In a significant ruling, the Supreme Court has addressed a dispute involving the Solar Energy Corporation of India Limited (SECI) and Wind Four Renergy Private Limited (WFRPL) regarding the timeline for the commissioning of a wind power project. The case centered on the applicability of an extension of time for the commissioning deadline, due to the delay in operationalizing the Long Term Access (LTA) to the transmission system. The case has broad implications for renewable energy projects and their timelines in India, particularly regarding the application of contractual provisions and government notifications.
Background: The Project and the Dispute
WFRPL, a subsidiary of Inox Wind Infrastructure Services Limited (IWISL), was part of a larger wind energy project awarded by SECI under a Request for Selection (RfS) dated 28 October 2016. As part of this project, IWISL secured a total capacity of 250 MW in five different Special Purpose Vehicles (SPVs). WFRPL was assigned a 50 MW capacity, for which a Power Purchase Agreement (PPA) was signed with Power Trading Corporation of India Limited (PTC) on 21 July 2017. The commissioning date was initially set for 4 October 2018, with a maximum extended deadline of 5 July 2019, subject to liquidated damages and tariff reductions.
However, a delay in the operationalization of the LTA, required for evacuation of power, led to WFRPL seeking an extension of the commissioning deadline. The LTA, crucial for the project’s successful implementation, was finally operationalized on 14 April 2019, triggering a chain of events leading to WFRPL's request for additional time to complete the project.
The Ministry of New and Renewable Energy’s Concessions:
In response to delays caused by issues in the transmission system, the Ministry of New and Renewable Energy (MNRE) issued a letter on 22 October 2019, granting certain extensions to wind power projects. The letter specified that wind projects would be entitled to a 60-day extension from the operationalization of the LTA, allowing developers like WFRPL more time to complete commissioning activities.
WFRPL, after learning that the LTA had been operationalized, argued that they should be granted an additional 132-day extension, which would shift their commissioning deadline to 21 November 2019. This claim was made on the grounds that they had not been informed of the LTA’s operational status until late 2019.
The Legal Journey: CERC, APTEL, and the Dispute Over Time Extension
The Central Electricity Regulatory Commission (CERC), in its order dated 8 March 2021, accepted WFRPL’s plea for a 132-day extension, which pushed the scheduled commissioning date to 23 October 2019. The order was accepted by SECI, and the revised deadlines allowed for the project to be completed within the adjusted timeframe.
However, the Appellate Tribunal for Electricity (APTEL) later ruled that the 132-day period of delay should be counted from the date of APTEL’s judgment, i.e., from 11 January 2022. SECI challenged this order, arguing that the delay should have been computed from the date the LTA was made functional, not from the date of APTEL's ruling. SECI contended that such an interpretation was contrary to the objectives outlined in the PPA and the broader timeline requirements for renewable energy projects.
Supreme Court’s Judgment:
The Supreme Court, after hearing both parties, set aside the APTEL judgment, restoring the CERC’s order of 8 March 2021. The Court emphasized the importance of adhering to project timelines to ensure the timely delivery of renewable energy and reduce carbon emissions. The Court found that the direction from APTEL to begin the 132-day extension from its own judgment was irrational and counterproductive, as it disrupted the established timelines that were crucial for the timely completion of the renewable energy projects.
The Supreme Court clarified that the extension period granted by the CERC, which had already accounted for the delay in the operationalization of the LTA and the subsequent 60-day extension, should be respected. The Court also noted that WFRPL had already received substantial benefits from these time extensions and had no valid reason to delay further, as the other SPVs of IWISL had already operationalized their respective projects.
Additionally, the Court ordered that SECI recover the Rs. 10 crore that it had refunded to WFRPL, along with interest at the rate of 12% per annum. If WFRPL failed to repay the amount within six months from the date of the Court’s order, the sum would be treated as electricity dues and recovered accordingly under the Electricity Act, 2003.
Conclusion:
This judgment is a significant one for the renewable energy sector, particularly for wind power projects, where delays in transmission infrastructure and regulatory processes can affect the timely commissioning of projects.
The Court's decision underscores the importance of clarity in project timelines and the necessity of adhering to the contractual obligations outlined in PPAs. The ruling also reinforces the principle that delays and extensions must be reasonable and in line with the broader objectives of renewable energy policies in India.
The Supreme Court’s intervention in this case ensures that the CERC’s order, which appropriately extended the commissioning deadlines, remains in effect, while also protecting the interests of SECI by directing the recovery of the Rs. 10 crore payment. The case highlights the dynamic nature of the renewable energy sector and the legal mechanisms in place to ensure that projects are completed efficiently and in accordance with agreed timelines.
ELECTRICITY ACT, 2003
