MNRE Sets Up Mechanism to Settle Disputes Beyond Scope of Agreements
The DRC will resolve disputes between renewable energy developers and implementing agencies
The Ministry of New & Renewable Energy (MNRE) has established a dispute resolution mechanism to handle unforeseen disputes between renewable energy power developers/EPC (engineering, procurement, and construction) contractors and implementing agencies.
The revised mechanism prioritizes transparency, impartiality, and independence by forming a three-member Dispute Resolution Committee (DRC) comprising individuals with impeccable integrity.
It will specifically consider cases related to time extensions due to recognized ‘force majeure’ events, unforeseen circumstances not covered by contractual agreements, and disputes unrelated to time extensions.
In case of all disputes, whether or not covered by agreements or contracts, the application must be made first to the renewable energy implementing agency (REIA). REIA would pass speaking orders on such requests to ensure the renewable projects are set up. If the applicant party is not satisfied with the orders of REIA, it can appeal to the DRC.
To initiate an appeal against a decision made by the REIA, developers/EPC contractors must submit an application along with a prescribed fee. The fee structure varies depending on the type of dispute and the presence of a performance bank guarantee. In cases where the appeal is successful, the collected fee will be refunded if recommended by the DRC and approved by the government.
The DRC can convene meetings with a minimum of two members.
The DRC will review referred cases and provide recommendations to the MNRE within 21 days. The MNRE, in consultation with the Integrated Finance Division, will review the recommendations and make a final decision within 21 days of receiving them.
The dispute resolution mechanism will also extend to power purchase agreements between state/union territory governments/entities and developers, provided they agree to bear the DRC’s sitting fees and associated expenses.
The procedural guidelines for the Dispute Resolution Mechanism are as follows:
- The DRC will convene at least once every week, provided there are pending cases/applications to be resolved. The Secretary (DRC) of the REIA will ensure that DRC meetings are scheduled in a manner and frequency that adheres to the 21-day decision period.
- In cases where the DRC cannot decide within the 21-day timeframe, the Secretary (DRC) appointed by the REIA will inform MNRE and may request an additional 14 days for the DRC to decide.
- The DRC will be free to interact with relevant parties involved in the case and record their views. The presentation of the case before the DRC will not include lawyers. The REIA can present their views and arguments on the applicant’s pleas. If necessary, the DRC may interact with MNRE, with the MNRE’s Division handling the Dispute Resolution Mechanism acting as the ministry’s nodal point.
- As per the ORM/DRC Order issued by MNRE, if the developers/EPC contractors wish to appeal the REIA’s Order, they must do so within 21 days of the REIA’s Order. Any adverse financial impact resulting from the REIA’s Order should be put on hold for 21 days after its issuance. If an appeal is not filed within 21 days or is rejected due to insufficient fee payment, the REIA may take appropriate action. No coercive action should be taken on cases brought before the DRC until the final disposal of the appeal by the DRC and MNRE, where applicable.
- In cases falling under the DRM/DRC Order issued by MNRE, which pertains to disputes between entities under States and Union Territories and renewable developers, the role of the nodal agency will be assumed by the Secretary (DRC), SECI.
Last March, the Ministry of Power introduced a conciliation mechanism for settling contractual disputes regarding power projects implemented by central public sector undertakings and developers under the administrative control of the ministry.
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