APTEL Upholds Commissioning Date For 5 MW Gujarat Solar Project, Rules On Tariff And Delay Penalties

The case involves an appeal filed by Gujarat Urja Vikas Nigam Limited (GUVNL) against an order passed by the Gujarat Electricity Regulatory Commission (GERC) regarding the commissioning date and tariff applicability of a 5 MW solar power project developed by Taxus Infrastructure & Power Projects Ltd. The primary issue in dispute is the deemed commissioning date of the project and whether the delay in its completion was due to force majeure events.

The GERC ruled that the project was deemed commissioned on March 31, 2013, and that Taxus was entitled to raise bills for the energy injected into the grid from April 1, 2013, at the applicable tariff for that period. GUVNL challenged this ruling, arguing that the actual commissioning date should be August 8, 2013, based on certification by Gujarat Energy Development Agency (GEDA) and Chief Electrical Inspector (CEI). GUVNL further contended that the delay of 402 days in commissioning should not be excused under force majeure and that Taxus should pay liquidated damages for the delay.

Taxus argued that the delay in commissioning was due to factors beyond its control, including regulatory hurdles, changes in land registration rates (Jantri rates), and the denial of permission from the Gujarat government to execute the project through a Special Purpose Vehicle (SPV). The company claimed that these constituted force majeure events, which should exempt it from penalties. The tribunal analyzed whether Taxus had taken all necessary steps to mitigate delays and whether the force majeure claims were valid.

The tribunal found that certain delays were indeed caused by external factors such as government regulations and land registration issues. However, it also noted that some of the delays were due to Taxus’ own business decisions, such as seeking an SPV approval that was not required for project execution. Based on the evidence presented, the tribunal ruled that the project should be considered commissioned as of March 31, 2013, but upheld the requirement for Taxus to pay liquidated damages as per the undertaking it had provided to GUVNL.

The tribunal also examined the impact of the commissioning date on the applicable tariff. GUVNL argued that the project should be subjected to the lower tariff applicable for projects commissioned after April 1, 2013, rather than the higher tariff set for projects completed before March 31, 2013. The tribunal upheld the GERC’s decision that the tariff applicable for the period ending March 31, 2013, should apply since the project was deemed to be operational from that date, despite delays in formal certification.

This judgment underscores the importance of regulatory compliance, timely approvals, and clear contractual obligations in power purchase agreements. It highlights the need for project developers to proactively address legal and procedural challenges to avoid delays and financial penalties. The ruling also reinforces the principle that while force majeure can justify some delays, developers must demonstrate that all possible efforts were made to mitigate such circumstances.