Kerala's 300 MW Power Tender Revision: Lessons for Tendering and Bid Evaluation in India

July 31, 2026

In July 2026, the Kerala State Electricity Regulatory Commission (KSERC) approved a revised bid evaluation framework proposed by the Kerala State Electricity Board Limited (KSEBL) for its ongoing tender to procure 300 MW of peak-hour power. The tender, floated through the DEEP Portal in March 2026, covers electricity supply between 18:00 and 24:00 hours on a lump-sum tariff basis for five years, from January 2027 to December 2031.

KSEBL's original evaluation approach had run into a structural problem flagged during pre-bid consultation, and the regulator's approval of “Corrigendum-V”, the utility's fifth formal amendment to the tender, offers a rare, well-documented example of a procuring entity catching and correcting a bid evaluation flaw before financial closure rather than after. For anyone involved in tendering and bid evaluation in India, whether in power, infrastructure, or manufacturing procurement, the episode is a compact case study in what can go wrong in tender design and how structured evaluation correction can fix it.

Why Kerala Revised the 300 MW Power Tender

KSEBL's need for the tender was itself a symptom of prior procurement difficulty. Earlier attempts to secure long-term and medium-term power supply had been cancelled after discovered tariffs came in between INR 5.76 and INR 7.48 per unit, levels the utility judged financially unviable given exceptionally high short-term round-the-clock electricity prices.

Facing rising peak demand, KSEBL narrowed its approach to procuring power specifically for the evening peak window, a more targeted and arguably more fundable structure. But during pre-bid consultation on the resulting 300 MW tender, renewable energy and Battery Energy Storage System (BESS) developers raised a specific objection to the tender structure itself, requesting additional time and flagging a mismatch in how bids would be compared.

The Bid Evaluation Flaw the Revision Corrected

The issue was technical but consequential. KSEBL's original evaluation methodology selected the lowest-tariff bidder based on price quoted at the generator's Central Transmission Utility (CTU) interconnection point, the point where a generator's power enters the national grid. But KSEBL itself bears the Interstate Transmission System (ISTS) charges to bring that power from the interconnection point to Kerala.

Evaluating bids purely at the generation point, without accounting for those downstream transmission charges, meant the tender could select a bidder with the lowest headline tariff but not the lowest actual landed cost of electricity for the utility, precisely the gap that separates a well-run tender evaluation process from a flawed one.

The complication deepened because ISTS charge waivers apply unevenly. Under central government policy, renewable energy and storage projects can receive partial or full ISTS charge exemptions depending on their commissioning timelines, while thermal and conventional generators typically cannot. A bid evaluation methodology blind to this difference would systematically misprice competing bids relative to one another.

KSERC approved the framework with one further refinement of its own, directing KSEBL to calculate the standard ISTS evaluation charge using a 12-month average of Central Transmission Utility of India Limited (CTUIL) invoices rather than a single month's data, reducing the risk that a short-term price spike would distort the entire evaluation.

Lessons for Tendering and Bid Evaluation in India

The Kerala case illustrates a principle that applies well beyond power procurement: the tender evaluation process must compare bids on total landed cost to the buyer, not on the headline number each bidder quotes. In power tenders, that means normalizing for transmission charges and waiver eligibility. In EPC and industrial tendering, the equivalent trap is comparing base contract prices without normalizing for differences in scope inclusion, taxes and duties, freight and logistics terms, payment milestones, and warranty or defect-liability provisions across bidders, differences that can shift the effective cost ranking as much as a transmission charge shift did in Kerala.

A second lesson is procedural: KSEBL's correction happened during pre-bid consultation, before financial bids were opened, because the tender documentation process included a structured window for bidder feedback and a regulatory approval step before the flaw could propagate into a binding award.

This is the practical argument for public procurement in India generally, and power sector tenders specifically, to build in a genuine pre-bid query and clarification stage rather than treating tender documentation as fixed once issued. A methodology error caught at Corrigendum stage is a manageable delay; the same error caught only after tariff discovery, as happened in KSEBL's earlier cancelled tenders, is a wasted procurement cycle.

Best Practices for Technical and Commercial Bid Evaluation

The Kerala revision points to several best practices that apply directly to competitive bidding and EPC tender evaluation across manufacturing, infrastructure, and energy projects. First, commercial bid evaluation criteria should be defined and published in enough technical detail that bidders can identify and flag structural flaws during the pre-bid stage, rather than after award.

Second, technical qualification and commercial evaluation should be kept as genuinely separate stages, with technical qualification, capacity, experience, financial standing, statutory compliance, and, for energy projects, waiver or eligibility documentation, assessed on a pass/fail basis before commercial bids are opened, so that price competition happens only among qualified, comparable bidders.

Third, any evaluation formula involving pass-through costs, escalation indices, or third-party charges (transmission charges, freight indices, duty structures) should specify the exact data source and averaging period in advance, as KSERC's requirement for a 12-month CTUIL average now does, precisely to prevent single-period anomalies from swinging an award decision.

Fourth, contractor and vendor capability evaluation should extend beyond the lowest compliant bid to include execution track record, technical resource availability, and financial capacity to deliver at the scale and schedule the project requires, factors that matter as much for a manufacturing plant EPC contract or an industrial expansion project as for a power purchase agreement. A tender that selects on price alone, without evaluating delivery capability, transfers procurement risk directly into execution risk.

How Structured Tender Management Reduces Project Risk

Procurement strategy failures rarely announce themselves at the tendering stage; they surface later, as cost overruns, disputed change orders, or contractor non-performance. Structured tender management, clear scope definition, a bid evaluation methodology tested against edge cases before the tender is floated, a genuine pre-bid clarification process, and a documented basis for every pass-through or index-linked cost element, is what prevents that transfer of risk.

For large infrastructure, energy, and manufacturing projects in India, where project procurement often involves multiple contractors, phased scopes, and long execution timelines, the cost of getting bid evaluation design wrong compounds: a flawed methodology does not just risk selecting a suboptimal bidder, it risks selecting one whose true delivered cost or capability was never actually compared on equal terms.

Kerala's power regulator caught a bid evaluation flaw before it could distort an INR-thousands-of-crore power procurement decision. The same discipline, normalizing bids to true cost, separating technical qualification from price, and stress-testing evaluation methodology before bids are opened, is what determines whether any large tender in India, in power or otherwise, selects the right partner or simply the lowest number.

IMARC Engineering’s Perspective

Kerala's 300 MW tender revision is a useful, publicly documented example of exactly the kind of bid evaluation discipline that determines whether a project procures the right partner at the right cost, and it offers a template that extends well beyond the power sector.

At IMARC Engineering, we work with manufacturers, infrastructure developers, and industrial project owners as bid evaluation consultants and engineering consultancy for tendering, and the KSEBL case reflects a pattern we see repeatedly: procurement risk is rarely about a bidder acting in bad faith, it is about a tender evaluation methodology that was not stress-tested against the specific cost structures and eligibility variations that real bidders bring to the table.

Our approach to tender management services covers the full procurement lifecycle, defining technically sound qualification criteria, structuring EPC tender evaluation methodologies that normalize bids to true landed or total project cost, running structured pre-bid clarification processes, and evaluating contractor capability alongside price, so that clients in manufacturing, infrastructure, and energy select contractors and suppliers on a basis that holds up through execution, not just through bid opening.

As tendering process in India continues to mature across sectors, the projects that build this discipline in at the tender design stage, the way KSERC and KSEBL did through Corrigendum-V, are the ones that avoid the far costlier correction of a failed procurement cycle.