The Maharashtra Electricity Regulatory Commission (MERC) has asked the Maharashtra State Electricity Distribution Company Limited (MSEDCL) to extend the financial closure and scheduled commissioning dates for a wind power project.
The project was developed by Mytrah Vayu (Vedavati) Private Limited (MVPL).
In June 2019, the MVPL had filed a petition with the Commission seeking the extension of the financial closure and scheduled commercial operation date (SCOD) of its 100 MW wind project in the state of Maharashtra.
MVPL requested the Commission to declare the circumstances that led to delays in land procurement and grid connectivity as force majeure events. It also sought for the Commission to direct the MSEDCL to not encash its performance bank guarantee (PBG) for the delayed project and to issue an order restraining it from seeking the submission of a new PBG.
Additionally, it asked the Commission to pass the interim orders to keep the MSEDCL from invoking the PBG until the petition was disposed of and from taking any coercive steps against it as per the notice sent by the distribution company on May 21, 2019.
MVPL said it signed the power purchase agreement (PPA) on July 16, 2018, but there was a delay on the part of the MSEDCL in signing the PPA, and this was only made known to the developer on August 18, 2018. It said that MSEDCL failed to sign the PPA within the stipulated time, and this delayed the developer’s ability to attain financial closure.
The PPA between the MVPL and MSEDCL stated that the financial closure was to be achieved within seven months of signing the agreement, i.e., by February 16, 2019, and SCOD within 18 months of signing the agreement, i.e., by January 16, 2019.
The MSEDCL, in response to the developer’s request to extend the date for financial closure, only gave a one-month extension, which was not enough. Further, the MSEDCL denied its request to extend the SCOD.
MVPL noted that if it had been informed earlier, the three months taken by the MSEDCL to respond to the extension request could have been used to obtain grid connectivity, but because of this delay, it was unable to do so.
This consequently affected MVPL’s ability to obtain the land required for the project, which is dependent on grid connectivity being granted. As a result of the delay, there were changes in land availability and prices as well because of new project activities nearby.
The Commission, in its decision, said that MVPL was diligent in its conduct, acting as per protocol in executing the project and that the delay in obtaining grid connectivity, and thereby land acquisition, was beyond its control. It declared that these events were force majeure events and that the developer cannot be held for a breach of obligation.
In its order, the Commission directed the MSEDCL to extend both the financial closure and SCOD by 163 days due to force majeure events beyond the control of the developer and that no compensation is payable.
The new date for financial closure would be July 29, 2019, while the revised SCOD would be June 27, 2020. Additionally, the MERC also directed the MVPL to submit a performance bank guarantee as per the conditions provided in the PPA.
Previously, the state body asked MSECDL to clear its outstanding dues with three wind developers in the state, including interest for delayed payment charges.
Then in September 2019, as well, the state commission directed MSEDCL to reconcile the statement of accounts with the petitioners within two weeks and pay back the dues of three wind generators.
Recently, Mercom reported that the MERC allowed Adani Electricity Mumbai Limited to renegotiate a lower tariff for 700 MW of grid-connected solar-wind hybrid power.
Nithin is a staff reporter at Mercom India. Previously with Reuters News, he has covered oil, metals and agricultural commodity markets across global markets. He has also covered refinery and pipeline explosions, oil and gas leaks, Atlantic region hurricane developments, and other natural disasters. Nithin holds a Masters Degree in Applied Economics from Christ University, Bangalore and a Bachelor’s Degree in Commerce from Loyola College, Chennai. More articles from Nithin.