The Solar Energy Corporation of Indian (SECI) released the standard PPA and VGF securitization agreement yesterday. Developers have been waiting for the VGF securitization agreement as the terms in it would affect the bankability of the projects. Some of the highlights from both the securitization agreement and PPA include
- Part commissioning of power plants is limited to tranches of 10 MW i.e. if the total capacity allocated is 20 MW, then a minimum capacity of 10 MW (DC) should be commissioned before VGF disbursal is undertaken.
- Similarly penalties on late commisioning would be applied in 10 MW slabs.
- No change in the VGF disbursal timelines with the funds being released in six tranches.
- Estimated annual CUF has to be declared at the time of commisioning and one revision of the same is allowed within 1 year of commissioning.
- Minimum CUF to be declared – 17%
- The CUF can vary between -15% and +10% of the declared value till the end of 10 years subject to the annual CUF remaining over minimum of 15%.
- The terms and conditions for the default and termination of the agreement are as seen in the guidelines released earlier.
- SECI/MNRE to conduct periodic site inspections to ensure quality of the projects is maintained.
- Failure to commision the project within three months of the specified date would enchasment of the performance bank guarantees provided by the developer. Failure beyond three months would result in the reduction of the annual electricity tariff paid to the developer by half paisa per kWh per day of delay subject to a maximum delay of 24 months.
- Payment security is enforced through a letter of credit (LC) and a Default ESCROW Agreement.
The documents can be downloaded from SECI’s website here and here.
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Are these projects under VGF scheme be eligible for RECs for Project Developers?? SECI is buying the power and selling to DISCOM with a mark up price. Will this amount to Third party sale, hence, at later date, whether SECI or the project developers can claim RECs?? If it is so, then, it is an economic harakiri for DISCOMS and also common man as VGF is getting doled out apart from Accelerated Depreciation…
Madhavan: Can you please seek this clarity from SECI / MNRE