CERC Directs NTPC to Return Bank Guarantees of Three Developers in Bhadla Solar Park

The commission has ruled that the retention of the performance bank guarantees by NTPC is illegal and arbitrary


The Central Electricity Regulatory Commission (CERC) has ruled in favor of three independent power producers (IPPs) regarding the payment of their performance bank guarantee (PBG) to the tune of ₹255 million ($3.7 million).

The three IPPs were: Rising Sun Energy Private Limited, Rising Bhadla 1 Private Limited, and Rising Bhadla 2 Private Limited.

The three IPPs had petitioned the CERC seeking the release of the performance bank guarantees retained by the NTPC. They had also requested for the extension of time and deferral of the scheduled commissioning date (SCOD) for two solar power projects of 70 MW capacity in Bhadla Solar Park, Rajasthan, executed under the National Solar Mission phase II, batch II, tranche I.

The respondents in the case were: National Thermal Power Corporation  Limited (NTPC), NTPC Vidyut Vyapar Nigam Limited (VVNL), Jodhpur Vidyut Vitran Nigam Limited (JVVNL) , Jaipur Vidyut Vitran Nigam Limited (JVNL),  Ajmer Vidyut Vitran Nigam Limited (AVVN) and the  Rajasthan Solar Power Development Company Limited (RSPDCL).

In its order, the commission has ruled that the retention of the performance bank guarantees by NTPC is illegal and arbitrary.

There was a total delay of 200 days (101 days due to late allotment of land and 99 days due to late providing of infrastructure for transmission and evacuation of power) due to unavoidable and uncontrollable reasons. These cannot be attributable to the petitioners and therefore are covered under Force Majeure events, the CERC order stated. The petitioners are eligible for the extension of SCOD also as per Article 4.5.1 of the PPA, the CERC order added.

The commission noted that though the SCOD was scheduled for May 25, 2017, one 70 MW project was commissioned on September 29, 2017, while another project of 70 MW was commissioned on November 1, 2017. Noting this, it has directed the respondents to immediately release the guarantee amounting to ₹255 million ($3.7 million).

However, the commission dismissed the request of the petitioners for compensation against the blocking of bank guarantee beyond three months by the NTPC, for a loss to the tune of ₹15.4 million ($0.22 million).

Previously,  the commission had quashed a transmission service agreement termination notice that was issued by the Power Grid Corporation of India Limited (PGCIL) to SEI Sunshine Power Private Limited, a Greenko subsidiary, including two letters issued by PGCIL to SEI regarding long-term access to its transmission system for 180 MW of solar projects in Madhya Pradesh, Mercom had reported.

It recently set generic tariffs for the purchase of electricity from a host of renewable energy generation sources during the financial year (FY) 2019-20.