Further delays threaten contracts for Indian project developers

Two more projects under India’s Jawaharlal Nehru National Solar Mission are set to miss their financial completion deadline.

According to Tarun Kapoor, a joint secretary at the Ministry of New and Renewable Energy, the projects in question are Entegra’s 10MW solar-thermal plant in Rajasthan and Enterprise Business Solutions’s 5MW PV plant in Punjab.

Kapoor claims both developers are in danger not just of losing the preferential tariffs available under JNNSM contracts but also the contract itself.

Problems with raising finance have blighted Entegra’s progress in Rajasthan that despite securing the contract nearly 12 months ago, building work has still not started on the INR2 billion or US$38 million development. Meanwhile, in neighbouring Punjab, construction is underway, although EBS has already incurred a fine for missing its initial October deadline for financial completion and has been forced to negotiate a two-month extension.

Entegra’s chairman, Mukul Kasliwal, has blamed his company’s financial difficulties on “unreasonable” government restrictions regarding its “special-purpose vehicle” status. However, Kasliwal expects this issue to be resolved shortly and for the plant to still meet its initial 2013 completion deadline.

“Had we been allowed to function as an SPV, then we would’ve finished financing long ago,” Kasliwal said.

The restrictions on SPVs, which allow companies to isolate risks from funding large projects, means Entegra is limited to raising finance through smaller loans backed by its balance sheet. The company has already invested INR100 million in the project and is in talks over alternative funding.