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The Central Electricity Regulatory Commission recently heard a petition filed by Boreas Renewable Energy Private Limited. Boreas, a project company under Ecoren Energy India Private Limited, signed a Power Purchase Agreement with Solar Energy Corporation of India (SECI) in April 2019. Under this agreement, Boreas was to develop a 175 MW wind power project in Bellary, Karnataka, and supply power to SECI at a tariff of ₹2.77 per kWh. The project was part of SECI’s initiative to procure 1200 MW of wind power through a competitive bidding process.
The scheduled commissioning date for the project was initially set for July 2020 but was extended to December 2020 due to the COVID-19 pandemic. However, Boreas faced delays in securing government orders and land allotments from Karnataka authorities, which delayed project execution. As a result, Boreas could not meet the deadlines despite repeated requests for time extensions.
In September 2021, Boreas formally asked SECI for an 18-month extension to the commissioning date and a reduction in the performance bank guarantee from ₹35 crore to ₹21.7 crore. SECI forwarded the request to the Ministry of New and Renewable Energy (MNRE), but MNRE advised SECI to handle the matter according to contract terms. Eventually, SECI denied any further extensions beyond the long stop date of September 2021.
Due to the inability to commission the project within the allowed timeframe, SECI decided to encash the ₹35 crore performance bank guarantee provided by Boreas through IREDA. Boreas then filed the present petition seeking the return of the bank guarantee, interest on the amount, and reimbursement of charges incurred in maintaining the guarantee. They argued that the PPA stood discharged due to SECI’s conduct and the inability to extend the commissioning date.
SECI argued that Boreas failed to deliver power by the required dates, and according to the PPA terms, they were entitled to encash the guarantee without proving actual losses. SECI maintained that Boreas had not fulfilled its obligations under the contract, and there was no waiver or change in terms that would release Boreas from its liabilities.
Boreas contended that delays were beyond its control, mainly due to government actions, and that SECI had extended similar timelines for other developers in the past. Boreas also highlighted that Bihar State Power Holding Company, the ultimate buyer of the power, had agreed to a time extension, yet SECI refused to act on it.
The case revolves around whether the PPA was frustrated and discharged due to SECI’s refusal to grant further time extensions and if SECI’s claim on the performance guarantee is valid despite the project’s non-viability. Boreas argued that SECI suffered no actual loss, while SECI insisted that the contract’s liquidated damages clause allowed them to encash the guarantee regardless of any demonstrated loss.
The Commission has yet to decide on the core issues, including whether the PPA was discharged and whether SECI should return the performance bank guarantee to Boreas with interest.
