CERC Grants Extension to Solar Projects in Rajasthan for Delay in Road Construction

The Central Electricity Regulatory Commission (CERC) has agreed with a petition that argued that the holdup in road construction by the state government delayed the project commissioning, which was beyond the control of the solar developers.

The commission has also ordered that the liquidated damages will be levied for two projects of 10 MW each after ascertaining the number of delays the project was delayed.

Suzlon had filed a petition against the National Thermal Power Corporation (NTPC) that had threatened to invoke the performance bank guarantees of 60 MW (6×10 MW) of solar power projects on account of delay in commissioning.

Along with Suzlon, the other petitioners include Aalok Solarfarms Ltd, Abha Solarfarms Ltd, Heramba Renewables Ltd, and Shreyas Solarfarms Ltd, the subsidiaries of Suzlon sold to ReNew Power


The petitioners requested the commission to declare that they’re entitled to an extension of the scheduled commissioning date and asked it to direct NTPC not to impose any liquidated damages or encash bank guarantees for the delay in meeting the scheduled commissioning date of the projects. The petitioners stated that the delay was on account of force majeure events.

Background

In July 2015, NTPC issued a Request for Selection (RfS) for 100 MW (10X10 MW) of grid-connected solar PV power projects in Rajasthan.

In August 2016, NTPC entered into six power purchase agreements (PPAs) with the petitioners for setting up of 60 MW at a tariff of ₹5.07 (~$0.07)/ kWh for 25 years.

The allotted capacity of 60 MW was split into six parts of 10 MW each. The respective solar power developers were Abha Solarframs Ltd, Aalok Solarfarms Ltd, Heramba Renewables Ltd. (I & II), Shreyas Solarframs Ltd. (I & II). 

On July 12, 2017, the developers were mandated to commission the projects as per the PPAs following which the developers requested the state transmission company Rajasthan Rajya Vidyut Prasaran Nigam Limited (RRVPNL) to complete the 33 kV bay work per the transmission agreements so that it could commission the project on time. Later in August, the developers sought the extension for commissioning the projects due to the implementation of GST, and delay of interconnection transmission facilities from RRVPNL. On September 12, 2017, NTPC rejected the request of the petitioners for extension of time for commissioning the projects.

The petitioners then submitted that the primary requirement to commence project work was the construction of roads. To commence the road construction, contractors of Suzlon approached the mining department for short-term permits for collecting and transporting the ‘murram’ (small pieces of stones mixed with sand used for the construction of roads) required for construction of the project roads.

However, the mining department stated that as a new mining policy was being framed, and it could not grant any permits until the formulation of the new policy.

The primary requirement to commence project work was the construction of access roads. The petitioners argued that it was the obligation of the RRVPNL to provide the interconnection facilities on time, and if there is a delay in providing the facilities, the developers will not be able to achieve the timely completion of the projects.

The petitioners further argued that the delay due to the non-availability of these facilities was an impediment beyond control of the developers, and therefore, should qualify as a force majeure event.

The petitioners requested that the scheduled commissioning date of the projects may be extended without applying liquidated damages or encashment of bank guarantees.

The commission observed that the scheduled commissioning date of the projects was July 12, 2017, but RRVPNL completed the bay work on September 27, 2017. With this in mind, the commission stated that the commissioning date would be extended until October 2017.

Out of the six projects, only two were late in their scheduled commissioning; one was late by 17 days while another by just one day.

The commission noted that some of the projects were commissioned before the actual date of approval for murram. “There was a delay due to late providing of infrastructure for transmission and evacuation of power for unavoidable and uncontrollable reasons not attributable to the petitioners,” said the commission. Noting this, the extension was provided to these projects.

Previously, the CERC ruled in favor of three independent power producers for the payment of their performance bank guarantee to the tune of ₹255 million ($3.7 million). The three IPPs had petitioned the CERC seeking the release of the performance bank guarantees retained by the NTPC. They had also requested for the extension of time and deferral of the scheduled commissioning date for two solar power projects of 70 MW capacity in Bhadla Solar Park, Rajasthan.

Then last month, the central commission directed three distribution companies in the state of Rajasthan to pay ₹313.4 million (~$4.4 million) that’s due to NTPC Vidyut Vyapar Nigam Limited (NVVN). The commission has asked the DISCOMs to pay the amount along with late payment surcharge of 1.25% per month on the outstanding amount calculated on a day to day basis.

Image credit: Renovalia Energy