CERC Declines Relief To Adani Firm Over Delayed Karnataka Wind Project

The Central Electricity Regulatory Commission (CERC) in its latest judgment declined to give relief to Adani Renewable Energy Seven Limited (ARSEL). The company had moved to the central commission seeking relief against any possible coercive action from the Solar Energy Corporation of India (SECI).

The petitioner–ARSEL is a Special Purpose Vehicle (SPV) of its parent company– Adani Renewable Energy Holding Fifteen Limited (AREHFL). ARSEL had earlier won a tender from SECI in 2021 for a 300 MW wind energy project at Koppal in Karnataka. 

The petitioner claimed that due to the lack of availability of land for the project, the renewable energy company failed to commission the project as per the Scheduled Commercial Operation Date (SCoD). In its petition before the CERC, ARSEL asked the Commission to declare that the Power Purchase Agreement (PPA) dated September 16, 2021, as frustrated. It also petitioned the CERC asking it to direct the SECI to not take any coercive action against it, till the pendency of the case. Such a coercive action could include forfeiting the Bank Guarantees (BG) due to the delay in commissioning of the project.

The Commission said that without going into the merits of the case, it noted that the project was to be commissioned within the SCoD of March 10, 20234. 

“Without going into the merits of the petition, we note that the project was to be commissioned within the SCoD of the project i.e., 10.03.2023. As per Article 4.6.1 of the PPA dated 16.09.2021, if the Petitioner is unable to commission the project by the scheduled date, the Petitioner has to pay the total PBG amount on a per-day basis and proportionate to the balance capacity not commissioned,” the CERC order said. 

CERC order 

The CERC however, in its petition declined to issue any order to give relief to the firm citing delay in the commissioning of the project. “In the instant case, the Letter of Award for setting up the 300 MW Wind Power Project was issued by SECI on 19.03.2021. As per Article 4.6.1 of the PPAs, the project was to be commissioned within the SCoD, i.e., 10.03.2023. However, the SCoD was extended till 11.06.2023 by SECI which has become the revised SCoD for execution of the project. As per Article 4.6.1 of the PPAs, SECI is entitled to encash the PBG (on a per day basis) in case of delay in commissioning of the project beyond the SCOD and including the date as on 270 days after the SCoD…” the CERC order said.

It also added that SECI had allowed the ARSEL to commission the full project till March 7, 2024, with the payment of Liquidated Damaged (LD). The Commission noted that the petitioner, instead of commissioning the project sought a declaration that the PPA should be frustrated and the they should be released from any obligations to tender the said agreement with any financial consequence. 

“The Petitioner has not brought on record any ground for interference in the invocation of bank guarantee as laid down by the various judgments of the Hon’ble Supreme Court, i.e., fraud of egregious nature or special equity in favour of injunction exists in this case. In view of the above, we are of the view that no case has been made out for the issue of direction to restrain SECI from encashing the BG furnished by the Applicant/Petitioner, till the final adjudication of the main petition. Accordingly, SECI is free to take further action in accordance with the provisions of PPA and law,” the written order of the CERC said.  

Case details 

SECI issued a tender on December 21, 2020, seeking developers for setting up 1200 MW of ISTS-connected wind power projects in India under tariff-based competitive bidding (Tranche-X). SECI issued the LOA to AREHFL on February 19, 2021, which decided to undertake the works through its SPV-ARSEL. 

The firm had earlier sought a land parcel in Koppal from Karnataka Renewable Energy Development Limited (KREDL) but in vain. Later it also sought a land parcel near Koppal from a private land aggregator unsuccessfully. ARSEL was also given the liberty in its SCoD on account of the challenges. 

ARSEL also said that despite sincere attempts land for the project could not be acquired. The Delhi High Court in its order on April 8, 2024, also put a status quo on the enhancement of the BG till the consideration of the matter by CERC. On the same day, SECI also withdrew the innovation of BG.