According to the PPA conditions, projects were to be set up within 210 days of signing the agreements.
Madhya Pradesh Power Management Company (MPPMC), the holding company of all the electricity distribution companies of the state, has cancelled two 50-MW power purchase agreements (PPAs) it had signed with the Indian unit of Canada-based Sky Power Solar in 2015. The PPAs were cancelled as Sky Power failed to set up the projects within the stipulated time. `23.6 crore from Sky Power’s bank guarantee of Rs 30 crore (Rs 15 crore X 2) will also be forfeited as delay penalties.
According to the PPA conditions, the projects were to be set within 210 days of signing the agreements. An additional nine-month delay period, warranting weekly penalties, was also permitted under the PPA terms. The PPAs were signed at `5.05/unit and `5.11/unit through competitive bidding.
The rates were the lowest discovered bids in India for solar projects at that time. The company had won three 50-MW solar projects in the same auction. A senior MPPMC official told FE that the third project, which was signed at R s5.30/unit, though delayed by about six months, is operational.
Sky Power had earlier notified MPPMC that it faced delay in land acquisition due to demonetisation. Land initially earmarked for one of the sites had no grid connectivity, hence it had to look for other places to set up the solar plant.
MPPMC noted that absence of grid and demonetisation do not constitute force majeure conditions. It added that since the developer also had the option of acquiring private land or getting government land allotted for the project, Sky Power’s justification for the project delay was not tenable. Madhya Pradesh generated more than 100 million units (MU) of solar-based electricity in July of the 1,659 MU produced across the country.