The Red Tape Challenge. How RE Producers in India Are Squeezed

The Red Tape Challenge. How RE Producers in India Are Squeezed

While meeting people within and outside the renewables industry, almost everyone agrees that unlike other sectors, a key part of the work, namely, the actual build up of renewable projects, in terms of procurement, transportation and commissioning at site, is probably the easiest part of the job.In fact, the mismatch between the time taken to have a project ready for synchronisation with the grid, and the availability of transmission facilities to do that, has been a major issue.

Even officially, most utility scale tenders give between 11 to 18 months for project commissioning in India, for large tender driven projects. Smaller rooftop projects at household or industrial level can take barely a week, or for larger setups involving modifications, a maximum of three months.

But the iron law of normalisation rules here. So all the advantage of commissioning speed is eventually brought down, more often than not, by a critical link in the chain from bidding to billing. The monopoly buyers, or state discoms. These buyers set the rules not just for price of power, but also much more, which can frequently lead everyone to the courts.

Just two recent cases that we have tracked, at Appellate Tribunal for Electricity (APTEL) for a case from Karnataka, and MERC (Maharashtra Electricity Regulatory Commission) demonstrate this. Both the cases are good pointers to the way relevant courts, commissions and higher authorities regularly spend quality time adjudicating between private power producers and government bodies that have simply not kept pace with the speed of change, to put it gently.

Lets look at the MERC case first. We take case no. 319, one of nine cases clubbed together by the MERC , where the nature of the complaints, and the respondent was the same. 9 different power producers had the same complaint against MSEDCL (Maharashra State Electricity Distribution Company Limited).

They all sought directions  to MSEDCL to accelerate and complete the process of installation of Individual Special Energy Meters at individual Generator end. The amazing thing? The requirement for installing the SEM’s came from MSEDCL itself! Not just that, all nine complainants pleased that MSEDCL had made a supplementary demand , orally, for installtion of insulators too before the SEM’s could be installed.

A demand they refuse to put in writing. Even more interestingly, a demand that was contradicted by different circle offices of MSEDCL.  The common fear of all producers? That by delaying the process, the MSEDCL will create a reason for cancellation of their Open Access Licence (OA), plunging projects into financial crisis and worse.

Among the many examples given, MSEDCL took 76 days to approve the metering specifications sent in by one of the petitioners. MSEDCL fild officers were unaware of directions given by its own CE (Commercial).

The commission finally disposed of the cases with the order that among other things states that ” the processes of seeking specification of SEM, joint inspection of site, approval of metering specifications, approval/sanction of technical estimates for SEMs and additional estimate for reorientation of feeders, payment of cost of SEM meters, etc., are required to be streamlined for completion of installation of individual unit wise SEM installation within the time frame. Besides there is lack of timely co-ordination between Petitioners, MSEDCL head office and its field office. As per the DOA Regulations, 2019, installation of SEM at Individual Generator end should have been completed within Six months…”  It gave an additional three months to the petitioners, besides an order not to revoke their open access.  Tellingly, the order says ” Maharashtra State Electricity Distribution Co. Ltd. is directed to issue the circular/guidelines (consistent with the provisions of the Regulations) on this issue in clear and transparent manner which would avoid ambiguity and bring about uniformity across all its field offices.”

Now lets move to the APTEL order, where Aavanti Solar energy Private Limited appealed against a KERC order in its petition against Gulbarga Electricity Supply Company Limited ( GESCOM). In this case the power producer entered into a PPA with GESCOM on 25, May, 2016. Based on this, the project was to be commissioned within 12 months. However, the appellant claimed that due to a series of delays at the discom end, a supplementary agreement was finally signed on 24.08.2017, which should be taken as effective date of PPA. based on this, the KERC ruling for liquidated damages due to delay needed to be reversed. Among many things in this case, GESCOM was misspelt as BESCOM, leading to a delay. The discom, while paying for electricity generation, was deducting liquidated damages without informing the petitioner about the amount deducted or the calculations, and if all that wasn’t confusing enough, even the rate at which energy had been paid for was not available!

Either way, the APTEL bench saw it fit to send the case back to KERC with the provision that the discom would stop deducting liquidated damages in the monthly bills, and provide full details of the calculations and provide a bank guarantee on a monthly basis for the difference in amount paid per unit versus that claimed.

The bottomline in both these cases, and tens, if not hundreds filed in various state commissions and above is very clear. Lack of clarity in rules, whether deliberate or not, claims many victims at the generator end. With almost 100 percent of renewable generation capacity being set up with private funding by private firms, this is a huge issue. On top of that is the clear reluctance, if not outright hostility firms seem to face from discoms in many states, when pushed to move faster. Finally, without looking inside, rules and regulations , especially timelines have been merrily bench marked to global levels, without accounting for the well below global levels of efficiency when it comes to timely approvals and response to queries. There is probably no easy answer to these challenges, other than single window clearances which most state governments seem incapable of executing right now.  But there is a strong case for time bound approvals and responses, which, if exceeded, should add the period of delay to the time given to power producers to set up their projects, Delays beyond a certain threshold need to be escalated to higher authorities fast, with suitable strictures for the parties at fault, where applicable. That would be the right thing to do. But then, that’s been one of the  toughest things to do for us in India, isn’t it?

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Prasanna Singh

Prasanna has been a media professional for over 20 years. He is the Group Editor of Saur Energy International