We Received Force Majeure Notices from Various Discoms, Despite Govt Directive: Azure Power

Despite government directive to power distribution companies (Discoms) to pay dues on time, the country’s one of the leading independent solar power producer (IPP), Azure Power said that it has received Force Majeure notices from various Discoms citing an inability to perform their obligations as per the PPA due to Covid-19.

There has been a significant reduction in electricity demand in the country and Discoms are reporting they are seeing delays in payments from their customers, the company said.

On the other hand, some of the Discoms like Tata Power-DDL has urged its customers to pay their bills on time through using digital mediums amid lockdown across the country.

However, the Ministry of New and Renewable Energy (MNRE) has sent a directive to all state Discoms to reiterate that all renewable energy facilities in India have been granted ‘must-run status’ and this status of ‘must run’ remain unchanged during the period of lockdown. The ministry further clarified that any curtailment but for grid safety reasons would amount to deemed generation.

In this respect, the power ministry has also clarified to all State Governments that “the obligation to pay for the power within 45 days of the presentation of the bill (or the period of given in the PPA) remains the same.”

Based on both power ministry and MNRE issued guidelines, Solar Energy Corporation of India (SECI) has denied force majeure claims from various Discoms which have cited low demand and delayed payments from their customers due to Covid-19.

In line with this, SECI in one of its responses to the state Discom of Haryana (HPPC) directed that “in view of the above, so long, there is a demand in Haryana, covering the renewable power capacity contracted under the PSA(s) and the corresponding PPA(s), it is incumbent on HPPC to schedule the power. HPPC is not entitled to plead Covid-19 or consequent load demand reduction as a reason for not availing the solar and wind power.”

Notably, the Discoms’ dues to Gencos surged nearly 32 percent to Rs 88,311 crore in the month of January 2020, as against Rs 67,012 crore during the same month in 2019.

An aggregate overdue amount to Discoms in January this year, which was not cleared even after a grace period of sixty days offered by power generation companies (Gencos), stood at Rs 76,192 crore as compared to Rs 51,453 crore during the same period last year.

Meanwhile, Azure Power said that its operating projects have not been materially impacted related to the Covid-19 outbreak as of April 10, 2020, and it will remain comfortable with its revenue and operating MW guidance for FY 2020 and 2021.

The company also stated that “our plants remain fully operational during the recent lockdown in India as electricity generation is designated as an essential service in the country”.

It further added that “we have been receiving payments towards electricity supplied from all our customers in normal course and there has only been minor curtailment of our plants, as of date.”

However, the company assured that its liquidity position remains sufficient to continue normal operations through at least the end of FY 2021, even if only some of the highest debt-rated counterparties, such as government-owned SECI, continue to make payments for electricity received.