TN power purchase agreement still needs clarity: Pasupathy Gopalan, MD, SunEdison India

SunEdison, the American solar power company which is active in India, says Tamil Nadu’s draft solar Power Purchase Agreement still needs some clarifications. SunEdision is one of the two highest bidders in Tamil Nadu’s solar power purchase tender. The company bid for four projects totalling 50 MW — it would sell solar power from these projects to the State’s electricity distribution company TANGEDCO.

The other company that has bid for 50 MW is RK Biotech of Chennai.

The Managing Director of SunEdison India, Pasupathy Gopalan, told

Business Line that ‘payment security’ was still an issue, even after the promise of a ‘letter of credit’ based system (i.e., bank-backed). Gopalan said many bankers were still not comfortable with TANGEDCO’s payment security system. (The utility has a very poor record of paying its dues — the wind power producers have not been paid their dues for over a year.)

The draft Power Purchase Agreement says: "The payment shall be made on 30th day from the date of receipt of passed bill (invoice) at LC opener’s bank." However, developers have pointed out that since TANGEDCO controls when the invoice / bill will be passed this is not a commitment for payment within a time frame.

The draft Power Purchase Agreement says that "both parties shall comply with the policies and guidelines issued by the Government of India and the Government of Tamil Nadu from time to time."

Gopalan said SunEdison would not enter into a bilateral contract in which "the other party has unilateral right" to change conditions. He said the company needs to be clarified on these issues.

It is learnt that SunEdison has bid at a tariff of around Rs 7.5 a kWhr. Asked about this, Gopalan said the company believes in offering the best price it can to operate profitably and not bid for the sake of bagging projects. He said any lower tariff would mean compromising on the quality of the project and the attendant problems would show up after five years.