Relaxations Given for Infrastructure-Based Sectors

Several relaxations have been given to various infrastructure-based sectors in India pursuant to the COVID-19 pandemic. Some of those changes are highlighted below:

Renewable Energy

i.   Time Extension in Scheduled Commissioning Date: The Ministry of New and Renewable Energy (‘MNRE’) though its Office Memorandum dated April 17, 2020 has decided to treat COVID-19 as a force majeure event. Renewable energy implementing agencies can grant extension of time for renewable energy projects. The extension is equivalent to the period of lockdown and additional 30 days for normalisation post lockdown; and

ii.  Force Majeure: The MNRE has issued directions, through its Office Memorandum dated March 20, 2020, to Solar Energy Corporation of India, NTPC Limited and Chief Secretaries of power/ energy/ Renewable Energy departments of State Governments and Union Territory Governments/ administrations, to treat delay on account of disruption of the supply chains as a result of COVID-19 in other countries as a force majeure event. They may grant suitable extension of time for projects based on evidence produced by the developers in support of their claims. This was pursuant to the Ministry of Finance’s Order dated February 19, 2020 holding that the disruption of supply chains as a result of spread of COVID-19 in China will be within the scope of a force majeure clause.

MNRE on May 13, 2020, pursuant to the above, provided that in public-private partnership concession contracts, an extension for a period of 3 to 6 months can be provided for completion of contractual obligations, on a case-to-case basis, which were to be fulfilled on and after February 20, 2020. It was also clarified that the invocation of such clause would be valid only if the parties to the contract were not in default as on February 19, 2020 and such invocation does not excuse any non-performance other than those related to the lockdown.

Power

i.    Relaxation on Payment Security Mechanism: The requirement of pre-payment/ letter of credit for the entire cost of the power scheduled by the distribution company, has been reduced for the period beginning from March 24, 2020 to June 30, 2020. The Ministry of Power (‘MoP’) on April 6, 2020, reduced this to 50% of the cost of power. The remaining 50% is required to be paid within the time period under the Power Purchase Agreement (‘PPA’);

ii.   Reduction in Late Payment Surcharge Fee: The MoP on April 6, 2020 has reduced the late payment surcharge fee till June 30, 2020, post which the normal PPA rates will apply; and

iii.  Advisory to Generating Companies: The MoP on April 24, 2020 has advised the generating companies importing coal for blending purposes to replace their imports with domestic coal. Coal can be imported for blending only if the requisite quantity and quality of domestic coal is not made available.

Published In:Inter Alia - Quarterly Edition - June 2020 [ English Chinese japanese ]
Date: June 30, 2020