India to Blacklist Companies for Missing Renewable Project Deadlines

Ministry of New and Renewable Energy (MNRE) has issued an order stating that renewable energy firms could be blacklisted if they are not able to meet project completion deadlines. This happens to be the first time that such an order has been introduced by India. 

The circular was issued by the MNRE on 15 February to state-run firms, Solar Energy Corporation of India Ltd. (SECI), National Thermal Power Corporation Ltd. (NTPC) and National Hydroelectric Power Corporation Ltd. (NHPC). According to the circular, “If any renewable energy project is not completed by the prescribed date of completion, then its Bank Guarantee should be encashed and the developer blacklisted after asking him to show cause. The blacklisting will be for a period of three to five years. These are in accordance with the General Financial Rules of the Government and apply to all tenders/bids."

India is on its way to achieving its renewable energy capacity target of 500 gigawatts by 2030. With its installed base of around 175 gigawatts, the country needs to add over 40 gigawatts of capacity annually to achieve its goal.

Meanwhile, the disruptions in equipment supply due to the COVID-19 pandemic and heavy import duties on solar equipment have decreased the pace of installation to less than 15 gigawatts per annum.

The new MNRE order will not only lead to accountability and transparency but also bring clarity to the pending projects. Further, it is expected to encourage firms to complete their projects in time which would help India achieve renewable energy targets by 2030.

Talking about the order, YK Jain, Smart Energy Consultant, says, “The contract has to be performed with an understanding between the parties of their shared responsibilities, actions are interlinked and thus delay analysis with Independent third party observation considering all facts is must before any conclusion as fair practice. The risk and rewards should be proportional; such unilateral imposition will be a big deterrent and jeopardize the renewable energy implementation as it will discourage any entity to participate further in such bids, who in ground reality have limited control over project stakeholders but contract forced to shoulder all risk, without any big reward. Instead, there should be an expedition cell duly empowered within Ministry with competent experts to closely monitor the projects, and authority to remove the challenges, hearing all stakeholders’ concerns. We need to have the environment for incentives for performance and need to develop the right competency to employ the best partners and assessment of fair rewards over the risks passed on to them. For fast-track overall development, we need the government to create a positive atmosphere and infrastructure to support that.”