Guarantee of 14 companies under solar mission encashed

NVVN recovers Rs 28 crore from erring firms

By Ankur Paliwal, Jonas Hamberg
Published: Monday 20 February 2012

Acting tough on companies that did not commission solar power projects on time, NTPC Vidyut Vyapar Nigam (NVVN) Limited has encashed a part of bank guarantee of 14 of them. The companies were awarded projects under batch one of the first phase of Jawaharlal Nehru National Solar Mission (JNNSM). The last date of commissioning was January 9. About Rs 28 crores have been encashed from these firms located in Rajasthan, Odisha, Andhra Pradesh, Karnataka and Tamil Nadu. 

Of the 14 firms Lanco Infratech Limited is the engineering, procurement and construction (EPC) contractor of three of them–DDE Renewable Energy Limited, Electromech Maritech Pvt Limited and Finehope Allied Energy Private Limited. A recent investigation by New Delhi-based non-profit Centre for Science and Environment showed that Lanco Infratech floated front companies to win seven JNNSM projects including the above three.

The seven projects are located in Askandra village in Nachna Tehsil in Jaisalmer. Based on CSE’s investigation the Union Ministry of Renewable Energy on February 17 formed a committee to investigate the matter. The committee would submit its report within a month. Amrit Energy Pvt Limited and Alex Solar are among the other companies whose bank guarantees have been encashed.

“Bank guarantees have been encashed since these projects did not meet the commissioning deadline,” says A K Maggu, general manager, NVVN. The companies have been given two months to commission their projects. “If they fail, they will be penalised again and given another three months for commissioning,” says Tarun Kapoor, joint secretary at the ministry.

According to the JNNSM guidelines, companies had to submit bank guarantees between Rs 9 and 12 crore at the time of signing the contracts. If a project developer fails to commission the project by the last date, NVVN can encash the bank guarantee in parts over a period of three months. NVVN will take 20 per cent of the total sum if the project gets delayed by a month, 40 per cent after two months and remaining 40 per cent after three months.

After that the project is fined Rs 5 lakhs per day for another three months and thereafter the project stands cancelled. The bank guarantee is calculated depending on how low the company had bid to get the project. The lower the bid the higher the bank guarantee company will have to submit. This was done to discourage unsustainable bids.

JNNSM aims to install 20,000 MW of grid connected solar power by 2020. In the first batch, projects were awarded for 610 MW (140 photovoltaic and 470 thermal power). A total of 1,000 MW will be installed in the first phase.  



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