MNRE’s Clarifications on the Dispute Resolution Mechanism for Solar & Wind Developers

The Ministry of New and Renewable Energy (MNRE) has issued clarifications regarding the dispute resolution mechanism to address the unforeseen disputes between solar and wind developers and the Solar Energy Corporation of India (SECI), NTPC, and NHPC.

The developers had requested the MNRE to set up a dispute resolution mechanism to solve the issues that are both within and outside the scope of contractual agreements.

According to the earlier order passed in June last year, if the government upholds the appeal after taking into account the recommendations of the dispute resolution committee (DRC) and strikes down the SECI order, then the full fee collected will be refunded, provided the DRC makes a recommendation, and the government passes an order. Now, the ministry has also added NTPC and NHPC along with SECI as the implementing agencies.

In September, MNRE issued procedural guidelines for the dispute resolution mechanism, which would apply to projects being implemented through SECl. Then, in December last year, the ministry issued amendments to the dispute resolution mechanism.

The DRC was formed to handle cases about time extension requests and various other common issues.

The ministry clarified that if the number of days of time extension allowed by the government is less than the number of days of time extension claimed by the solar or wind developer, then the refund will be in proportion to the number of days allowed as per the total number of days claimed by the developer.

Earlier, MNRE had stated that the fee payable would be 5% of the performance bank guarantee (PBG) in case of an extension of time dispute. A minimum fee of ₹100,000 (~$1,406.72) would be payable even if 5% of the guarantee was less than ₹100,000 (~$1,406). Later, the MNRE clarified that the amount could, in no case, exceed ₹10 million (~$140,672).

The ministry further noted that in cases wherein the government’s decision had been conveyed to DRC or SECI, NTPC, and NHPC, the refund may be done based on this clarification without the necessity to get a recommendation from DRC and the government passing an order.

In September last year, MNRE had directed NTPC and SECI to release PBGs for the solar and wind power projects that have been commissioned. According to the letter, PBGs may be released within 45 days from the commercial operation date, subject to fulfillment of requirements of submission of all the requisite documents.