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Gujarat says no to time extension for solar power developers

According to reports, developers of solar power projects who wanted an extension of time beyond January 29 to avoid coming under a lower tariff regime (than they would have if they had completed their projects by January 29) have lost their case. The Gujarat Electricity Regulatory Commission has ruled against them.

“We decide that the petitioners have not succeeded in making out a case for invoking the inherent power of the Commission to extend the control period determined by the Commission in its Order No. 2 of 2010 dated 29 January 2010,” the Commission said in its order dated January 27.

The list of petitioners included special purpose vehicles of Tata, GMR, Lanco, Moser Baer and Surana Telecom groups. It also included Solar Energy Association of Gujarat and also the global auto component major, ZF Steering.

The petitioners had prayed for extension of time beyond January 29, citing reasons of ‘Act of God’ (flooding), land acquisition issues, change in design of sub-station by Gujarat Energy Transmission Corporation (GETCO), non-availability of evacuation facilities and insufficient time for completion of their projects.

All the petitioners (project developers) had signed power purchase agreements with the Gujarat Urja Vikas Nigam Ltd, the state utility. Under the PPA, the tariffs agreed were: Rs 15 per unit for the first 12 years and Rs 5 a unit from the 13th year to the 25th year.

In all, 84 PPAs were signed, in two phases, for 968.5 MW. They were to complete their projects by December 31, but the Gujarat government did give them more time, up to January 29, 2012. Those who do not complete their projects by January 29, would get a lower tariff. Meanwhile, following the order of the Gujarat Electricity Regulatory Commission , which denied any extension of time to solar power project developers to complete the projects, the Gujarat government has announced the new tariffs (see table).

The Commission went into three questions: Whether it had inherent powers to extend the time as prayed for, (for which the answer was ‘yes’), whether such an extension of time was justified (the answer was ‘no’), and if an extension was justified, for what period (which became redundant).

The Commission has taken note of the fact that most of the projects have been completed, or would be completed by January 29.

According to the Government of Gujarat, 54 developers would complete their projects, with a total capacity of 587.4 MW, out of the total PPA-signed projects of 968.5 MW.

It also took cognisance of the argument put forth by the Gujarat state that prices of solar modules have fallen significantly (and the developers would suffer no loss if the tariff was revised downwards.)

“Though they have put forward a number of reasons for the relief they have sought, none of the petitioners, including the Association of Solar Power Developers, which has filed a separate petition, has indicated any ground whatsoever which is of universal application either in the State of Gujarat or a major part thereof by which all the projects are affected by such factors. Several projects have been or are likely to be commissioned during the control period itself. The reasons indicated by the petitioners appear to be in the manner of indirectly invoking the Force Majeure clause specified in the PPA, which cannot be addressed by a general order,” the Commission said.

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