In Jharkhand, power purchase agreements (PPAs) for 1.1 GW of solar projects that were auctioned in March of 2016 (LoIs signed May 2016) are yet to be signed due to differences between the state distribution company (DISCOM) and developers over the quoted tariff.
According to Mercom’s India Solar Project Tracker, tariffs quoted in the state ranged from a high of Rs.5.59 (~$0.0824)/kWh to a low of Rs.5.08 (~$0.0749)/kWh.
In November, Mercom reported, that PPAs for a total of 1.1 GW of solar projects are expected to be signed by the third week of December 2016 after speaking with Jharkhand officials.
Developers who won bids for these projects in Jharkhand are unhappy. The time that is being taken to push this 1.1 GW through is taking a toll on developers’ morale in the state.
Our Earnest Money Deposits (EMDs) are stuck and there is negligent response from the implementing agencies. They also want rates at par with Rewa – the situation is becoming absurd, stated a source at one of the firms that won a bid for more than 100 MW in this auction.
There is a reason we quoted what we did, stated another bidder. There is dearth of large tracts of land to construct projects. There is also no guarantee of security from Naxals, how can we quote less? It is tough to get people to work in these areas and all these add up to our project costs, added the developer.
If they do not want to sign PPAs, why not return our EMD and retender the entire capacity with amendments made to the tender document based on Rewa tariffs. Then they can get the tariff they want and we will be comfortable functioning in the state, stated a developer.
When contacted, a JREDA official said, “the dispute resolution mechanism has been initiated and soon the committee will take a final decision; we are in the final stages of discussion.”
A Jharkhand State Electricity Regulatory Commission (JSERC) official told Mercom, this situation should not have happened. The state utilities had demanded upfront subsidy from the state to purchase power generated from these projects as the tariffs quoted were more than average cost of power in the state. Basically, if the state government says yes, the PPAs will be pushed through.
Saumy is a senior staff reporter with MercomIndia.com covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.