CERC Turns Down PSEPL’s Petition Against NTPC to Refund Liquidity Damages

CERC Approves Trading Margin of Rs.0.07/kWh in SECI's PSAs with Distribution Firms

The Premise of the Order 

Power Purchase Agreements dated 04.08.2016 were entered into between the petitioner – Parampujya Solar Energy Private Limited (PSEPL) and the respondent, NTPC. The petitioner is now seeking directions to NTPC Limited to accept the impact of Force Majeure events and extend the Scheduled Commissioning Date of the Project of the petitioner.

The second respondent is Southern Power Distribution Company of Telangana Limited (TSSPDCL), which is a distribution licensee in the State of Telangana.

Background

The MNRE issued guidelines for selection of grid-connected Solar-PV Projects under “State Specific Bundling Scheme” under Batch-II Tranche I of NSM Phase-II” (Guidelines). NVVN, NTPC’s subsidiary, on behalf of NTPC was to purchase Solar power from PSEPL and sell it to DISCOMS after bundling it with the thermal power allocated by Ministry of Power (MoP). NTPC had agreed to sign Power Sale Agreement (PSA) with TSSPDCL to sell such bundled power as per the provisions of the National Solar Mission (NSM). On 09.10.2015, NTPC issued a ‘Request for Selection’ document (RfS) inviting bids in Telangana. PSEPL participated in the bidding process and ultimately emerged a successful bidder. NTPC issued Letter of Intent (LOI) and PSEPL entered into five PPAs with NTPC for sale of power for a cumulative capacity of 50 MW (10 MW X 5) from its solar PV projects located in Telangana on 04.08.2016. As per the PPAs, SCoD of the projects was 18.08.2017. However, the actual commissioning date of all the 5 projects is 17.11.2017.

Force Majeure Events 

PSEPL has alleged that the following Force Majeure Events adversely affected its projects resulting in the delay:-

(i) Introduction of GST by the Government of India

(ii) Stoppage of work by Tehsildar

(iii) Delay in synchronisation due to delay in Approval of PSA by the TSERC

The Petition 

PSEPL has filed a petition with the following requests:

a) Declare that the petitioner was prevented from performing its obligation under the PPA due to occurrence of Force Majeure events (as mentioned below)

b) To condone the inadvertent delay of 23 days caused for the reasons beyond the control of PSEPL due to Force Majeure events

c) Direct to refund the amount of liquidated damages paid PSEPL along with the interest

Flow of Events 

PSEPL has pointed out that there has been a delay in synchronisation due to delay in approval of Power Sale Agreements by the Telangana State Electricity Regulatory Commission (TSERC)

a) On 17.07.2017, it had served an advance preliminary notice 30 days prior to synchronisation to NTPC.

b) On 01.08.2017, PSEPL sent a letter to TSSPDCL informing TSSPDCL that PSEPL was ready to synchronise the projects by 12.08.2017.

c) PSEPL was verbally informed by TSSPDCL that since the PSA entered into between TSSPDCL and NTPC was pending approval by the Telangana State Electricity Regulatory Commission (TSERC), therefore, TSSPDCL is unable to issue approval for synchronization.

d) On 03.08.2017, PSEPL immediately informed the above to NTPC/NVVN. PSEPL followed up with TSSPDCL regarding the issue of approval for synchronization vide its letters dated 05.08.2017 and 11.08.2017.

e) On 16.08.2017, PSEPL informed that NTPC has rejected the notion that the approval of PSA is a requisite for synchronization.

f) On 19.08.2017, TSERC intervened and instructed the TSDISCOMs (including TSSPDCL) to proceed with the formalities of synchronisation. TSERC also directed TSSPDCL to inform NTPC to not to levy penalty on the developers of solar power project due to this issue of delay on account of non-approval of PSA by the TSERC.
Post intervention of TSERC, TSDISCOMs began considering the requests for synchronisation of solar projects.

g) On 23.08.2017, TSSPDCL informed NTPC of the directions issued by TSERC. TSSPDCL in the same letter further informed NTPC of the intention of PSEPL to commission the projects. TSSPDCL then sought the work completion report of the projects following which a Synchronization Committee will take necessary action for granting synchronization approval.

NTPC’s Rejection of PSEPL’s Request

On 24.08.2017, PSEPL informed NTPC of the above-mentioned circumstances and the developments that had taken place and requested NTPC to resolve the situation immediately so that PSEPL can commission projects. PSEPL further requested NTPC to provide an appropriate response to TSSPDCL and grant an extension in SCoD to PSEPL so as to accommodate the delay caused on account of delay in approval of PSA and synchronisation of the projects.

i) On 30.09.2017, PSEPL wrote a letter to NTPC requesting NTPC to not levy penalty due to delay caused on account of pendency of the PSA approval by the TSERC. NTPC vide its letter dated 30.10.2017 rejected the request of PSEPL. NTPC in its letter dated 30.10.2017 stated that the PPAs did not envisage the non-levy of penalty due to delay caused in commissioning of the projects on account of pendency in approval of PSA.

Liquidity Damages 

On 11.07.2018, NTPC sent a letter to YES Bank Limited based on which NTPC claimed the payment of Rs. 1,20,00,000 in terms of the Performance Bank Guarantee furnished by PSEPL.

As per PSEPL, due to the incorrect time extension granted by NTPC, PSEPL has been levied with the payment of liquidated damages for the incorrect number of days of delay which is gravely prejudicing it.

NTPC’s Contention 

NTPC has acknowledged delay in development of the projects on account of introduction of GST and stoppage of work by Tehsildar and has extended the SCOD of the projects by 42 days and 26 days respectively, i.e. till 25.10.2017. However, NTPC has refused to extend the SCoD on account of delay in synchronization due to delay in approval of PSA by TSERC. PSEPL has submitted that 23 days’ delay caused due to Force Majeure events needs to be condoned. Per contra, NTPC has submitted that the delay of 23 days SCoD is solely attributable to PSEPL and PSEPL is liable to pay liquidated damages of Rs. 2.30 Crores.

CERC’s Ruling 

The CERC has ruled that it has not found any infirmity in the action of NTPC to encash the BG for breach of the provisions of the PPA by PSEPL. Consequently, PSEPL is not entitled for refund of the encashed PBG.