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National Solar Mission projects in India may miss deadline and face rising costs says KN Subramaniam- Moser Baer

The first round of the first phase of the Jawaharlal Nehru National Mission was announced and bids invited for 620MW of projects, 470MW in Solar Thermal and 150MW in Solar PV last year.

Panchabuta was the first to report  on the Solar PV and thermal developers  shortlisted for the first phase of the Solar Mission. 37 developers for a aggregated capacity of 620MW have been shortlisted and PPA’s signed.

Gujarat has released a state specific  solar policy with an ambitious target of installing 1,000 Mw solar power capacity by the end of 2012 and 3,000 Mw in next five years. The state has already signed PPAs for about 934MW.

The bidding for the first stage of  first phase of the Jawaharlal Nehru National Solar Mission  has been conducted through a fair and transparent reverse bidding process with stringent bid bond conditions and strict timelines and penalties for potential developers.

According to the time lines, most of the developers are scheduled to achieve financial closure by the middle of June this year.

 Also, with such high discounts it seems highly unlikely that these project licenses could be significantly traded leaving developers with an option of either executing the project with assistance of a technical partner or giving up their bid bond guarantees that they have made.

Given these tight deadlines, it comes as no surprise that some companies may miss deadlines to build India’s first solar power plants this year while others face rising costs as they compete for contractors and labor, the second-biggest solar-cell maker in India said.

Developers are having trouble obtaining financing from banks wary of lending to the new sector, which delays them from starting on their projects, K.N. Subramaniam, chief executive officer of the solar systems division of Moser Baer India Ltd. (MBI), said in an interview to Bloomberg.

“If everybody is going to compete at the same time for resources, for contractors, for mechanical fabrication or labor, the cost is bound to go up,” said Subramaniam, who heads the engineering, procurement and construction activities of Moser Baer’s solar unit. “They may not be available for completion in time.”

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