BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION BAYS NO , SECTOR 4, PANCHKULA HARYANA

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1 BEFORE THE HARYANA ELECTRICITY REGULATORY COMMISSION BAYS NO , SECTOR 4, PANCHKULA HARYANA Quorum: Case No. HERC/PRO-51 of 2014 Date of hearing: Date of order : Shri R.N. Prasher, Chairman Shri Jagjeet Singh, Member Shri M.S. Puri, Member IN THE MATTER OF: AND APPLICATION SEEKING INTERVENTION OF THE COMMISSION UNDER SECTION.86(1)(e) OF THE ELECTRICITY ACT, 2003 READ WITH REG. 64(3) OF HERC REGULATION NO. 23/2010 (AS AMENDED FROM TIME TO TIME) IN IMPLEMETATION OF NON-CONVENTIONAL AND RENEWABLE ENERGY PROJECTS IN THE STATE OF HARYANA IN THE MATTER OF: M/s Siwana Solar Power Project Private Limited H.No. 874, Sector 6, Bahadurgarh, Haryana. through its authorized signatory Shri Narendra Kumar. Versus. Chief Engineer Haryana Power Purchase centre (HPPC) Panchkula on behalf of UHBVNL & DHBVNL. Petitioner..Respondent -1 Haryana Renewable Energy Development Agency (HAREDA) through its Director, Renewable Energy Department.. Respondent 2 1 P a g e

2 PRESENT: - On behalf of the Petitioner: 1. Shri R.K.. Jain, Adviser Power/Counsel 2. Shri Mukesh Kumar, Director. On behalf of the Respondents 1. Shri Shri K.S. Saini, XEN / HPPC, for Respondent M/s Seema Sidana, AEE/ HPPC, for Respondent Shri D.K. Chopra, Addl. Director / HAREDA, for Respondent 2 ORDER The Petitioner had submitted as under: 1. That M/s Siwana Solar Power Projects Pvt. Ltd., Vill. Mithi, Distt. Bhiwani is an Independent Power Producer having its Registered office at 874, Sector 6, Bahadurgarh, Haryana (hereinafter referred to as Petitioner Company). The Petitioner Company is in advance stage of setting up a 5 MW Solar Power Project in Village Mithi of Distt. Bhiwani. 2. That the petitioner Company is setting up a 5 MW Solar Power Project and for that 2 P a g e purpose has entered into a long term Power Purchase Agreement (PPA) which was signed on Some of the important provisions of the PPA are reproduced hereunder; Clause 3.1 Satisfaction of conditions subsequent by the Solar Power Developer: The Solar Power Developer agrees and undertakes to duly perform and complete all of the following activities at the Solar Power Developer s cost and risk within four (4) months from the Effective Date, unless such completion is affected by any Force Majeure event, or if any of the activities is specifically waived in writing by HPPC. a). b).

3 c) The Company shall have achieved Financial Closure and has provided a certificate to HPPC from the lead banker to this effect. Clause 4.1 Sale of Energy by Company: The HPPC shall purchase and accept all energy available at the Delivery point from the Company s facility, pursuant to the terms and conditions of this agreement as per the amount claimed by the Company for the energy delivered for sale (including captive/auxiliary consumption of Solar Power generated less the energy imported by IPP) of electricity generated from Solar PV Crystalline Power Plant valid for a period of 25 years during the Billing period at the following tariff whichever is the lowest rate out of the following three options: a) Generic tariff decided by HERC i.e. Rs.7.94 for FY in case the plant is commissioned before or Rs.7.58 per unit for FY in case the plant is commissioned by b) The lowest tariff quoted and accepted in the first long term tender for purchase of solar power through competitive bidding to be floated by HPPC till c) The lowest tariff quoted and accepted in the first long term tender for purchase of solar power through reverse bidding to be floated by HAREDA till , as per solar policy of Govt. of Haryana. 3. That the Commission vide its order dated in the case of M/s Siwana Solar Power Projects Pvt. Ltd. Vs HPPC had concluded as follows, The Commission is in an advanced stage of passing an order determining tariff from renewable energy power projects to be commissioned in FY Accordingly, the Commission directs HPPC/ Discoms to conclude the PPA with the Petitioner at the tariff determined by the Commission for the projects to be commissioned in FY provided the Petitioner undertakes that he shall start generation by 31 st March, That in spite of best efforts by the Petitioner Company, the PPA could not be concluded till Feb. 2014, leaving hardly any time for the completion of the project by 31 st March, That the Respondent made submissions before this Commission vide his office Memo. No. Ch.-42/HPPC/SE/C&R-1/T-26F dated The Commission after 3 P a g e

