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PGCIL To Return Rs 90M Bank Guarantee For Revoking 500 MW Solar Projects Connectivity

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In a recent ruling, the Central Electricity Regulatory Commission (CERC) decided that Rs 5 million of the connectivity bank guarantee for each of the two 250 MW solar projects in Anantapur, Andhra Pradesh, and Tuticorin, Tamil Nadu, should be forfeited. 

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The Power Grid Corporation Of India Limited (PGCIL) should repay the remaining Rs 45 million (Rs 90 million in total) for each of the two projects to the solar developer.

Earlier, NTPC has issued a tender for the development of 2,000 MW of solar projects linked to the interstate transmission system (ISTS). Shapoorji Pallonji Infrastructure Capital Company was selected as one of the reverse auction winners.

A letter of intent was provided to the developer in October 2018 for the building of two 250 MW solar projects in Anantapur, Andhra Pradesh, and Tuticorin, Tamil Nadu.

The company then requested for Stage-I connection for its projected 500 MW solar power plants in Tuticorin and Anantapur, which PGCIL approved. Later, PGCIL authorized Stage-II connection for the proposed solar installations at the developer’s request. On February 12, 2019, the petitioner and PGCIL signed the transmission service agreement (TSA).

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On March 11, 2019, NTPC signed a power sale agreement (PSA) with Telangana’s DISCOMs. The developer then executed the power purchase agreement (PPA) with NTPC on March 20, 2019.

The Telangana DISCOMs were required to secure Telangana State Electricity Regulatory Commission (TSERC) approval of the individual PPAs within 60 days of the agreements’ effective date. However, despite NTPC’s three-month extension to the DISCOMs, the PPAs were not authorized by TSERC, resulting in the cancellation of the PPAs.

After the PPAs were terminated, the developer asked that PGCIL dismiss the Stage-II connection problem for the two solar projects. Thus, PGCIL cancelled the developer’s Stage-II connection.

Afterwards, Shapoorji Pallonji filed a petition seeking the refund of Rs 100 million connectivity bank guarantees provided by the developer to PGCIL under the TSA inked between the parties.

According to PGCIL, there are no provisions in the detailed procedure for the award of connectivity or in the TSA for the return of the connectivity bank guarantee.

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According to the updated detailed procedure, a connectivity bank guarantee provided under the detailed method (pre-revised) shall be classified as Conn-BG1 for Rs 5 million and Conn-BG2 for the rest amount, said the Commission.

Furthermore, if the Stage-II grantee was constructing the relevant bay at the ISTS substation, the money equivalent to Conn-BG1 shall be forfeited, according to the amended detailed process. The remaining balance (which is referred to as Conn-BG2) of Rs 45 million for each project should be repaid.

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