Solar Energy Corporation of India Limited (SECI) disbursed a total of $17.3 million (~₹1.3 billion) to solar and wind developers in May 2020.
According to a statement released by SECI, it released $12.5 million (~₹937 million) for the purchase of solar and wind power and reimbursed $1.38 million (~₹104 million) for the Goods and Services Tax (GST) claims made by solar power developers. The beneficiary companies under the GST claims were Adani, Avaada, Tata Power, Phelan Energy, Azure Power, and ACME Solar.
Payment delays have been a cause of apprehension for solar developers in the country. Mercom previously reported that the delay in GST reimbursement and lack of clarity is affecting solar project developers in India.
Besides this, SECI also settled $1.82 million (~₹136 million) under rooftop solar subsidy program to three recipients – Hero Future Energies, CleanMax Solar, and Silver Star Solar.
According to developers, SECI demonstrates a good credit history with a record of making timely payments to developers. SECI has been the implementing agency for many of the programs under the National Solar Mission. However, recently, the Indian Renewable Energy Development Agency Limited (IREDA) replaced SECI as the implementing agency for solar projects with Viability Gap funding Support (VGF) by Central Public Sector Undertakings (CPSU) for self-use or use by government entities.
In March 2020, MNRE issued a circular stating that GST and Safeguard Duty compensation to solar project developers should be paid within 60 days. The circular by MNRE was addressed to SECI and NTPC, and it warned that if the compensation is not made within two months, a late payment surcharge may be imposed, or the payment can be made on an annual basis spread throughout the power purchase agreement (PPA) tenure.
In April 2020, due to the nationwide lockdown, SECI was unable to raise physical invoices for its buying utilities and requested all state distribution companies and agencies to allow submission of invoices digitally to make it feasible to release the payment to developers.
In a recent Mercom webinar, Jatindra Nath Swain, Chairman and Managing Director of the SECI, who participated as a speaker, said that the corporation has also done its part to help the industry amid the global pandemic. SECI reduced earnest money deposits (EMDs) and performance bank guarantees (PBGs) to make their projects more investor-friendly in these tough times. SECI has also been very timely with payments as far as their power purchase agreements are concerned. He also said that SECI has come up with a formula to address future “change in law” incidents in their PPAs more efficiently. It has also been dealing with cases of supply chain disruptions because of the pandemic on a case-to-case basis, he added.
Also, on the subject of reducing DISCOM risk, the SECI chairman said that they are currently considering implementing a “Contract for Difference” (CFD) model wherein developers will be paid the difference if the discovered tariffs fall below a previously agreed upon “strike price,” from a centrally maintained fund by the state DISCOMs.
Sampath has been part of the Mercom India research and news team since the company’s inception. He currently oversees all data and research relating to news published on the MercomIndia.com platform. Sampath received his Bachelor’s of Commerce Degree from Kuvempu University and Post Graduate Diploma in Management, from Indira Gandhi National Open University. More articles from Sampath Krishna.