According to reports, ambitious projects under the Jawaharlal National Solar Mission are stuck despite an overwhelming response after the government found holes in the corporate equity holding structures of companies meant to implement them. Financial closure of projects under the mission was considered in place as its deadline approached in July, but the NTPC Vidyut Vypar Nigam Ltd (NVVN), the agency supervising the mission, has ordered a scrutiny of a whole bunch of applications after it was found that some company promoters had not followed a guideline that stipulated that they must hold at least 26% equity in the projects during the first year of operation.
Financial closure refers to the tying up of bank loans or other funds needed to implement a project.
The projects moving towards financial closure involve an investment of over Rs 6,000 crore.
Most of the firms awarded projects under the mission had submitted their documents by the deadline day, July 24.
“Until now the response was enormous where we had achieved financial closure for 610 megawatts of the 615,” said a top official from NTPC Vidyut Vypar Nigam.
But perceived violation of equity norms has changed the picture.
“There could be a change in the mood of closure. The fact that the solar companies have submitted documents does not mean that all the projects are through,” the official said.
According to the bidding norms solar power firms cannot sell stakes during the selection and execution of power purchase agreements (PPA) and can offload a maximum of 74% stakes after signing power supply pacts with the nodal agency.
Officials say the process might now take another couple of weeks with NVVN starting a scrutiny of documents.
“If there is a violation of the agreement we already have a termination clause. To start with, we can send a notice to seek an explanation or could ask for remedial actions, too,” the official said.
One does but wonder, why the scrutiny for a condition that must have been fulfilled at the time of signing of the PPA, being done now, more than six months after it has been signed.
This is indeed a very disappointing situation and shows a rather lacklustre approach that is being followed by such a reputed organization for one of India’s most treasured and forward-looking programs.
The relaxation of norms by the agencies has resulted in the “financial closure” of a record number of projects though the industry has been skeptical about “unviable projects” that had bid “irrational tariffs”. All this does lead to a question of the definition of financial closure that has been followed here and sources have indicated to us, that the verdict on this is rather split inside the various organizations and hence this delay in officially declaring the number of projects that have achieved financial closure by either MNRE or NVVN though its been almost ten days after the deadline.