CERC Orders Return Of INR214 Crore Bank Guarantee To APDCL After Assam 750 MW Solar Project Suspension

The Central Electricity Regulatory Commission (CERC) has ruled in favor of Assam Power Distribution Company Limited (APDCL), directing the Central Transmission Utility of India Limited (CTUIL) to return a Connectivity Bank Guarantee (Conn-BG2) worth ₹214 crore. The decision comes after APDCL sought the release of the bank guarantee following the suspension of a major solar power project in Assam due to the withdrawal of funding.

The case relates to the Government of Assam’s “Mukhya Mantri Sauro Shakti Prokolpo,” under which APDCL was appointed to develop a 1000 MWp solar power project in the state. In 2023, APDCL received in-principle approval for inter-state transmission system (ISTS) connectivity for the project. The approved capacity was later revised to 750 MW. To secure the associated transmission system and terminal bays, APDCL submitted a Connectivity Bank Guarantee of ₹214 crore to CTUIL. At the same time, the North Eastern Region Generation Scheme-I (NERGS-I) was awarded to Techno Electric & Engineering Company Limited through a competitive bidding process to develop the required transmission infrastructure for evacuating power from the project.

The solar project, however, could not move forward after the Department of Economic Affairs withdrew the loan proposal from the Asian Development Bank (ADB) following a request from the Assam Government. With the funding no longer available, the Assam Cabinet decided to suspend the solar project. Subsequently, APDCL’s Board approved the withdrawal of its ISTS connectivity request.

Following the cancellation of the project, APDCL approached the CERC seeking the return of its bank guarantee. CTUIL opposed the request, stating that under Regulation 24.3 of the General Network Access (GNA) Regulations, encashment of the Connectivity Bank Guarantee becomes mandatory once the transmission project has been awarded, irrespective of whether the project is later cancelled or suspended.

NERGS-I also opposed the release of the bank guarantee. The transmission developer informed the Commission that it had already incurred significant expenditure on the project and had submitted a compensation claim of about ₹69.36 crore to CTUIL. It argued that the bank guarantee should not be returned until its expenses were recovered.

APDCL, however, argued that no actual construction of the transmission system had started and the project would never be implemented because of the funding withdrawal. The utility stated that encashing the ₹214 crore bank guarantee under such circumstances would amount to an unfair financial burden. APDCL also informed the Commission that it was willing to compensate NERGS-I for its genuine and verified expenses.

After examining the matter, the Commission observed that the case involved exceptional circumstances where neither APDCL nor the transmission developer was responsible for the cancellation of the project. It also noted that the proposed transmission system had been designed exclusively for APDCL’s solar project and would not serve any other beneficiary.

Using its powers under Regulations 41 and 42, which allow it to relax regulations and remove difficulties in exceptional cases, the CERC ruled that strict enforcement of the regulations would lead to unnecessary financial hardship. The Commission directed CTUIL to return the ₹214 crore bank guarantee to APDCL. However, it also instructed APDCL to submit its formal relinquishment application within 15 days and deposit fresh security of ₹70 crore, either in cash or through a new bank guarantee, within one month. This amount will remain with CTUIL to safeguard the pending compensation claims raised by NERGS-I until the matter is resolved.