Reading Time: 2 minutes
In a recent order, CERC gave temporary relief to Mytrah Energy from encashment of their submitted performance bank guarantee (PBG) to Power Grid Corporation Of India Limited (PGCIL).
In June 2018, Mytrah Energy an independent power producer (IPP), declared successful bidder in competitive bid process conducted by Solar Energy Corporation Of India (SECI) for setting up 2000 MW ISTS (Inter State Transmission System) connected wind power projects (Tranche III) and awarded 300 MW wind power project contract. Letter of Award (LoA) was issued by SECI on 01.06.2018.
Subsequently, a power purchase agreement (PPA) was signed between Mytrah & SECI on 04.09.2018. As per the PPA terms and conditions, Mytrah applied stage-II ISTS connectivity to Central Transmission Utility (CTU) i.e. Power Grid Corporation Of India (PGCIL). The stage-II ISTS connectivity grant was given in favor of Mytrah on 12.07.2018. On receiving a grant for stage-II connectivity, Mytrah entered into a transmission agreement dated 08.08.2018 with PGCIL and submitted a Performance Bank Guarantee (PBG) of INR 5Cr in favor of CTU.
In Spite of the issuance of PPA on 04.09.2018, SECI did not seek adoption of tariff from appropriate commission for the awarded project. As a result, after more than one & half year delay, the tariff was adopted on 19.02.2020. Due to these delays IPP found the awarded project became unviable in terms of economic & financial perspective and assumptions based on which Mytrah Energy had participated in the bid process. In the meantime, due to the delay & lack of clarity on tariff adoption, lenders backtrack from financing the project.
Henceforth, Mytrah terminated the PPA dated 25.02.2020 & requested SECI to return the PBG amount of INR 60Cr. This issue is under consideration of the commission in a separate petition filed by Mytrah. With due reference to the above scenario, Mytrah filed a separate petition to the commission for refund of the PBG amount of INR 5Cr issued in favor of PGCIL. Petitioner is justifying the refund of PBG as per PPA clauses which are directly linked with transmission agreement & Stage-II connectivity grant from CTU. In response, CTU claimed there is no relation between transmission agreement and PPA agreement. Thus CTU proceeded to invoke the PBG in the case of the petitioner as per the clause 11.2 which tells that “in the event of Stage-II connectivity grantee fails to complete the dedicated transmission line within the stipulated period, the connectivity BG of the grantee shall be encashed and the Stage-II connectivity shall be revoked”.
After hearing the petitioner and respondent’s claim commission ordered the following points:
- The interim protection granted by APTEL shall be continued till the next date of hearing.
- Petitioners need to submit the following documents.
i. Correspondence was exchanged indicating that the Petitioner took up the matter with SECI from time to time for early adoption of the tariff by the Appropriate Commission.
ii. Correspondence was exchanged with lenders whereby the lenders expressed their difficulty/inability to finance the Project in absence of the adoption of tariff by the Appropriate Commission.