BEFORE THE ELECTRICITY REGULATORY COMMISSION AT

Suo Motu Petition No.1058/2010

In the matter of: Suo Motu petition to consider the request of the petitioner to condone the delay in commissioning of power evacuation facilities of Wind power project at Jadeshwar and Sardhar Sites, encashment of Bank Guarantees tendered under clause No.18 of Amendment to Wind Farm Policy of GOG Notification GR No.WND-11-2008-2321-B dated 7th January,2009 for Security Deposit towards timely completion of lines, bays, and other associated equipments of 66 KV substation and withdraw the claim against B.G. lodged with bank

Respondent No.1 : Azalea Enterprise Private Limited “Industry House”, S.No.49, Opp: Kalyani Carpenter Special Steel Ltd., Mundhwa, Pune-411036 (Maharashtra).

Represented by : Shri Radha Krishna

Respondent No.2 : Gujarat Energy Transmission Corpn.Ltd. Sardhar Patel Vidyut Bhavan, Race Course, .

Represented by : Ms.Venu Birappa, Mr.S.K.Trivedi & Mr.J.A.Jani.

CORAM: Shri Pravinbhai Patel,Member(T) Dr.M.K.Iyer, Member(F)

ORDER

[1] The present petition is a Suo Motu petition initiated by the Commission to consider the request of the petitioner to condone the delay in commissioning of power evacuation infrastructure of wind power projects at Jadeshwar and Sardhar sites, extend the completion period upto 31.03.2011

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for Jadeshwar site and 30.6.2011 for Sardhar site and withdraw the claim against Bank Guarantee lodged with the bank by the respondent No.2 GETCO. The petitioner has approached the Commission vide their submission letter dated 14.12.2010.

[2] The facts of the present petition are briefly stated as under:

2.1 The Commission had received a letter dated 14.12.2010 from M/s. Azelea Enterprise Pvt. Ltd. (respondent No.1 in present proceedings), requesting to condone the delay in commissioning of wind power evacuation facility at Village: Bojapuri, Karban and Mahidhar Dist. to Sardhar S/S of GETCO till 30.06.2011. It was submitted that they are facing lot of technical issues in creation of evacuation transmission lines for the location of GETCO Sardhar station, as the line, as planned originally, was to cross over dense forest and very thickly populated area, due to which, it is impossible to draw the transmission line. The respondent No.1 was, therefore, required to establish transmission line on a new route. Hence, they seek extension of the time limit. They have also proposed to evacuate power through 132 KV to nearby substation and it will take time upto 30.06.2011. Therefore, delay in establishment of evacuation system may be granted. They also promised to extend the Bank Guarantee submitted by them towards the security deposit. The applicant has also made an investment of Rs.10 Crores approximately for creation of the above infrastructure.

2.2 The respondent No.1 has, in his another letter dated 14.12.2010 submitted that due to heavy and continuous rainfall from June, 2010 to

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September, 2010, they were unable to carry out the work of Jadeshwar site. They have placed order for all required equipments and the same will be established and Commissioned upto 31.03.2011 and they have already spent about Rs. 6 crores. Therefore, they have requested to condone the delay in Commissioning of wind power evacuation facility at kotada, nayani and arnitimba to Jadeshwar S/S of GETCO till 31.03.2011.They also promised to extend the Bank Guarantee submitted by them towards the security deposit.

2.3 The respondent No.1 had submitted Bank Guarantee No.0896609BG0000833 of Rs. 3.50 crores issued by State Bank of , Pune, for carrying out transmission work relating to evacuation of power of 70 MW wind energy generators at Village Bojapuri, Kabran & Mahidar villages to Sardhar S/s of respondent No.2, which consist of laying 16 Kms of transmission lines, bays and other associated equipments of 66 KV substation. The said work was required to be completed by 31.12.2010, failing which the Bank Guarantee would be encashed by respondent No.2. The respondent No.1 submitted that they were unable to complete the work within the time limit, due to reasons beyond their control. They requested to condone the time limit for completion of work upto 30.06.2011 and promised to extend validity of the Bank Guarantee accordingly.

