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Karnataka Electricity Regulatory Commission Approves 849-Day Delay in Solar Project Commissioning

The Karnataka Electricity Regulatory Commission (KERC) has approved a 849-day delay in the commissioning of a 20 MW solar power project developed by Asian Fab Tech in Chamarajanagar. The regulator also directed Bangalore Electricity Supply Company (BESCOM) to honor the original power purchase agreement (PPA) tariff of Rs 2.89/kWh for the supplied power and ruled out any penalties for the delay.

Background and Delay Justification

Asian Fab Tech had signed a PPA with BESCOM on November 9, 2018, for setting up a 20 MW solar project in Hanur Taluk, Chamarajanagar District. The initial commissioning deadline was June 17, 2020, but multiple obstacles—land acquisition disputes, regulatory delays, legal challenges, COVID-19 disruptions, and adverse weather conditions—pushed the project completion to October 14, 2022.

The developer sought an extension of the commissioning deadline, claiming the delays were caused by force majeure events beyond its control. It also requested payment of Rs 5.756 crore for the electricity supplied from October 14, 2022, to March 31, 2024, and demanded the cancellation of BESCOM’s notice imposing Rs 7.640 crore in liquidated damages.

BESCOM’s Counterarguments

BESCOM contended that the delay was primarily due to the developer’s inefficiencies rather than uncontrollable events. It argued that Asian Fab Tech was only eligible for a lower tariff of Rs 2.312/kWh due to the delayed commissioning and insisted on imposing the liquidated damages.

Commission’s Findings and Ruling

After reviewing the case, KERC upheld the developer’s claims, citing multiple legitimate causes for the delay:

• Regulatory Delays: Karnataka Power Transmission Corporation took 236 days to approve the project’s evacuation scheme, stalling construction.
• Land Conversion Issues: The application for land conversion, submitted on January 2, 2020, was only approved on April 26, 2022, significantly delaying progress.
• Legal Disputes:
  • A neighboring landowner secured a temporary injunction on May 25, 2021, preventing construction until it was lifted on September 9, 2022.
  • Another landowner filed a compensation and permanent injunction lawsuit, which was settled in Lok Adalat on November 12, 2022.
• COVID-19 Impact: Lockdowns and supply chain disruptions led to material shortages, prompting the Ministry of New and Renewable Energy to grant a five-month extension for ongoing projects.
• Adverse Weather: Persistent heavy rainfall between July and September 2020 further slowed construction activities.

Despite these challenges, the project was successfully synchronized with the grid on October 7, 2022, and the commissioning certificate was issued by Karnataka Power Transmission Corporation on October 17, 2022. Power supply to BESCOM commenced on October 14, 2022.

KERC’s Directives

• Extended the official commissioning date to October 14, 2022.
• Overruled BESCOM’s demand for liquidated damages.
• Directed BESCOM to pay the full agreed tariff of Rs 2.89/kWh.
• Ordered BESCOM to clear Rs 5.756 crore in pending payments for power supplied.
• Mandated late payment surcharges as per the PPA.