CERC Gives Jolt To Shirdi Sai Electricals Over Bank Guarantee Row

CERC Rejects Indosol Solar's Plea To Consider POI As Conn-BG

The Central Electricity Regulatory Commission (CERC), in its latest judgment, has rejected Indosol Solar’s plea for immunity from furnishing a connectivity bank guarantee. Indosol Solar is a Special Purpose Vehicle (SPV) of Shirdi Sai Electricals. Shirdi Sai Electricals is one of the winners of India’s Production-Linked Incentives (PLI).

The central electricity regulator issued the order after the petitioner approached CERC seeking intervention. The case concerned the requirement to furnish a connectivity bank guarantee to the Central Transmission Utility of India Limited (CTUIL) for the transmission of solar power generated by the petitioner’s 3,500 MW project.

The Andhra Pradesh government, on September 12, 2022, sanctioned the project, located in the districts of Kurnool, YSR (Kadapa), and Ananthapur. These projects are proposed to be connected to the Inter-State Transmission System (ISTS). Indosol Solar submitted four connectivity applications to CTUIL under the General Network Access (GNA) Regulations.

CTUIL approved the plan and requested the company to furnish connectivity bank guarantees in three parts. The applicant was required to provide these guarantees within one month of the in-principle grant of connectivity.

Plea To Treat POI As BGs

Indosol Solar, however, requested CTUIL to accept a Payment Order Instrument (POI) issued by IREWDA in place of the bank guarantees. CTUIL rejected the request, citing a breach of GNA Regulations. Following this, the petitioner sought CERC’s intervention.

“Petitioner approached the Commission vide the instant Petition praying to direct CTUIL to extend the time limit to submit BG/POI. The commission allowed the submission of BGs up to 15.04.2024. However, Petitioner having failed to deposit requisite BGs in the extended timeline, CTUIL vide letter dated 22.04.2024 revoked in principle grant of Connectivity,” the CERC order stated.

CERC noted that Indosol Solar argued the issue was not merely academic since the petitioner intended to submit the Payment Order Instrument in place of BGs for subsequent in-principle grants as well. The petitioner requested the Commission to use its Power to Relax and Power to Remove Difficulties under the GNA Regulations to permit such relief.

Final Judgement 

While rejecting the plea, CERC stated, “We also observe that POI in lieu of Conn-BGs is not provided for in GNA Regulations, and Petitioner has sought the same under Powers to relax. Since CTU is of the view that POI does not fall under Section 14 (3) of IBC for immunity, we do not find a case for relaxing the Regulations. Petitioner is well aware of the regulations which require a Bank Guarantee to be furnished. The only reason why the Petitioner has sought to allow POI is the double security it is required to furnish in case of a Bank Guarantee, which depends on the financial parameters of the petitioner.”

CERC further added, “In view of the above, the prayers of the Petitioner in the instant petition are rejected. We, however, direct the commission’s staff to examine the acceptable instruments other than the Bank Guarantee for providing adequate guarantees against default and process the same through amendment to the GNA Regulations as per law.”