Aafrin Kidwai 
The Uttar Pradesh Electricity Regulatory Commission (UPERC) has directed UP Power Corporation Ltd (UPPCL) and Ecogreen Energy Lucknow Pvt Ltd to come up with a firm agreement for the amended power purchase agreement (PPA) for a 13.5 MW municipal solid waste (MSW)-based power project. The Commission has also adjourned the date of hearing to July 21, 2020, owing to the coronavirus (COVID-19) outbreak.
Mercomindia.comreports that the UPPCL and Ecogreen Energy Lucknow Pvt Ltd had signed a power purchase agreement had been signed in September 2017 and the project was scheduled to be commissioned by March 2019. Ecogreen Energy had sought the extension of the commercial operationalization date (COD) from UPPCL until December 2020. The company pointed out that the delay in commissioning was due to the delay in the issuance of a concessional customs duty certificate. Moreover, the site was dumped with waste before the project development began.
The UPPCL had given an extension to the COD of the project up to December 2020 based on a set of six conditions which were subject to the Commission’s approval.
Then in March 2020, the Commission directed the UPPCL to file a comparative statement on the petition within a week, showing a financial impact on UPPCL due to a change in COD.
After the order from the Commission, the UPPCL submitted an affidavit stating that the net present value (NPV) with the revised COD was lower with respect to the original COD.
The NPV for the original COD was ₹482 million ($6.4 million), while the NPV for revised COD stood at ₹467.3 million ($6.2 million).
Ecogreen Energy argued that the COD timeline that was agreed in the amended PPA was before the pandemic, and under the current circumstances, COD timelines may not be adhered to.
The UPPCL submitted that COVID-19 is a force majeure condition, and “PPA has the provision of its treatment.” Soon after the outbreak of the virus in the country, the Ministry of Finance (Department of Expenditure Procurement Policy Division) had issued a clarification that coronavirus will be covered in the force majeure clause and should be considered as a case of natural calamity. Further, the ministry has stated that this clause can be invoked wherever appropriate.
The Commission observed that the terms of the amended PPA are yet to be finalized. If they are approved in their present form, it may lead to unnecessary litigation between the parties. Citing this, the two entities were asked to work out a firm agreement and present it before the Commission.
Picture Credit: Vujn at en.wikipedia, Vidhan Sabha Lucknow, CC0 1.0
