The Central Electricity Regulatory Commission (CERC), in a recent order, directed the Solar Energy Corporation of India (SECI) not to encash the performance bank guarantee (PBG) furnished by Adani Wind Kutchh One Limited for the delay in commissioning of 250 MW wind projects until the next date of the hearing. It directed the wind developer to keep the bank guarantee valid.
Adani Wind Energy Kutchh One filed a petition with the Commission seeking directions that it should be relieved from its obligations under the power purchase agreement (PPA) on the ground of ‘force majeure.’ It also requested the Commission to restrain SECI from encashing the PBG.
In its submission, Adani Wind Energy Kutchh One said that due to the occurrence of various ‘force majeure’ events, the construction and commissioning of the 250 MW wind projects in Gujarat became impossible within the timelines mentioned in the PPAs.
However, instead of recognizing the ‘force majeure’ events, SECI informed the petitioner that the PBG would be invoked upon expiry of 21 days, i.e., January 13, 2021.
Since the Commission was not holding any hearing because of the Supreme Court order, the developer filed a petition with the High Court of Delhi seeking directions to SECI to maintain the status quo regarding the PPAs and restrain SECI from encashing the PBG. In its order dated January 13, 2021, the High Court directed SECI to maintain the status quo and not take any coercive steps.
The developer said that some of the force majeure events that rendered the performance of its obligations impossible included the outbreak of the COVID-19 pandemic and the subsequent lockdown, and delays due to several reasons including the construction of the dedicated transmission lines, the damages caused by villagers to the transmission lines, the cyclone Vayu and heavy rains in Gujarat.
SECI, in its submission, said that Article 13.5 of the PPA provided for the termination of the PPA by either party only in case of continuation of ‘force majeure’ or its effects beyond 12 months. However, the documents showed that the petitioner’s claim concerning the non-commissioning of the associated transmission system was incorrect.
The petitioner had voluntarily agreed and accepted that the associated transmission system would be available only by December 31, 2020, or later and accordingly had sought time to implement the projects by December 31, 2020.
Considering all the fact submitted, the Commission directed Adani Wind Energy Kutchh One to serve a copy of the petition to SECI and asked SECI to file their reply by March 22, 2021. The Commission noted that the High Court had passed an order directing SECI not to invoke the PBG until the Commission’s final hearing. Keeping this in mind, the Commission directed SECI not to encash the PBG until the hearing’s next date.
In August last year, ReNew Wind Energy, a subsidiary of ReNew Power, also had filed a petition with the CERC asking it to issue orders restraining SECI from encashing its bank guarantee following delays in project implementation due to ‘force majeure’ events.
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Rakesh is a staff reporter at Mercom India. Prior to joining Mercom, he worked in many roles as a business correspondent, assistant editor, senior content writer, and sub-editor with bcfocus.com, CIOReview/Silicon India, Verbinden Communication, and Bangalore Bias. Rakesh holds a Bachelor’s degree in English from Indira Gandhi National Open University (IGNOU). More articles from Rakesh Ranjan.