, BBMP has given an extension of time to complete financial closure on various occasions, including most recently at the meeting with BSPL on 23 August, 2021, where BBMP allowed a final deadline to BSPL to achieve financial closure by 22nd September, 2021. However, despite the repeated assurances provided by BSPL and multiple extensions of time provided by BBMP, BSPL is yet to achieve financial closure and has failed to demonstrate satisfactory progress in implementing the project.”

Gupta’s notice further said: “Your failure to achieve financial closure has a material adverse effect on the ability of BSPL. You have also not complied with the various milestones required under the EPC. Non-compliance results in events of default and thus the EPC is frustrated.”

“BBMP, therefore, terminates the EPC dated 01.03.2019 as provided under Clause 22.1(e) and hereby withdraws the Letter of Acceptance (LoA) dated 23.02.2019,” Gupta’s notice added.

CM’s earlier warning

Earlier, on September 14, Chief Minister Basavaraj Bommai had warned contractor Shapoorji Pallonji of a Rs 1-lakh weekly penalty if the LED deadline was not met and had also stated that the city would see around 3 lakh LED lights by December-end. But little progress was made thereafter.