NTPC threatens to end pact with Tata Power over delays

By: |
October 21, 2021 4:00 AM

NTPC is a major client of Tata Power Solar with a significant portfolio of EPC projects from the CPSE ongoing at sites in Gujarat, Kerala and elsewhere.

State-run NTPC has threatened to terminate the contract with Tata Power Solar for a 320 megawatt (MW) project at Jaisalmer in Rajasthan, alleging lack of significant progress on the site eight months after the agreement was signed.

NTPC is a major client of Tata Power Solar with a significant portfolio of EPC projects from the CPSE ongoing at sites in Gujarat, Kerala and elsewhere.

According to sources, in a notice to the contractor, NTPC Renewable Energy Ltd (NREL) — the developer of the project — said it does not have “reasonable assurance” that the project “can attain completion of the facilities by the scheduled time”. As per the contract, Tata Power Solar is required to complete the project worth around Rs 1,200 crore within 17 months from when the contract was signed.

While the contract states that 50% of land for the project should be transferred to NREL within May, and the balance land by September, the sources said Tata Power Solar has not transferred any land to NREL till date.

Queries sent to Tata Power Solar on Tuesday regarding the development have not been responded to.

Apart from land acquisition, Tata Power Solar is said to have made no significant progress with respect to engineering works and ordering of equipment for the project as well.

Since Tata Power has not initiated any of the activities eight months after the award of the contract, “in spite of regular follow-ups and several review meetings”, it has been requested by NREL to take necessary remedial measures and submit a firm recovery plan within 14 days of receiving the default notice, failing the EPC contract will be terminated, sources added.

Tata Power’s solar EPC business has shown significant growth in recent years, with revenue from this business segment rising 420% annually to Rs 1,638 crore in Q1FY22. At the end of FY21, Tata Power solar EPC order book capacity was worth `8,742 crore, of which orders worth Rs 2,294 crore were received in Q4FY21 itself.

In Q1FY22, it won solar EPC orders of another Rs 743 crore. The company had said in June that it has received a letter of award for an EPC contract to build 210 MW solar projects for NTPC, and the commissioning date for NTPC is set for November 2022.

NREL, the renewable energy arm of NTPC, was incorporated to focus on its green energy business in October 2020. NTPC, through NREL, aims to attain 60,000 MW of green capacity by 2032 from the current level of around 1,400 MW. Around 75% of the 2032 green energy target is expected to come from solar.

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