Central Grants to be Repaid with Interest If Solar Parks Are Not Developed on Time

The Ministry of New and Renewable Energy (MNRE) has issued new guidelines incorporating changes in the project timelines for the development of solar parks in the country.

These guidelines are a modification of a memorandum that was issued on February 5, 2019. In March 2019, Mercom reported about the MNRE memorandum proposing modifications to the guidelines issued for its Solar Parks Program. In that memorandum, the MNRE included a new mode (Mode-7) for development of renewable energy parks inclusive of hybrid, solar and wind energy. It also addressed issues like power evacuation and land availability for projects.

The modifications state that solar parks approved in and after FY 2017-18 under Phase II of the Solar Park Program will be completed in two years from the date of the in-principal approval or one year from February 5, 2019, whichever comes later.

In the event of a breach of a deadline, the central grants allocated under the program must be returned with interest. In certain exceptions, extensions of the timelines can be granted in instances where the solar power developer was chosen through a competitive bidding procedure with land allocated in the solar park. In this instance, financial closure should be completed before the deadline of the solar project ends. An assurance that the solar park will generate electricity is also a pre-requisite, although the time extension will depend on factors like the magnitude of solar projects that are tied up at present.

Under the new draft, if the solar park is canceled at any stage and funds have been released as per the earlier program, the recovery may be executed in the following manner: An adjustment can be made against any other dues that are pending for the same purpose with the developer.  The amount can be recovered from lease, rent, and operation and maintenance charges. The project developer will deposit the amount with the government.

Release of central financial assistance:

As per the order dated May 22, 2019, the CFA of ₹1.2 million (~$ 174,000)/MW will be released to the developer after the issue of the letter of award (LOA). In this instance, the solar developer should have fulfilled two criteria: The LoA for the solar projects should have been issued by SECI or NTPC or MNRE and the administrative guidelines mentioned in the initial solar park program notice should be adhered.

Solar parks in India were designed to reduce bottlenecks and bring down large-scale project development costs by the government allocating land and providing transmission infrastructure, a challenge when developing projects privately.

Earlier, the MNRE had come out with a memorandum amending provisions of its solar park program for Central Public Sector Undertaking units.

Image Credit: Florian Pépellin [CC BY-SA 3.0 ]