CERC Upholds Wind Developer’s Plea for ₹330 Million Bank Guarantee Release

The Commission held that the delay in adopting the tariff led was unfair


The Central Electricity Regulatory Commission (CERC) has ruled that the delay in adopting the tariff order by the Uttar Pradesh Power Corporation is a valid reason to claim an extension in the commissioning date for the generating station.

It also ordered the release of the performance bank guarantee (PBG) of ₹330 million (~$3.9 million) to wind developer Mytrah Energy India.


Mytrah Vayu (Sabarmati), the petitioner, has a 250 MW wind power project in the Thoothukkudi district of Tamil Nadu.

The parent company, Mytrah Energy India, secured a successful bid in response to the October 28, 2016, 1,000 MW wind tender issued by the Solar Energy Corporation of India (SECI).

PTC India won the bid for the intermediary trading license on August 26, 2016.

Subsequently, Mytrah Energy established Mytrah Vayu (Sabarmati) as a special-purpose vehicle to implement the project.

Mytrah Vayu executed the power purchase agreement (PPA) on July 21, 2017.

According to the terms of the PPA, the entire 250 MW capacity was initially slated for commissioning by October 4, 2018. However, through its letter dated November 19, 2018, SECI revised the initial scheduled commercial operation date (SCOD) to November 13, 2018.

Subsequently, the petitioner commissioned 128.79 MW in the first Phase on January 29, 2019, 58.32 MW in the second Phase on April 15, 2019, and 62.89 MW in the third Phase on May 10, 2019, out of the contracted 250 MW capacity.

Mytrah contended that the delay in meeting the revised SCOD was attributed to force majeure events.

The company sought a direction against any coercive actions, including the encashment of the PBG.

The petitioner asserted that liquidated damages were not applicable due to the commissioning of the project within the stipulated timeframe and the absence of compensation claims from distribution companies.

It argued that SECI’s premature invocation of the PBG violated the PPA.

The petitioner contended that the delay in the SCOD extension approval adversely affected the project’s progress and bankability and led to cost overruns.

SECI contended that the petitioner experienced delays in meeting construction obligations, leading to a delay in achieving the SCOD as per the PPA. It asserted the right to encash the PBG for liquidated damages.

The nodal agency said the bidding documents and the PPA do not include any clause that prevented it from utilizing the PBG for liquidated damages.

Commission’s Analysis

The Commission had before it the following issues for adjudication:

  • Whether unforeseen events constitute force majeure warranting a six-month extension of the SCOD. Also, if the delay caused by respondents in adopting the tariff justifies relief for the petitioner.
  • Whether SECI’s letter dated May 27, 2021, seeking to encash the petitioner’s PBG, should be set aside, and if SECI should release the guarantee to the petitioner.

The Commission noted that the tender did not explicitly require tariff adoption for financial closure. It observed that Uttar Pradesh Power Corporation had delayed the tariff adoption and acknowledged Mytrah’s achievement of financial closure on September 20, 2017.

The Commission held that SECI’s delay in adopting the tariff contributed to the petitioner’s inability to schedule power, and hence, its penalty for project delay was unfair.

Recently, CERC approved an annual transmission charge of ₹248.67 million (~$2.98 million) as per the final offer by Apraava Energy to acquire Fatehgarh IV Transmission.

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