2.4 It was further submitted by the respondent No.1 had paid Bank Guarantee No.0896609BG0000832 of Rs.3 crores dated 25.11.2009 issued by State Bank of India, Pune for carrying out transmission work relating to evacuation of power of 60 MW wind energy generators at

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Villages Kotadanayani & Arnitimba to Jadeshwar substation of respondent No.2 which consist of laying 10 Kms of transmission lines, bays and other associated equipments of 66 KV substation. The said work was required to be complete by 31.12.2010, failing, which the Bank Guarantee would be encashed by respondent No.2. The respondent No.1 submitted that they were unable to complete the above work in above time limit due to heavy rain, which was beyond their control. They requested to condone the time limit for completion of the above work upto 31.3.2011 and promised to extend validity of Bank Guarantee accordingly.

[3] The matter was kept for hearing on 7.01.2011. When the matter was called out Shri Radha Krishna was present on behalf of respondent No.1. Ms.Venu Birappa, Mr.S.K.Trivedi and Mr.J.A.Jani were present on behalf of respondent No.2 at the time of hearing.

[4] Shri Radha Krishna on behalf of the respondent No.1, reiterated the fact as stated in para 2 above. He further submitted that, the respondent No.1 has initiated the work for evacuation of power from 60 MW wind farm at village kotadanayani and Armitimba to 66 KV Jadeshwar S/s of the respondent No.2. They had carried out site survey and also allocated works for completing the transmission network etc. at the place of respondent No.1 and respondent No.2. He further submitted that the respondent No.1 was allocated land in the year 2008 by Govt. of Gujarat. Thereafter, they have carried out wind survey by installing wind mast to verify the availability of wind and accordingly decided to install the appropriate capacity of the wind energy generators. They have initiated works for creation of transmission network by completing the work of 16 foundation out of 20 foundations, 6

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structure for the transmission network was completed. Some delay happened as there were objections regarding right of way by the people in various locations. They have made expenditure towards creation of the necessary infrastructure, foundation, procurement of materials etc. Which works to about Rs. 6 crores for Jadeshwar. They seriously desire to complete the above work within the stipulated time; but due to heavy rains during the months of June to September 2010, and objections regarding right of way to create the foundations of the transmission lines etc., they were unable to complete the said work. They have given an undertaking to complete the above work upto 31.12.2010 and furnished the requisite Bank guarantee, which is valid upto 15.1.2011. However, due to reasons mentioned above, the work will now be completed only by 31.03.2011. The respondent No.1 has also agreed to enhance the said Bank Guarantee period upto 31.3.2011 so that they are able to complete the said work within the above period and the Bank Guarantee should not be encashed by the respondent No.2. On encashment of the Bank guarantee by the respondent No.2, the respondent No.1 will be badly affected as the project cost would become very costly and prohibitive. Hence, the Commission may please extend the time limit for completion of the transmission evacuation network of above Jadeshwar site transmission network work upto 31.3.2011.

4.1 He further submitted that the evacuation system for the 70 MW of wind energy generators being established at villages Bojarpuri, Kabran and Mahidar consist of 16 kms of 66 KV line upto 66 KV Sardhar S/S of GETCO. As per the original planning the line was passing through dense forest and thick population area. Due to which, it was not

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possible to create the necessary infrastructure because they are unable to receive the necessary clearances from the forest department. Hence, the respondent No.1 was required to change the route of the transmission lines which led to increase in the length of transmission lines to 26 kms and also required to repeat all the works related to creation of the transmission network i.e route map survey, right of way etc. The respondent No.2 was therefore, unable to complete the above transmission network upto 31st December, 2011. They would be able to complete the above work by 30th June, 2011. The respondent has already made an expenditure of Rs. about 10 Crores for the creation of the necessary infrastructure. If the extension in time limit is not allowed the respondent No.1 would face difficulty due to higher cost of the projects. The respondent No.1 was unable to complete the above task as the same was beyond their control. He requested that the Commission may extend the time limit for execution of above transmission network, and promised to extend the period of the bank guarantee accordingly.

