A delay in land acquisition has sparked disputes between the Madhya Pradesh government and two solar power companies with the state government cancelling the power purchase agreements for all projects of SkyPower Global, a Canada-based solar power company. The state government initiated a similar exercise against ReNew Power, which went to court against the cancellation and won the case.
Persons close to development said SkyPower had ended its India operations, though it too had contested the cancellation of the power purchase agreements (PPAs) in the Madhya Pradesh High Court. If it exits, SkyPower will be the second overseas company after SunEdison to shut its Indian operations. Of its three projects, SkyPower was able acquire land for only two, but after the stipulated 16 months. The state government cancelled all three projects on August 11, 2017. MP Power Management Company Limited (MPPMCL) had signed PPAs with the two solar project developers, SkyPower South East Asia Holdings 2 Ltd (Mauritian arm of SkyPower Global) and ReNew Solar Power for three units of 50 Mw each and one unit of 51 Mw, respectively.
“SkyPower failed to procure land within the period stipulated in the PPAs. MPPMCL’s board issued the termination notice on August 11, 2017,” said a government official. Business Standard has reviewed the termination letter. In the case of ReNew, the termination notice was set aside by the High Court, Jabalpur, on August 18, after the company contested it. The commissioning date for ReNew’s project is September 7.
SkyPower was last year looking for buyers to offload its equity in the MP projects. Calls did not go through to executives handling the Indian business of SkyPower. ReNew Power did not comment. “The PPAs were cancelled due to the non-fulfilment of terms and conditions of the agreements and not due to the unwillingness of MPPMCL to buy solar power or a purported intention to renegotiate the PPAs for lower electricity tariffs,” said the official.
Madhya Pradesh recently proposed to take away the must-run status of renewable power in a draft regulation.
Both companies had bid record low tariffs in competitive bidding for solar power projects. During the auction held in July 2015, SkyPower bid Rs 5.05 per unit for the 50 MW project, the lowest then in the sector. It won 50 MW each at Rs 5.11/unit and Rs 5.30/unit. It later quoted Rs 5.17 per unit for a 50 Mw project in Telangana.
Dispute over land acquisition
* Of its three projects, SkyPower was able acquire land for only two
* The government cancelled all three projects on August 11
* SkyPower failed to procure land within the period stipulated in the PPAs
* MP Power Management Company had signed PPAs with solar project developers — SkyPower South East Asia Holdings 2 and ReNew Solar Power for 50 Mw power each