The Gujarat Electricity Regulatory Commission (GERC) has upheld Gujarat Urja Vikas Nigam’s (GUVNL) cancellation of both the base capacity of 250 MW/500 MWh and the additional greenshoe capacity of 250 MW/500 MWh awarded to it to set up standalone battery energy storage systems (BESS).

The Commission concluded that since Gensol failed to execute the mandatory battery energy storage purchase agreement (BESPA) and did not submit the required performance bank guarantee on time, the company had breached its post-award obligations.

The Commission also confirmed the forfeiture of Gensol’s earnest money deposit (EMD) amounting to ₹185 million (~$2.11 million).

Background

The case originated from a tender process conducted by GUVNL for the procurement of 250 MW/500 MWh standalone BESS capacity with an additional greenshoe option of 250 MW/500 MWh.

Gensol Engineering emerged as the successful bidder at a tariff of ₹372,978 (~$4,249.7)/MW/month.

GUVNL issued the letter of intent and expected the company to sign the BESPA within 10 days of tariff adoption. However, during the evaluation, it was observed that Gensol did not initially meet the required net-worth criteria of ₹7.4 million (~$84,335)/MW.

For the base capacity, this requirement translated to ₹1.85 billion (~$21.08 million), and for the total 500 MW capacity, the required net worth stood at ₹3.7 billion (~$42.17 million).

Gensol submitted that, at the time of bidding, its financial statements for the 2023–24 financial year were not finalized. In place of audited accounts, it provided a provisional net-worth certificate, certified by a chartered accountant, showing a net worth of ₹3.44 billion (~$39.16 million). This figure was sufficient for the base capacity but not for the greenshoe option.

The company later provided another certificate confirming a higher net worth of ₹4.94 billion (~$56.30 million) and unaudited financials indicating a balance sheet of ₹6.44 billion (~$73.39 million) as of September 2024. On that basis, Gensol argued that it had fully met the financial eligibility requirements and requested approval to adopt the tariff for the total capacity of 500 MW/1000 MWh.

GUVNL, however, maintained that Gensol failed to comply with the post-award conditions. Despite repeated communications, reminders, and extensions, the company did not sign the BESPA or submit the performance bank guarantee.

Initially, GUVNL gave 10 days to sign the agreement following the tariff adoption on April 3, 2025, and later extended the deadline to April 30, 2025, upon Gensol’s request, citing bank holidays.

Gensol then requested further extensions up to May 30, 2025, stating administrative and legal difficulties.

In the meantime, GUVNL noted that the Securities and Exchange Board of India had issued an interim order against Gensol and its directors for alleged misappropriation and diversion of funds.

Citing this and the company’s failure to execute the BESPA within the prescribed time, GUVNL canceled the award and forfeited the earnest money deposit of ₹185 million (~$2.11 million).

These actions were communicated to both Gensol and the Commission in early May 2025.

Commission’s Analysis

The Commission noted that the requirement of ₹7.4 million (~$84,335)/MW net worth was clearly stipulated in the tender document. While Gensol’s provisional submission of ₹3.44 billion (~$39.16 million) met the base capacity requirement, it did not automatically extend to the greenshoe capacity, which required ₹3.7 billion (~$42.17 million).

The certificate, which was later submitted showing ₹4.94 billion (~$56.30 million), could not be accepted as retrospective evidence because it was issued long after the bid evaluation and did not cure the initial non-compliance. The Commission emphasized that transparency and the sanctity of the bidding process required all financial qualifications to be demonstrated at the time of bid submission, not later.

It referred to a clause in the tender document that placed sole responsibility on the successful bidder for the timely completion of all post-award milestones, including the signing of the BESPA and the submission of the PBG.

The letter of intent clearly stated that if the bidder failed to sign the BESPA within 10 days of tariff adoption, the letter of intent would become null and void, and the earnest money deposit would be forfeited.

The Commission found that GUVNL had acted fairly and in accordance with the contractual terms. The Commission also took note of the SEBI interim order highlighting financial irregularities, which further justified GUVNL’s cautious approach. It held that Gensol’s reliance on later provisional certifications could not substitute for contractual compliance.

GERC concluded that GUVNL’s decision to cancel both the base and greenshoe allocations and to forfeit the EMD was valid, lawful, and consistent with the Ministry of Power’s guidelines, the tender provisions, and principles of prudence under the Electricity Act.

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