4 considering the above submissions made by the Respondent reiterated its directions vide Memo. No. 3467/HERC/Tariff/PPA-Siwana Solar dated which read as under, Regarding signing of PPA with Siwana Solar Power Project Private Limited, you are directed to sign the PPA in the next one week with a stipulation that the project developer shall start generating and supplying power before In case he fails to do so, the tariff to be determined by the Commission for FY onwards shall apply. Further, in case the project developer fails to generate and supply power before , the PPA shall lapse. It is made clear that if HPPC fails to sign PPA in the next one week with the above stipulations, the Commission may initiate action against the officer concerned for non-compliance of its orders. a) However, in spite of the clear directions given by this Commission to sign the PPA by (as conveyed vide letter dated ), the PPA was signed only on i.e. after a lapse of nearly 2 months. b) Even the PPA signed is not in line with the directions given by the Commission dated to the extent that the tariff to be allowed to the Solar Power Developer has been made uncertain by adding three options, whose outcome cannot be foreseen. c) Even with the signing of the PPA after 2 months delay, the project commissioning has been retained by 30 th June, d) In the absence of a clear PPA, with a certain sale rate, the Project Lenders are reluctant to commit the Term Loan for the project. e) Moreover, the stipulations made in the last letter issued by this Commission dated that, Further, in case the project developer fails to generate and supply power before , the PPA shall lapse, is also causing concern to the Project Lenders. The Project Lenders have to be assured of the suitable extension in the time for completion of the project and validity of the PPA during 4 P a g e

5 the extended period of execution. The Commission would kindly appreciate that in the absence of the Financial Closure and the Term Loan having been sanctioned by the Project Lenders, total investment has been made by the Petitioner till date from its own resources, which is affecting the cash flow for the project and is having adverse effect on further progress of the project. The Petitioner Company has already completed 75% of the Project Work and is confident to complete the balance work in the next 5-6 months. 6. That the revised guidelines from Ministry of Non-conventional Resources of Energy, Govt. of India, issued vide OM No. 30/42/ /NSM dated , provides as under, The developer would be required to submit Total Bill of Material (TBOM) to the State Nodal Agency duly certified by the Chartered Engineer for Excise & Custom Duty exemption. The State Nodal Agency shall forward the above documents/ application and Total Bill of Material to MNRE after verification as per guidelines. Accordingly, the Petitioner Company had submitted the Total Bill of Material for the Solar Project being set up at Vill. Mithi, Distt. Bhiwani vide letter dated for processing the case and forwarding the documents to the MNRE. HAREDA has fixed the meeting of the Technical Advisory Committee on That having covered so much ground after so much effort by the Project Developer, the Petitioner Company most humbly prays to the Hon ble Commission to come to its rescue and save the project in the overall interest of the State and that of other stakeholders. 5 P a g e