[5] Ms.Venu Birappa, on behalf of the respondent No.2 submitted that the respondent No.1 was allocated the evacuation capacity at Jadeshwar S/S site in the year 2008. The respondent No.1 had to construct only 10 Kms of transmission line along with bays and associated works at the substation of GETCO. The respondent No.1 did not completed the above work, though one year time period is provided to them for completion of the above work. According to amendment made in Wind Power Policy by the dated 13.6.2009 and the Order No.1 of 2010 of the Commission dated 30.1.2010, the wind energy generators, who have to install 1 to 100 MW wind energy

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generators are required to complete the above work within a period of one year which is not complied by the respondent No.1. There were other 7 wind energy generator projects, who had completed the laying of transmission network and construction of bay and associated works at GETCO substation and at their place within a period of one year. Thus, the ground taken by the respondent No.1 for extension of the time limit due to heavy rain for creation of transmission network from their wind energy generators at Kotadanayani & Arnitimba to Jadeshwar Sub Station is not a valid reason. The Bank Guarantee is a contract between the respondent No.1 and No.2, according to which the respondent No.1 agreed to complete the above 2 site works upto 31.12.2010. On non-completion of the said work in the stipulated time, the respondent No.2 had decided to encashed the bank guarantee of Rs.3.0 crores given for Jadeshwar site. The respondent No.1 had placed the work order for the materials required for creation of necessary infrastructure only in November and December, 2010. They have not started till date any line stringing work. She submitted that the respondent No.1 may be able to complete the work related to Kotada Nayani, Arani Timba to 66 KV Jadeshwar upto 31.3.2011, as per the site work report obtained by the respondent No.2. She submitted that the Bank Guarantees were valid upto 31.12.2010, and hence, they have started the procedure for encashment of the same.

5.1 She further submitted that in case of creation of transmission system consisting of the transmission lines of 16 kms, bays, and other associated equipments of 66 KV Sardhar S/S from villages Bojarpuri, Kabran and Mahidar to 66 KV Sardhar S/S for evacuation of power from wind energy generators is passing through dense forest and thick population area is

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correct. But the respondent No.1 was having sufficient time to change the route of the transmission system as they received the estimate during the year 2008 from the respondent No.2. Thereafter, they were able to carry out route survey map for erection of necessary transmission network and know that the proposed line will pass through dense forest and thick population. As such, the reasons for delay in creation of transmission system should not be accepted.

5.2 She further submitted that the land was allocated to the respondent No.1 quite long back so that they were able to establish wind mask and able to study the necessary wind velocity etc. at their place. Hence, it is not correct to say that the time period of study wind potential at the site of the respondent No.1 is also required to be considered to extend the time limit for creation of the necessary infrastructure.

The respondent No.1 has not completed the transmission network for evacuation of power from their wind energy generators sites to the GETCO S/S within one year as per the order of the Commission. The respondent No.1 has thus, not fulfilled the directives given by the Commission in order No. 1 of 2010. Therefore, the respondent No.2 have started the procedure for encashment of the Bank Guarantee given by the respondent No.1.

[6] In response to submission made by respondent No.2, Shri Radhakrishnan on behalf of respondent No1., submitted the details of latest works done by them at above two sites and stated that they are committed to Commission the projects by 31.03.2011 (Jadeshwar S/S site ) and 30.06.2011 (Sardhar S/S site). They are also ready to extend the bank guarantees upto 31.3.2011 and 30.06.2011 for Jadeshwar and Sardhar

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sites respectively. If they are unable to complete the transmission network for evacuation of the electricity from wind energy generators by above dates, the respondent No.2 will be eligible to encashed the same. The extension for completion of above work sought by the respondent No.1 is only for 3 months i.e. from 1.1.2011 to 31.3.2011 for Jadeshwar sites and 6 months i.e. from 1.01.2011 to 30.06.2011 for Sardhar S/S sites as they are serious to complete the above works and already incurred substantial expenses towards it.

