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23-Apr-2020

Introduction

On 17 April 2020, Ministry of New & Renewable Energy, Government of India (MNRE) issued an office memorandum (Memorandum II) requiring all renewable energy implementing agencies to treat lockdown due to COVID-19 as ‘force majeure’.

The Memorandum has been issued in furtherance of MNRE’s office memorandum dated 20 March 2020 (Memorandum I), which envisaged a framework for extension of scheduled commissioning dates of renewable energy projects considering disruption of supply chain due to COVID-19 as a force majeure event. Pursuant to Memorandum I, MNRE had, inter alia, directed: (a) all renewable energy implementing agencies of the MNRE such as Solar Energy Corporation of India Limited and NTPC Limited (Implementing Agencies) to treat delay on account of disruption of supply chain due to COVID-19, as force majeure; and (b) developers to submit formal application to the Implementing Agencies with documentary evidence in support of their claims.

Key Directions

Ø  All implementing agencies will treat lockdown due to COVID-19, as force majeure.

Ø  Implementing agencies may grant an automatic extension for the entire period of lockdown and 30 additional days towards normalisation after end of such lockdown to all renewable projects.

Ø  Developers are not required to submit any evidence for availing above-mentioned time extension.

Ø  MNRE has requested the State renewable energy departments (including agencies under power / energy departments of States, but dealing in renewable energy) to treat lockdown due to spread of COVID-19, as force majeure and to consider granting appropriate time extension on account of such lockdown.

Ø  The extension due to disruption in supply of renewable energy equipment prior to lockdown will continue to be governed in accordance with the Memorandum I and will be in addition to general exemption under Memorandum II.  

Comments

MNRE has been proactive in providing reliefs to renewable energy developers on account of COVID-19, from time to time. Even before the nationwide lockdown was announced, MNRE had provided relief to developers for supply chain issues in terms of the Memorandum I. Further, it had directed the distribution companies to continue scheduling power from renewable energy sources on a ‘must-run’ status.

Pursuant to Memorandum II, MNRE has taken a more purposive and equitable view of the ground realities as project related activities are dependent on manpower, supply chain and optimal functioning of operations at local bodies. The time extension for achieving project related milestones along with a normalisation period is a step in the right direction as developers were facing wide ranging impacts due to the lockdown as well as disruption of supply chain and issues due to exodus of labourers. The MNRE has addressed the concerns of the stakeholders by providing the normalisation period to developers to factor in the time required for re-mobilising equipments and labourers once the lockdown is lifted.

-       Dibyanshu (Partner), Prateek Bhandari (Principal Associate) and Prashant Singh (Associate)

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