India’s largest solar power developer, ACME Solar has recently filed a petition to direct the Power Grid Corporation of India Limited (PGCIL) and the Solar Energy Corporation of India (SECI) to abstain from invoking its letters of comfort and bank guarantees, with the Central Energy Regulatory Commission (CERC).
Reportedly, ACME Dhaulpur Powertech Pvt Ltd., and ACME Deoghar Solar Power Pvt Ltd. along with their holding firm ACME Solar Holdings Limited submitted the petition requesting for the termination of the power purchase agreement (PPA) for 600 MW of solar projects which they inked with SECI.
Earlier in 2018, ACME had placed the lowest bid by offering a tariff of Rs 2.44/kWh to develop 600 MW out of the total 3 GW solar auction from SECI. Apparently, this comes as the lowest solar tariff to be quoted in a reverse auction till this date in India.
On May 4, 2020, ACME moved to cease the PPAs due to forced Majeure events which began with a stay order from the high court on the land where the construction of sub-stations was planned. This was then followed by the ongoing Coronavirus crisis which impacted the operations of supplier’s manufacturing facilities since December 2019 and forced both India and China to enforce complete lockdown.
The solar company was also facing a delay in commissioning of the associated transmission network. However, SECI disputed that ACME’s force majeure requests and reasons were inaccurate as there were no valid instances that restricted them from completing the projects.
Moreover, it argues that the letters of comfort and the bank guarantees should be kept valid during the progression of the petition. Nevertheless, SECI assured ACME that it has no intention of encashing or appropriating the bank guarantee if the parties settle on a mutual agreement.
As for PGCIL, it claimed that the petitioners shouldn’t be able to escape the contract’s liability obligations by enforcing force majeure.