Arina Solar Private Limited has filed a petition with the Central Electricity Regulatory Commission (CERC) requesting it to direct the Solar Energy Corporation of India (SECI) to return its performance bank guarantee (PBG) of ₹500 million (~$6.67 million).

Case Background

Arina Solar, a subsidiary of Shapoorji Pallonji and Company Pvt Ltd, had entered into a power purchase agreement (PPA) with SECI on November 22, 2018, for setting up a 250 MW solar power project.

However, the developer terminated the PPA on August 07, 2020, following the COVID-19 pandemic and the subsequent lockdown.

According to clause 4.5.3 of the PPA, if the force majeure event continues beyond three months, the petitioner is entitled to terminate the PPA.

In February, the Ministry of Finance had announced that coronavirus would be covered in the force majeure clause considering it as a case of natural calamity, and this clause can be invoked wherever appropriate.

Arina Solar, in its submission, said that since it had terminated the PPA, the PBG amount furnished by it to SECI must be returned.

In response to Arina Solar’s contention, SECI asked for some time to file the reply and said that the distribution licensee, the Jharkhand Bijli Vitran Nigam Limited (JBVNL), should also be included as a party to the petition.

After hearing both the parties, the Commission directed Arina Solar to include JBVNL as a party to the petition and asked it to serve a copy of the petition to both SECI and JBVNL. It also directed SECI and JBVNL to file their reply by September 15, 2020.

Arina Solar, in its submission, further requested that the Commission should restrain SECI from encashing the PBG amount of ₹500 million (~$6.67 million) until the final disposal of the petition. In response, SECI noted that it was not going to encash the PBG at this stage, provided the petitioner kept the PBG valid.

Notably, amid the COVID-19 crisis, the Maharashtra Electricity Regulatory Commission exempted ACME Heergarh Powertech Private Limited from its contractual obligations under force majeure provision of its power purchase agreement with the Maharashtra State Electricity Distribution Company Limited.

Recently, a subsidiary of ReNew Power also filed a petition with the CERC asking it to issue orders restraining SECI from encashing its bank guarantee following delays in project implementation due to force majeure events. The Commission, in its order, directed SECI not to encash the bank guarantee until the next hearing. It also directed ReNew to keep the bank guarantee valid for this period. The Commission has said that the petition would be listed for hearing later, and a separate notice would be issued for the same.