To take the ease of doing solar business a notch higher, the Ministry of New and Renewable Energy is exploring alternate options to the earnest money deposits (EMDs) and performance bank guarantees (PBGs) for the prospective bidders.
In this regard, the ministry has sought views from the Solar Energy Corporation of India (SECI) and NTPC—central government entities which act as the nodal agencies for conducting the auctions.
Specifically, MNRE is exploring Letter of Comfort or Corporate Guarantee as the additional alternatives to EMD. It is also exploring additional alternatives to PBG either through Letter of Comfort or through pledging of existing revenue stream of the already operational projects.
Welcoming the initiative, NSEFI said “this would encourage larger participation in the upcoming bids as this can help in better tariffs for the bids while helping the entire ecosystem.”
However, NSEFI wants the ministry to extend the above-mentioned alternatives to the existing contracts as well where projects are yet to be commissioned. Releasing performance bank guarantees in lieu of alternate arrangements could help resolve liquidity issues for the developers to complete the projects.
“It is estimated that bank guarantees to the tune of Rs 7000 crore are with various government procurers/intermediary procurers. Releasing the said amount would enhance the capabilities of the execution of the project. This would also help in getting working capital issues resolved to the extent possible for the developers,” the NSEFI wrote to the ministry.