The Tamil Nadu Electricity Regulatory Commission (TNERC) has directed Tamil Nadu Generation and Distribution Corporation Limited (TANGEDCO) to pay five wind developers a sum of ₹16.72 million ($0.23 million) as accrued interest against the delayed payment.

TANGEDCO has been asked to make the payments within 60 days from the date of the order.

The five developers with payments stuck are Binaguri Tea Company Pvt. Ltd, Spero Power Pvt. Ltd, Scientific Mes Technik Pvt. Ltd, Zuri Hotels and Resorts Pvt Ltd, and Emerald Jewel Industry India.

According to the affidavit, TANGEDCO has agreed to pay 6% interest on the payments made for the invoices for the supply of electricity as a one-time measure to resolve the dispute amicably.

In the petition, the developers also apprised that they have suffered substantial losses due to the non-payment of interest, which caused them difficulties in meeting the financial obligations towards banks and financial institutions.

Considering TANGEDCO’s current financial status, the wind developers accepted 6% interest on the delayed payment, which it must pay within two months.  However, this settlement will not be treated as a precedent for future payment delays. In case of a delay in the future, TANGEDCO must make the payment at the rate of 1% per month.

Background

In separate petitions, the petitioners had also requested the Commission to order TANGEDCO to pay interest at the rate of 1% every month for any delay in settlement of invoices beyond 30 days.

According to the petition, all wind generators are entitled to interest on the delayed payment at the rate of 1% per month. Only a 30-day time limit is provided for the payment, and any delay beyond that will have to be made with an interest rate of 1% for every month.

The cumulative capacity of wind projects owned by these companies is 14.4 MW.

The petitioners had raised the invoices for the power supplied from its wind generators every month as per the terms mentioned in the energy purchase agreement. The petitioners received their payments against the invoices raised until March 2013. However, the payments were being delayed without any interest. According to the petitions, the payments on the invoices were delayed for at least a year.

Prolonged payment delays owed to solar and wind developers has tarnished TANGEDCO’s reputation in the industry. Last year, the state DISCOM had to hand over its solar and wind tenders to the Solar Energy Corporation of India (SECI).

In a previous article, Mercom reported that in Tamil Nadu, TANGEDCO had delayed payments for more than a year to renewable developers. Moreover, the distribution company has been known for curtailing power from solar and wind projects.

Meanwhile, the Andhra Pradesh High Court has asked the state’s distribution companies to clear the dues of wind developers within two weeks. The dues currently amount to a whopping ₹1.7 billion (~$24.3 million).

Anjana is a news editor at Mercom India. Before joining Mercom, she held roles of senior editor, district correspondent, and sub-editor for The Times of India, Biospectrum and The Sunday Guardian. Before that, she worked at the Deccan Herald and the Asianlite as chief sub-editor and news editor. She has also contributed to The Quint, Hindustan Times, The New Indian Express, Reader’s Digest (UK edition), IndiaSe (Singapore-based magazine) and Asiaville. Anjana holds a Master’s degree in Geography from North Bengal University, and a diploma in mass communication and journalism from Guru Ghasidas University, Bhopal.