The Madhya Pradesh Power Management Company Limited (MPPMCL) has cancelled power purchase agreements (PPAs) for two 50 MW solar projects in Madhya Pradesh. These projects were being developed by a Canadian firm, Sky Power Solar.

The PPAs were cancelled because the company did not complete project on time. “These firms delay, then ask for extension, but we cannot give continuous extensions,” said an MPPMCL official. “Sky Power knew the project commissioning deadline.”

According to the MPPMCL official, they had provided a nine month extension when the first deadline had been breached. But Sky Power Solar failed to meet the new deadline.

The PPA cancellation by MPPMCL runs counter to the Ministry of New and Renewable Energy’s (MNRE’s) recent advisory to provide time extensions for solar projects. In a letter directed to state and union territory authorities, Dilip Nigam, Advisor (National Solar Mission), MNRE, stated, “If there are delays of any kind on the part of the state government, such as land allotment, development of transmission or evacuation facilities, connectivity permission, or force majeure, the competent authority in the state may consider providing an extension of time.”

According to Mercom’s India Solar Project Tracker, Sky Power Solar had won bids in July 2015, to develop three solar projects of 50 MW each by quoting tariffs of₹5.051 (~$0.0788)/kWh; ₹5.109 (~$0.0798)/kWh and ₹5.298 (~$0.0827)/kWh.

“This development is a wake-up call for solar developers and could negatively affect investor sentiment about the state. The MPPMCL instead of levying fines chose to cancel PPAs. The state has to come out and transparently layout the steps it will take if there are delays in the future so developers know what they are dealing with,” said Raj Prabhu, CEO of Mercom Capital Group.

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