[7] We have carefully considered the submissions made by the parties. It is an admitted fact that the Government of Gujarat had in amendment made in Wind Power Policy dated 13.1.2009 provided that the wind turbine generators shall be required to give Bank Guarantee @ Rs.5 lacs per MW to GETCO i.e. respondent No.2. The Commission has in para 6.4 of its order No.1 of 2010 dated 30.1.2010 decided as under:

6.4 Security Deposit

The objective of the order is to promote development of renewable energy in the state. A procedure of giving permission for the proposed wind projects, based on the load flow studies has been followed by the GETCO. Thus, the proposed evacuation system from the pooling station of wind projects forms part of the overall GETCO System. While timely completion of power evacuation system of such wind projects is essential, timely execution of WEG project isalso equally important. Non-completion of WEG projects leads toidling of transmission resources. Thus, to assure GETCO about seriousness of wind power projects, the project Developer shall be required to furnish a Bank Guarantee of Rs. 5 lakhs/MW to GETCO. The Bank guarantee shall be forfeited if the project is not commissioned within a specified time period as follows:

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Projected Prescribed Period for Commissioning of the project capacity in MW 1 to 100 1 (one) Year from the date of allotment of transmission Capacity 101 to 200 One and a half years from the date of allotment of transmission capacity 201 to 400 Two years from the date of allotment of transmission capacity 401 to 600 Three years from the date of allotment of transmission capacity

Suggestions of the Objectors

GETCO suggested that date of allotment of the transmission capacity shall be considered from the date of issue of estimate for the wind farm site to the developer. M/s Kenersys India Pvt Ltd. and M/s. Azalea Enterprise Pvt Ltd. have suggested that a period of 3 years be given to the developer before any view is taken with regard to non- utilization of allotment. The security deposit of Rs. 5 lakhs per MW and that too for completion instead of starting of activities is not justified. M/s Acciona Wind Energy Pvt Ltd. has suggested that a minimum period of 4 years should be allowed irrespective of the capacity of the proposed project. Indian Wind Energy Association has suggested that the provisions of security deposit should not be made.

Commission’s Ruling

As clarified above, the duty has been cast upon GETCO to create necessary infrastructure of transmission system for evacuation of power generated by WEG. If, GETCO fails to create the same, the power generated from wind energy is not utilized. Similarly, if the project developer fails to complete his project and evacuation system upto GETCO inter-connection point within the stipulated time frame, the infrastructure created by the GETCO will remain unutilized and the burden of the network charges is borne by other consumers. Hence, the Commission does not agree to any change in the provisions regarding security deposit and prescribed time period. So

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far as the allocation of transmission capacity is concerned, the date of estimate given by GETCO and receipt of the same by the project developer may be considered as starting date for this clause. It creates the right of the project developer on the proposed transmission system. With the above observation, the Commission decides that date of receipt of estimate from GETCO by the project developer shall be the starting date for the period of commissioning of WEG as well as power evacuation arrangement as stipulated in this clause

7.1 According to above decision, the Commission had decided that if the WEG developers, failed to complete the evacuation work within the time limit, their security deposit shall be forfeited by GETCO. However, purpose of the said deposit was to ensure seriousness of the developers to Commission the Wind Generator Projects. It is unjust and unfair to encash the Bank Guarantee, if any project developer fails to complete the evacuation of transmission network associated with the wind energy projects to the GETCO substation due to any natural calamities, force majeure events or conditions beyond the control of the project developers. In the present case, the respondent No.1 submitted that there was heavy rain during June, 2010 to September, 2010. Due to heavy rain, they were unable to carry out the work related to creation of necessary infrastructure for transmission lines, bays work and other associated works at the substation of the respondent No.2 and at their place. It is true that in case of heavy rain, it becomes difficult to carry out the work like creation of foundation for the transmission lines, stinging of the transmission lines etc. for both the sites. Moreover, for evacuation of power from villages Bojapuri, Karban & Mahidar to Sardhar S/S of the respondent No.2 the line was passing through dense forest and thick populations. Therefore,

