MERC Clears Path For Arbitration In 500 MW Solar Power Dispute In Maharashtra

On 22 April 2025, the Maharashtra Electricity Regulatory Commission (MERC) issued a final order in Case No. 52 of 2025, involving a dispute between Maharashtra State Electricity Distribution Company Limited (MSEDCL) and Braithwaite Nacof Solar Project Ltd. This case stemmed from a terminated power purchase agreement (PPA) between the two parties.

The dispute began after Braithwaite failed to commission a 500 MW solar power project by the extended deadline of 31 March 2024. As a result, MSEDCL issued a default-cum-termination notice on 2 July 2024. Braithwaite responded by approaching the Bombay High Court seeking a stay on the termination and on the invocation of a bank guarantee.

Following court directions, both parties were instructed to approach MERC to either settle the issue or appoint an arbitrator. The PPA had initially been signed on 30 March 2023 and required the project to be operational by 17 August 2023, which was later extended.

The core of the disagreement involved jurisdiction. Braithwaite argued that since it did not complete the solar project, it could no longer be considered a generating company. However, MERC, citing various legal rulings and the PPA clauses, disagreed. It said that even after termination, Braithwaite remains bound by the obligations under the PPA as a deemed generator.

The Commission, referring to Supreme Court and Appellate Tribunal judgments, emphasized that disputes involving generating companies and distribution licensees fall under its jurisdiction. It clarified that even though Article 11.10 of the PPA allows for arbitration, the earlier sections of Article 11 give MERC authority to adjudicate such matters.

Nevertheless, during the proceedings, both parties voluntarily nominated arbitrators. This mutual agreement led the Commission to suggest that the matter be resolved through arbitration.

The Bombay High Court, in its order dated 3 April 2025 (uploaded on 17 April), agreed with MERC’s stance and requested the Commission to pass a final order within one week, enabling the nominee arbitrators to select a presiding arbitrator.

Accordingly, MERC, in its final order, allowed the arbitration process to proceed. It confirmed its jurisdiction over the dispute but chose not to proceed on the merits, honoring the High Court’s request. The Commission permitted both parties to move forward with the arbitration process as per the terms laid out in the PPA.

This case highlights the complex legal landscape surrounding renewable energy contracts and the mechanisms available for dispute resolution. It also underscores the importance of clearly defined roles and responsibilities in public-private power agreements.