6 SPECIFIC RELIEF SOUGHT BY THE PETITIONER: 1. The Commission may kindly accept the petition in its present form; 2. The Commission may kindly give suitable directions to the Respondent to amend Clause 4.1 of the PPA to bring it in line with the directions issued through its order dated i.e. tariff to be paid to the Project Developer as per the Generic Tariff decided by the HERC; 3. The Commission may kindly allow extension for completion of the project by 6 months i.e. to be completed before The Commission may kindly take up the matter on priority and pass an appropriate order as any delay may put the project, which is in an advance stage, in jeopardy. 5. The Commission may kindly give any other relief, so deemed fit, in the present case. 8. In order to have the benefit of the view of the Respondents i.e. HPPC and HAREDA, the Commission vide memo no dated directed the Respondents to file reply / comments / objections to the relief sought by the Petitioner within a fortnight from the date of the aforesaid letter. However, no reply / comments / objections to the issues raised / relief sought in the petition was submitted by HPPC. The Director HAREDA vide memo no. / HAREDA/DA/2014/1153 dated submitted point wise reply to the issues raised by the Petitioner in the present case. The Commission, in order to take the process forward listed the case for hearing on Accordingly the parties were informed vide memo no dated and the notice of hearing was also hosted on the website of the Commission. 6 P a g e

7 The hearing was held as per schedule intimated to the parties. All parties were present in the hearing. 9. HAREDA, in their written response agreed to the contention of the Petitioner that in the absence of clear PPA including specific sale rate, the Project Lenders shall be reluctant to commit term loan for the project. It was further submitted that the commissioning of the project, in such a short time, is difficult and in the absence of Financial Closure and Term Loan sanctioned by the Project Lenders, the progress of the project will suffer. 10. The Ld. Counsel for the Petitioner Shri R.K. Jain mostly reiterated his written submission; hence the same is not being reproduced here. Additionally he raised the issue of the PPA not being in line with the order of this Commission and sought amendment to the same. He prayed that the project is 75% complete and hence may be allowed further eight months time to start generation as due to the delay in signing the PPA the Project Lenders refused to extend Term Loan and hence procurement of solar panels, inverters etc. got delayed. While countering the additional time of eight months sought by the Petitioner, the Representative of HPPC argued that admittedly the signing of the PPA was delayed by about two months; hence this Commission may consider granting an additional two months time for commissioning the project instead of eight months sought by the Petitioner. 7 P a g e

8 11. Upon hearing the arguments of the parties, the Commission asked the representative of HAREDA about the normal time taken for commissioning a Solar Power project of 5 MW. To this Shri Chopra replied that it takes about seven to eight months time. The Commission, at the outset, observes that the Petitioner signed a PPA with HPPC including the terms and conditions specified there in. Thus the PPA, with the consent of both the parties, was forwarded for statutory approval of this Commission and the same was approved by the Commission as a commercial contract between the consenting parties i.e. the buyer in this case HPPC and the seller i.e. Siwana Solar. Consequently, at this belated stage it is not open for the Petitioner to question clause 4.1 of the PPA or for that matter any of the terms and conditions of the concluded PPA. Since the Ld. Counsel for the Petitioner agreed to this dispensation, the only issue left for consideration and order of this Commission is the additional time that could be allowed to the Petitioner for commissioning the project in view of the fact that signing of the PPA was admittedly delayed by about two months by HPPC and hence the delay in raising project loan as well as placing order for Solar Panels, Inverters etc. The Commission further observes that the objective of this Commission is to bring the project into generation as the same is an advance stage of implementation as submitted by the Petitioner; hence a practical view needs to be taken in the matter. The PPA was signed on ; hence eight months from this date would be October, Iin view of the above discussions this Commission allows time up to 31 st October, 2014 to the Petitioner to commission their 5 MW Solar Power project for which they have 8 P a g e

9 entered in to a PPA with HPPC. Thereafter, there will be no further relaxation and the PPA shall lapse. Further, as the project is likely to be commissioned in FY , the tariff determined by this Commission for such projects for FY shall be the applicable tariff. The Petition is accordingly disposed of. This order is signed, dated and issued by the Haryana Electricity Regulatory Commission on 22 nd July, Date : Place : Panchkula. (M.S. Puri) (Jagjeet Singh) (R.N.Prasher) Member Member Chairman 9 P a g e