Unravelling The Mess At Gensol-Speed Essential

With a Rs 7,000 crore unexecuted order book, speed is needed, but will sadly be the toughest part of the solution

A report in business daily Mint has finally raised the issue of embattled solar EPC firm Gensol’s recent tender wins, and the likely future of those projects. The report cites sources close to the matter at the government as saying that all options, including rebidding are on the table. At SaurEnergy, we have also been citing the need for entities to relook projects awarded to Gensol, as in the case of GUVNL. Forfeiture of performance guarantees or other deposits will hardly be the best solution as per the contracts, considering the importance of some of these projects.

The central government’s attention is also down to the high share of government backed entities in the recent project wins that Gensol accumulated. Particularly worrying will be key BESS projects, where significant slippages would not only affect the entities involved, notably GUVNL and NTPC among others, but also have cascading effects on medium term plans for grid management.

Besides key projects awarded to Gensol after competitive bidding, there is also the issue of exposure to the firm for IREDA and PFC, which is reported to be over Rs 1000 crore. A major part of this exposure was to purchase EVs that were to be leased to the promoters separate firm, Blu Smart Mobility. Selling by these institutions to recover their dues has been among factors that have seen the Gensol stock dive over 90% this year. With a 60% crash in just the past month since the news finally broke out starting with liquidity issues.

With an unexecuted order book of over Rs 7,000 crore, based on its own investor presentation, including 570MW/1,140MWh capacity BESS projects in 2023-34.

The largest affected entities will be GUVNL with a 570MW BESS exposure for projects awarded in June last year, which would ordinarily have been expected to be up and running by sometime in 2026. Other significant contracts like the EPC work at Khavda for NTPC should be recoverable much faster, thanks to NTPC’s own experience and faster bidding process.

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While everyone would prefer white knight to step in and take over the execution of the Rs 7,000 crore pipeline, the seriousness of the charges against the key promoters of the firm means that any resolution will not happen quickly. Thus, in the best case scenario, we are looking at a delay of 12 months, to 30 months at worst for these projects. One year, if a better outcome can be managed, then the government will certainly deserve appreciation for a job well done.

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