New Delhi: The Ministry of Renewable Energy has re-introduced a condition that will require a renewable energy company to guarantee bank performance and money earnestly while bid on the project.
Ministry on Thursday asked public intermediaries such as SECI, NTPC and NHPC auctioned renewable projects to introduce conditions in their upcoming tenders.
Based on new requirements, bidding for the project must provide 4% of the project costs as a bank warranty if the site is determined by them and 5% of the project value if the site is selected by the generator.
Bidders must also deposit 2% of the project costs as earnest money to qualify to bid on the project.
The ministry has suspended bank guarantees and earnest money requirements to reduce the burden on the developer during a covid-induced slowdown.
Letter of Comfort (Locs) from the Central Green Lender Sector Irdal is permitted as an alternative to deposit money and company guarantees from intermediaries as an alternative to bank guarantees.
This step is estimated to have been released around RS 7,000 Crore for developers.
Industrial analyst said the reinferred of these conditions will increase the funding needs of developers when many of them struggle with increasing input costs, especially consisting of modules, and bracing for further increase after customs duty forced next year with the aim of promoting domestic manufacturing .
Access to funds remains an obstacle for domestic renewable energy companies and a large segment of solar and wind projects supported by foreign investment.
But others say the condition will make non-serious players out of the bidding process, allowing fair competition among serious companies.
Players who are not serious are known to enter the arena and bid the unrealistic low rates for bag projects for assessment but ultimately fail to give.
This delays the project as in most cases they have to retendation.