APTEL Swayed By Solar Developer’s Appeal Of Financial Distress

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The Appellate Tribunal for Electricity (APTEL) has issued a new order in favour of Sahasradhara Energy Private Limited, allowing the interim financial relief sought by the developer that the Uttar Pradesh New and Renewable Energy Development Agency (UPNREDA), Uttar Pradesh Electricity Regulatory Commission (UPERC), and Uttar Pradesh Power Corporation Ltd (UPPCL) had aggressively opposed.

In 2015, UPNREDA initiated a process of competitive bidding to procure electricity from solar project developers in Uttar Pradesh, following which a Letter of Intent was issued to Sahasradhara Energy for a levelized tariff of Rs. 8.37/unit for a capacity of 5 MW. Accordingly, the solar developer entered into a PPA with UPPCL.

In 2017, UPERC passed an order holding that the tariff in the bidding process (i.e. Rs. 8.37/unit) was high and directed UPCCL and UPNEDA to take necessary steps, following which the state commission adopted the tariff of Rs. 7.02/unit for those 9 bidders who had completed the projects by September 2017. However, UPERC proposed to adopt the tariff of Rs. 5.21/unit before Sahasradhara Energy and later reduced it to 5.07/unit through an order.  The developer states that it had no choice but to execute the supplementary PPA at Rs. 5.07/unit, as it had been paying additional interest during construction since January 2017 and would have otherwise become a nonperforming asset (NPA).

Sahasradhara Energy then approached APTEL to explain that because of the reduced tariff, the company is struggling with the financial viability of the project and the threat of being converted into NPA is imminent. In view of this serious financial crisis, the developer has requested the tribunal to allow a tariff of Rs. 7.02/unit as an interim arrangement only for a period of three months to help the company overcome the immediate threat of being rendered an NPA. The developer also submitted that it would refund the differential amount of Rs. 5.07/unit and Rs. 7.02/unit sought as an interim arrangement to help stay afloat, in case an earlier appeal of 2019 filed by Sahasradhara before the tribunal for the reason that it is supplying electricity to UPCCL under their PPA.

UPERC, UPCCL, and UPNEDA “vehemently opposed” Sahasradhara Energy’s plea, arguing that the “so called grim financial condition” was “not true”. They also mentioned that the appellant had sought such a relief earlier as well, which the tribunal had not permitted, concluding that it would not be possible to recover the differential amount, paid as interim relief, in the event of the rejection of the 2019 appeal filed by the developer.

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After considering the facts of the matter, APTEL stated that Sahasradhara had a fit case for being granted interim relief, validating the NPA threat and dismissing the respondents’ concerns over non-recovery of differential amount.

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The tribunal has therefore allowed the interim relief sought by Sahasradhara Energy.