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The Gujarat Electricity Regulatory Commission (GERC) has issued its order in Petition No. 2394 of 2024, filed by Solarcraft Power India 3 Pvt. Ltd. against the Gujarat Energy Transmission Corporation Limited (GETCO). The case centered on the withdrawal of Stage-II connectivity and the return of bank guarantees totaling ₹4.5 crore that were furnished for a 200 MW wind power project in Gujarat.
Solarcraft Power India executed a Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited (GUVNL) in December 2022 for the project’s development. Initially, the project was to be located across Una and Gir Gadhada talukas in Gir Somnath district, with connectivity granted at five substations — Dandi, Delwada, Zudvadli, Dhokadva, and Kansari. However, the Ministry of Defence (MoD) refused to issue the necessary No Objection Certificates (NoCs) for these areas due to undisclosed national security concerns. Consequently, the company relocated its project to nearby talukas, including Kodinar, Veraval, and Sutrapada.
Due to this change, Solarcraft obtained fresh Stage-II connectivity at new substations — Prachi, Bhetali, and Rayadi — and submitted new bank guarantees worth ₹5.25 crore. It then requested GETCO to withdraw the earlier connectivity at Dandi, Delwada, and Dhokadva and release the earlier guarantees. Despite repeated communications, GETCO did not respond. The company argued that the retention of these guarantees served no purpose, as it no longer required the original connectivity and was forced to bear financial costs for maintaining the guarantees.
In its defence, GETCO stated that under Clause 9.7 of the Detailed Procedure approved by GERC in January 2023, Stage-II connectivity is automatically revoked and canceled if the estimated payment or the connectivity agreement is not completed within 65 days. As Solarcraft did not pay the required estimates or sign the agreement, the connectivity was automatically canceled. GETCO further argued that there is no provision in the regulations for returning bank guarantees once connectivity is granted, even if later revoked.
The petitioner countered that this provision does not mention forfeiture or retention of bank guarantees and that the purpose of guarantees is to protect GETCO from financial losses arising from non-completion of a dedicated transmission line. Since the company had not even signed a connectivity agreement or started any work, there was no possibility of loss to GETCO. Solarcraft emphasized that it had voluntarily surrendered its connectivity well within the 65 days, before cancellation, and that GETCO had been informed of the relocation arising from force majeure conditions acknowledged by GUVNL.
Citing previous judgments, including the Appellate Tribunal for Electricity (APTEL) ruling in Vayu Renewable Energy (Kaveri) Pvt. Ltd. vs CERC, the petitioner maintained that forfeiture of bank guarantees amounts to a penalty, which cannot be imposed without proven loss or statutory authority. It also argued that GUVNL, a state entity like GETCO, had already recognized the MoD’s denial as a legitimate force majeure event, and hence, GETCO’s position was inconsistent and unfair.
The Commission took note that the petitioner had applied for fresh connectivity for the same project capacity and furnished new guarantees at new locations, thus showing bona fide intent to continue project execution. It was observed that the Detailed Procedure was silent on the treatment of guarantees in such cases where connectivity is surrendered before completion.
The matter highlighted a regulatory gap concerning the return of bank guarantees where connectivity is voluntarily withdrawn before execution. The Commission examined whether GETCO’s retention of the bank guarantees without any incurred loss was justified under the law and whether the petitioner’s request could be considered under its powers to remove procedural difficulties.
