Two more projects handed out under India’s Jawaharlal Nehru National Solar Mission (JNNSM) 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 (EBS) 5MW PV plant in Punjab, and Kapoor claims both developers are in danger not just of losing the preferential tariffs available under JNNSM contracts but also the contract itself.
As with many projects in India, problems with raising finance have blighted Entegra’s progress in Rajasthan to the extent that, despite securing the contract nearly 12 months ago, building work has still not started on the INR2 billion (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” (SPV) status. However, Kasliwal expects this issue to be resolved shortly and for the plant to still meet its initial 2013 completion deadline.
“We haven’t started because we’re not going to do something that doesn’t make sense financially,” Kasliwal said in a phone interview to Bloomberg. “Had we been allowed to function as an SPV, then we would’ve finished financing long ago.”
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.
India’s government plans to hold further solar auctions in 2012 as it looks to move closer to its target of installing 3GW by 2018, although Kapoor said a final decision on how much capacity would be auctioned off is yet to be decided.