2020-03-24
Govt. to consider RE supply chain disruption due to COVID-19 as Force Majeure

Govt. to consider RE supply chain disruption due to COVID-19 as Force Majeure

The Ministry of New and Renewable Energy (MNRE) in its latest notification issued on Friday, March 20, directed all renewable energy implementing agencies to treat delay on account of disruption of the supply chain due to the spread of coronavirus in China or any other country, as Force Majeure.

[Force majeure provisions in the PPA refers to an event or circumstance which prevents one party (in this case the power producers) from performing their obligations under circumstances that are not anticipated and beyond reasonable control].

The notice further clarified that RE implementing agencies may grant suitable extensions of time for projects that have been delayed based on documents produced by RE developers in support of such claims.

This notice came following concerns were raised by Federation of Indian Chambers of Commerce and Industry (FICCI) that lack of communication from MNRE and Solar Energy Corporation of India (SECI) and State Renewable Energy Departments related to the implementation of Force Majeure on supply chain disruptions due to coronavirus was creating confusion among power project developers and RE companies in the country.

The notice clarified that all power project developers claiming time extension will have to make a formal application to SECI/NTPC/other implementing agencies providing all the necessary documents in support of their claim.

It further cautioned implementing agencies to ensure that no double relief is granted due to overlapping periods of time extension granted for reasons eligible for such relief.

Last month, the Ministry of Finance (Department of Expenditure Procurement Policy Division) issued a notice clarifying that all delays in business/project completion due to coronavirus will be covered in the force majeure clause (FMC) and should be considered as a case of natural calamity. It added that the FMC can be invoked wherever necessary following the due procedures.

 

 

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