MNRE Amends Bidding Guidelines for Procuring Power From Solar Projects

MNRE has issued amendments to the guidelines for the tariff-based bidding process for the procurement of power from grid-tied solar projects.

The Ministry of New and Renewable Energy (MNRE), in a gazette notification, has issued amendments to the guidelines for ‘Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects’.

The key amendments are:

a. Minimum Paid-up Share Capital to be held by Promoter

The successful bidder, if being a single company or consortium, shall ensure that its/ their shareholding in the SPV/project company executing the PPA shall not fall below 51 percent at any time prior to 1 year from the COD [earlier 3 years], except with the prior approval of the Procurer. Further, the successful bidder shall ensure that its promoters shall not cede control2 of the bidding company/ consortium till 1 year [earlier 3 years] from the COD, except with the prior approval of the Procurer. In this case, it shall also be essential that the successful bidder shall provide the information about its promoters and their shareholding to the Procurer before signing of the PPA with the Procurer.

b. Quantum of Earnest Money Deposit (EMD)

Quantum of the EMD in the form of a bank guarantee/ letter of undertaking to pay/ payment of order instrument, [earlier only bank guarantee] to be furnished by the bidders. The EMD shall stand forfeited in the event of failure of the Solar Power Generator to execute the PPA within the stipulated time period.

c. Guarantees

The Solar Power Generator shall provide the following guarantees to the Procurer in terms of the RfS and the PPA:

Earnest Money Deposit (EMD), to be fixed by the Procurer, [but not to be more than 2 percent of the estimated capital cost of the solar PV power project cost, as determined by CERC, if any, for the financial year in which the bids are invited or the estimated project cost], to be submitted along with a response to RfS, in the form of:

(a) Bank Guarantee(s);

OR

(b) “Payment on Order instrument” / Letter of Undertaking: to pay in case situation of default of solar power generator in terms of tender condition arises, from Indian Renewable Energy Development Agency (IREDA)/ Power Finance Corporation Limited (PFC)/ REC Limited (REC). [Earlier only bank guarantee(s)]

In its new amendments, the Ministry has mentioned that “these Letter(s) will have the same effect as that of a Bank Guarantee issued by any public sector bank. Such “Payment on Order instrument” would have terms and conditions similar to that of any Bank Guarantee given by any public sector bank and would promise to pay the Procurer on-demand within the stipulated time. Solar power generators can seek such Letters(s) by offering due security to the above mentioned three non-banking financial institutions mentioned above (IREDA, PFC & REC). Procurer(s) shall not accept the instrument of ‘Letter of Undertaking’ as described above or in any other form, from any other non-banking financial institutions or bank, except IREDA, PFC & REC.”

These letter(s) will also be accepted as Performance Bank Guarantee(s). And hence, the ministry has stated that Performance Bank Guarantee (PBG) wherever mentioned in the bidding process guidelines shall be referred to as Performance Guarantee (PG) in the form of Bank Guarantee or alternatives provided thereto as per these Guidelines.

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