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the respondent No.1 was required to change the route of the evacuation transmission lines. Hence, the reasons advanced by the respondent No.1 seems to be genuine which requires to be considered and if any delay occurred due to such events, the said period is genuinely not available in a period of one year for completion of the work. It is observed that the works related to establishment of transmission network depends on the geographical area, weather conditions, etc. and accordingly time period for laying the same will vary. We, therefore, decide to extend the time limit for completion of the transmission network and related works for evacuation of power from (i) 60 MW of generators at Villages Kotadanayani & Arnitimba site of the respondent No.1 to 66 KV Jadeshwar substation of respondent No.2 and (ii) 70 MW of villages Bojarpuri, Kabran and Mahidar site of the respondent No.1 to 66 KV site of Sardhar S/S of the respondent No.2 for the period upto 31.3.2011 and 30.06.2011 respectively. If the respondent No.1 fails to complete the above work within the said limit, no further extension shall be allowed to the respondent No.1 and respondent No.2 shall be eligible to encash the Bank Guarantee submitted by the respondent No.1.

7.2 It is seen that the Bank Guarantee given by the wind energy generators to the GETCO (respondent No.2) is as per the order No.1 of 2010 dated 30.1.2010 of the Commission. Thus, the Bank Guarantee was given by the WEG for the completion of the evacuation of the transmission network for the time period decided by the Commission. If the Commission decides any change in the above time frame, the period of Bank Guarantee will change accordingly. Though the Bank Guarantee is a commercial arrangement, it cannot be treated as an

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agreement between the two parties. As such the Commission may allow the extension of existing Bank Guarantee or direct the respondent No.1 to furnish a fresh Bank Guarantee.

7.3 During the hearing, the respondent No.2 submitted that they have started proceedings for encashment of the bank guarantees given by the respondent No.1 as the time limit for completion of the above work is over on 31.12.2010. We have already in para 7.2 above decided that the respondent No.1 shall be given extension of time limit to complete the evacuation work for 60 MW of generators at Villages Kotadanayani & Arnitimba site of the respondent No.1 to 66 KV Jadeshwar substation of respondent No.2 upto 31.03.2011 and for 70 MW of villages Bojarpuri, Kabran and Mahidar site of the respondent No.1 to 66 KV site of Sardhar S/S of the respondent No.2 upto 30.06.2011 for creation of transmission network from . Therefore, the Bank Guarantees submitted by the respondent No. 1 are required to be extended as a decided by the Commission in earlier para. However, if the Bank Guarantee amount is already encashed by the respondent No.2, the same should be refunded to the respondent No.1 on receipt of fresh Bank Guarantee for the extended time limit of upto 31.03.2011 for Jadeshwar site and upto 30.06.2011 for Sardhar site. The respondent No.1 shall have to submit fresh Bank Guarantee to the respondent No. 2 for the extended time limit on receipt of the order of the Commission for a time limit of 31.03.2011 for Jadeshwar site and 30.06.2011 for Sardhar site for an amount of Rs. 3 Crores and 3.5 Crores. The respondent No.2 is directed that they should refund the encashed Bank Guarantee amount within 3 days from the date of receipt of the fresh Bank Guarantee from the respondent No.1.

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7.4 In view of above, we decide that the time period for creation of the necessary transmission infrastructure by the respondent No.1 for its Jadeshwar and Sardhar sites shall be extended upto 31.3.2011 and 30.06.2011 respectively. If, the Bank Guarantee has already been encashed by the respondent No.2, the amount of the Bank Guarantee should be refunded to the respondent No.1 within 3 days from the receipt of the fresh guarantee from the respondent No.1. The respondent No.1 shall submit the fresh Bank Guarantee within 5 days from the date of receipt of this order to the respondent No.2. If the respondent No.1 is unable to complete the transmission network for evacuation of power from the Jadeshwar and Sardhar sites by 31.03.2011 and 30.06.2011, the Bank guarantee submitted by the respondent No.1 shall be encashed by the respondent No.2.

[8] We order accordingly.

[9] With this order, the petition stands as disposed of.

Sd/- Sd/-

[PRAVINBHAI PATEL] [Dr.M.K.IYER] MEMBER(T) MEMBER(F)

Place: Ahmedabad Date: 10/02/2011

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