ReNew Power to pay Rs 11.9-crore penalty for Madhya Pradesh solar project delay

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renew power, Madhya pradesh HC, penalty The Supreme Court upheld the Madhya Pradesh High Court’s decision to impose a penalty of Rs 11.9 crore on ReNew Power — currently the country’s largest renewable energy player — for not setting up solar projects on time. (Reuters)

The Supreme Court upheld the Madhya Pradesh High Court’s decision to impose a penalty of Rs 11.9 crore on ReNew Power — currently the country’s largest renewable energy player — for not setting up solar projects on time. The company signed a power purchase agreement (PPA) in November 2015 with the state for supplying electricity at Rs 5.47 per unit from the 51 MW solar generation unit it was going to build in the state.

“We welcome the restoration of our PPA and look forward to supplying power to MPPMCL from our 51 MW project,” ReNew Power said in a statement. Madhya Pradesh Power Management Company (MPPMCL) — the state-owned power procurer — had claimed that since the company was not able to meet certain deadlines within the stipulated 210-day period, it warranted a penalty.  MPPMCL also said the PPA was liable to be cancelled according to the agreement as the delay exceeded 9 months. The firm had submitted Rs 15.3 crore as bank guarantee for the project.

ReNew, after being unable to acquire land to set up the solar plant, was allotted 96.73 acres on lease in Rajgarh district by the state government in April, 2016. Even the allotted land could not be used by the company due to encroachment and other local resistance, and subsequently purchased 253 acres of land in Ashok Nagar district. It was specified from before that land procurement was the obligation of the bidder.

The SC observed that the time taken by ReNew to change locations and construction of the plant “have to be kept in view for counting the delay”, and decided against termination of the PPA, as proposed by MPPMCL.

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