TERC Rejects SCOD Extension Plea For 50 MW Solar Project, Upholds INR 9.08 Crore Penalty In Telangana

The Telangana Electricity Regulatory Commission (TERC) has dismissed a petition filed by M/s Dinkar Technologies Private Limited seeking an extension of the Scheduled Commercial Operation Date (SCOD) for its 50 MW solar power project and a refund of Rs 9.08 crore recovered through Performance Bank Guarantees (PBGs).

The dispute relates to a Power Purchase Agreement (PPA) signed in 2016 between Dinkar Technologies and the Southern Power Distribution Company of Telangana Limited (TGSPDCL). The agreement required the solar project in Medak district to achieve commercial operation by May 2, 2017.

However, the developer synchronized only 24.94 MW of the project on September 7, 2017, resulting in a delay of 128 days. The remaining capacity was also not commissioned within the maximum permitted period of 21 months. Following the delay, TGSPDCL invoked Article 10.5 of the PPA and imposed a penalty of Rs 9,08,60,000. The utility also encashed the bank guarantees submitted by the developer.

Dinkar Technologies later approached TERC, requesting the commission to condone the delay, revise the SCOD to September 7, 2017, and direct TGSPDCL to refund the entire amount recovered from its PBGs.

The developer argued that the delay was caused by several force majeure events beyond its control. These included heavy rainfall and floods, administrative disruptions following the reorganization of Telangana’s revenue districts, difficulties in achieving financial closure, cash flow problems following demonetization in 2016, delays related to the introduction of GST, and disputes over land acquisition.

TERC rejected these arguments. The commission observed that several events cited by the developer, including heavy rainfall in late 2017 and the implementation of GST, occurred after the original SCOD of May 2, 2017. Therefore, they could not explain the failure to meet the contractual deadline.

The commission also rejected the argument relating to demonetization, noting that financial difficulties and commercial hardship do not make contractual performance impossible. It further stated that arranging contiguous land was the responsibility of the developer under the PPA. The claims regarding administrative disruptions were also found to lack sufficient contemporaneous evidence.

TERC further noted that general government directions extending SCODs for solar projects could not automatically benefit every developer. Referring to Supreme Court principles, the commission said each case must be considered individually based on specific evidence.

Another key issue was the delay in approaching the commission. TGSPDCL had advised Dinkar Technologies in February 2018 to seek regulatory relief. However, the developer filed its petition more than four years later without providing a legally acceptable explanation for the delay.

Citing the principles of delay and laches, TERC concluded that the developer was not entitled to the relief sought. The commission therefore upheld TGSPDCL’s penalty and encashment of the PBGs and dismissed the petition in its entirety.