The Federation of Indian Chambers of Commerce and Industry (FICCI) in a footnote has defined that the Renewables industry in India is in a state of muddle regarding the next steps during the ongoing global outbreak of the novel coronavirus, due to the lack of any communication from the Ministry of New and Renewable Energy (MNRE), Solar Energy Corporation (SECI) and states related to applicability of Force Majeure on the business disruption caused by the spread of the virus.
“The Finance Ministry has issued a circular stating the current situation of COVID-19 should be treated as Force Majeure for solar projects. However, MNRE, SECI and state governments have not yet issued any circular with respect to the same. This is creating confusion in the renewable energy industry,” FICCI issued in a note on the Impact of COVID-19 on Indian Economy as reported by ET.
It added the Renewable Energy Industry is a capital-intensive industry where availability of liquidity is important and the current outbreak of coronavirus has affected the liquidity of the renewable energy companies due to the impact on the supply chain.
In its suggestions to deal with the situation, FICCI has said MNRE, SECI and state governments should declare the present situation in the renewable sector as Force Majeure for solar power projects and power purchase bills raised by renewable power suppliers to SECI or NTPC should be paid within 15 days instead of 30-45 days, which will help in easing the liquidity of renewable energy players.
The chamber has also said the disbursement of Term Loans for project construction should continue and the government should direct the banks not to stop disbursement of loans under the expectation of project delays due to COVID-19. Further, ways should be explored for safe unloading of shipments from China into India. FICCI said shipments from China have started to arrive, however, the ships are not being allowed to unload their goods in India due to fear of contagion. The government should find ways to facilitate the safe unloading of shipments in India.
Contrary to the suggestions made by the industry chamber, power and new & renewable energy minister RK Singh has been on record to say that India’s solar industry is under no compulsion to import solar cells or modules from China following the coronavirus outbreak. “The solar industry is under no compulsion to import solar cells, modules and other equipment from China. They are free to meet their requirements either from the domestic market or alternative sources,” Singh said in a written reply in Parliament.
Speaking of alternative sources, he said the government was actively promoting domestic manufacturing of solar equipment in India through several schemes such as M-SIPS, PM-KUSUM, CPSU Scheme, grid-connected rooftop solar programme, and also tenders for setting up solar photovoltaic manufacturing facilities.
“The government has already clarified that disruption of supply chains due to the spread of coronavirus in China or any other country should be considered as a case of natural calamity and force majeure clause may be invoked, wherever considered appropriate, following the due procedure,” Singh added.
In February, rating agency ICRA had said that the outbreak of (COVID-19) coronavirus in China poses a concern for domestic solar developers and original equipment manufacturers (OEMs) due to disruption in the supply chain for key components used for manufacturing solar modules.
Further adding that this development could potentially play spoilsport in the near term, it said, adding that the sector is already facing several headwinds due to issues such as long delays in making payments by state distribution utilities, execution in delays for projects bid out over the past two years due to challenges in land acquisition and securing transmission connectivity and financing in a timely manner.
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