India's principal power sector regulator, Central Electricity Regulatory Commission (CERC) has asked the Solar Energy Corporation of India Limited (SECI) to explain how Azure Power India was substituted as power developer by Adani Green Energy (AGEL) for 2,333 MW of power capacity to be supplied to Andhra Pradesh under the 7,000 MW solar power deal, according to an Economic Times report.
SECI and Andhra Pradesh distribution companies (discoms) signed power supply agreement for 7,000 MW of power in 2021. 4,666 MW of the total amount had to be supplied by AGEL and 2,333 MW by Azure. For this, power purchase agreement (PPA) was signed between SECI and AGEL and another between SECI and Azure which was approved in April 2022 by the power regulator.
However, Azure Power withdrew from the agreement and transferred its share of solar power capacity to be supplied to AGEL. By the end of 2023, another PSA was signed between SECI and Andhra Pradesh government under which the capacity was transferred AGEL.
Now, this supplementary agreement between SECI and AP government is before the CERC for approval. In October, the regulator questioned the automatic substitution of power developer and whether this was allowed under the original PPA.
According to the CERC order, senior counsel for SECI said that while the provisions of the guidelines and the request for selection (RfS) documents did not restrict such transaction, the PPA as issued along with the RfS, at Article 15.1, permitted the assignment of the PPA.
It added that, "Senior counsel further sought liberty to file a brief note on the aspects as to how the above transaction is permissible under the guidelines and bid documents and in addition, in the larger public interest."
Article 15.1 of PPA, however, forbids any transfer of such capacity before the commissioning date of the full project. So far, the project has not been commissioned but the capacity has been transferred.
In the case in question, the commissioning date (COD) of the full project is September 2026. Article 15.1 of PPA says, "This agreement shall not be assigned by any party, except to the project lenders or lender's representative as security for their debt under the financing agreements, other than mutual consent between the parties to be evidenced in writing... In no case, such assignment shall be permissible prior to the declaration of COD."
The final order of CERC is pending on whether the transfer of power capacity can be permitted.
