Lanco found guilty of false commissioning of plants

To lose bank guarantees for its four power plants in Rajasthan

By Ankur Paliwal
Published: Tuesday 20 March 2012

The Union Ministry of New and Renewable Energy (MNRE) has found Lanco Infratech guilty of false commissioning of solar power plants in Rajasthan. The company will now lose its first set of bank guarantees for the remaining four solar photovoltaic plants in Rajasthan. It has already lost bank guarantees of three other plants being set up in the state after National Vidyut Vyapar Nigam (NVVN) Limited encashed it in mid-February as the company failed to commission them before the deadline on January 9.

Down To Earth had exclusively reported in the March 15 issue that these plants were commissioned only on paper.  Following the report, the ministry had sent a fact-finding team to the state to assess the ground reality.  The plants were being set up in the Askandra village in Nachna Tehsil in Jaisalmer district of the state. The team submitted its report to MNRE last week.

Lanco is building seven solar photovoltaic plants of 5 MW each in Rajasthan in the first batch of the first phase of the Jawaharlal Nehru National Solar Mission (JNNSM).

“It was found that the remaining four plants by Lanco were indeed not commissioned,” says Tarun Kapoor, joint secretary, MNRE. Lanco had written a letter to the ministry saying that the definition of commissioning was not clear to them. “It seems both the project developer and the government of Rajasthan had misinterpreted the meaning of commissioning. But whatever has been the reason, we are not accepting it. The definition of commissioning is clear,” Kapoor adds.

According to NVVN, a 5 MW solar power project is considered commissioned when the full capacity is installed and is feeding the grid depending upon the solar radiation. Down To Earth had found that while the entire 35-MW capacity was commissioned in the files of the state government, the seven plants were feeding a miniscule 65,385 kwh power in a month. This is only 1.3 per cent of the promised output.

Keeping with JNNSM guidelines, the companies were asked to submit bank guarantees of Rs 9 to Rs 12 crore at the time of signing power purchase agreements on January 9, 2011. It was agreed that if a project developer missed the deadline, NVVN would start encashing the bank guarantee in parts over three months, after which the project would be fined Rs 5 lakh per day for another three months. If still incomplete, the project would stand cancelled.

There could be more defaulters 

NVVN, a power trading arm of National Thermal Power Corporation, is now in the process of finalising the names of defaulters who have still not commissioned their plants. The second set of bank guarantees will be encashed from them.

“We are going through the reports of the fact-finding and commissioning committees and soon would know how many project developers will lose their first and second set of bank guarantees,” says A K Maggu, general manager, NVVN. First set of bank guarantee of some companies was not enchased in February as their commissioning status was disputed.

When Down To Earth had visited Askandra on February 12, it was past the second penalty period and not even half the work was completed.
MNRE had constituted one more committee to look into the complaints raised by Centre for Science and Environment, a New Delhi-based non-profit which found that Lanco Infratech circumvented JNNSM guidelines to bag seven of the projects. “The report of the committee is expected soon,” says Kapoor.


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