Response to Bidders Queries for Development of 50 MW of Solar Power Projects in the State of Karnataka. Clause No. Clause Query Response

Transcription

1 Response to Bidders Queries for Development of 50 MW of Solar Power Projects in the State of Karnataka The Selected Bidder shall be a company incorporated under the Companies Act, 1956 (hereinafter referred to as "Developer") and will be responsible for design, finance, engineering, procurement, construction, operation and maintenance of the Project under and in accordance with the provisions of the Power Purchase Agreement to be entered into between the Developer and the concerned ESCOM in the form provided by the Authority as part of the Bidding Documents pursuant hereto ".. A bidder could propose max of 3 projects. Provided minimum capacity of the project proposed by the bidder shall be at least 3 MW and max capacity shall be 10 MW..." Request to mention the duration of the PPA to be entered in to by the bidders with ESCOM. "..A bidder could propose max of 3 projects. Provided minimum capacity of the project proposed by the bidder shall be at least 3 MW and max capacity shall be 50 MW..." The enhancement of the minimum size will bring in economies of scale in projects. Refer Clause 3.2. of Draft Power Purchase Agreement Capacity of the project It may be clarified if it is 50 MW DC or 50 The Solar PV Project capacity shall be in AC rating as measured at the 1

2 Offered capacity under this RfP is 50 MW Connectivity with the Grid Developers shall be responsible for power evacuation from the Power plant to the nearest Substation/Delivery point. The selected bidder shall obtain power evacuation approval from KPTIL/ESCOM. The developers shall carry out maintenance of Transmission line during the agreement period. However, applicable supervision charges shall be paid by the developer Parameter: Water Availability Description as per tender document: This Clause is applicable In case the Bidder Is bidding for the Solar Thermal Projects). It would be the responsibility of the Developer to make arrangements for the water MW AC. It is suggested that construction of Transmission line from the power plant to the nearest Substation/ Delivery Point may be included in the scope of KPTCL/ESCOM. Since ultimate buyer is ESCOM and Developer's obligation ends at delivery point, the need for power evacuation approval from KPTCL/ESCOM may be deleted. Maintenance of Transmission line from the power plant to delivery point as per RfP only could be in the scope of Developer. Payment of supervision charge for line to be constructed and maintained by the developer should not be applicable. Is there any guide line available with KREDL on the time required In days to get approval from the Irrigation Department, Government of Karnataka In case the water is proposed to be used from Irrigation sources. This is being asked as the clause states that this approval has to be submitted along with the Bid. Please Delivery Point. Refer to the Corrigendum. 2

3 required for the Projects). The Bidder shall submit documentary evidence In the form of approval from the Irrigation Department, Government of Karnataka In case the water is proposed to be used from irrigation sources along with the Bid PPA to be executed between the Developer and ESCOM would be vetted by KERC The selected bidder may change the location proposed during the RFP Stage The Bidders are requested to submit their Bids in accordance with the Bidding Documents. The Bid shall be valid for a period of not less than 365 (Three Hundred and Sixty Five) days from the date specified in Clause 1.3 for submission of Bids (the "Bid Due Date"). clarify. PPA to be executed between the Developers and ESCOM should be vetted by KERC before seeking bids to define the rights & liabilities of the contracting parties. Kindly confirm if there is any time limit for change of location. For eg. From Selection of Bidder to Financial Closure The duration of Validity Period of bid i.e. 365 days is very long. Based on the proposed schedule of bidding process as mentioned under clause 1.3, it seems the bidding process will be concluded by June Please change the validity of bid to 180 Days from Bid due date. Refer Annex II of Appendix I. As per the Annex II, the Bidder is required to furnish evidence of clear possession of the required land for the project along with documentary evidence within 270 days of signing of the Power Purchase Agreement Parameter: Effective Tariff KERC approved tariff Is Rs /kWh for Refer Clause of the RFP. 3

4 Description as per tender document: Financial Bids are invited for the Project on the basis of the effective tariff after discount In Rupees/kWh on KERC approved tariff (the "Effective Tariff') offered by a Bidder for energy to be sold to ESCOMs under the Agreement. The Effective Tariff payable by ESCOM/kWh to the Bidder shall constitute the sole criteria for evaluation of the Financial Bids. The Agreement Period is predetermined, as indicated in the draft Power Purchase Agreement. In case KERC issues a revised tariff order after the Bid Due Date and consequently, the Effective Tariff of any of the Selected Bidder(s) is higher than the tariff notified by KERC, then the revised tariff as notified by KERC would be applicable to those Selected Bidders The Bid Security shall be refundable not as per Clause except in the case of the Selected Bidder(s) whose Bid Security shall be retained till it has provided a Performance Security under the Power Purchase Agreement. Solar Thermal Power Project. After offering discount If effective tariff for Solar Thermal Is higher than the highest effective tariff of a PV plant, how the selection of CSP project will be done as this is a reverse bidding process? Please let us know If there is a separate allocation for Solar Thermal" out of Total 50 MW capacity. Solar Thermal with storage option can provide electricity on demand, i.e., can serve peak hours as well as night time. We would request you to kindly look Into the possibility of higher tariff for peak hours on the time of day tariff concept for projects with storage option. To be re texted as: The Bid Security shall be refundable as per Clause except in the case of the Selected Bidder(s) who s Bid Security shall be retained till it has provided a Performance Security under the Power Purchase Agreement. capacity allocation has been made separately for Solar Thermal and Solar PV. Refer to the Corrigendum The EMD should be completely be 4

5 The Bidder shall pay a part of Bid Security equal to an amount of Rs. 10,00,000/ through E Procurement Website submitted through Bank Guarantee from nationalised / scheduled bank. Request to clarify the last date for payment of Rs. 10,00,000/ Please refer to Clause 1.2.4, as per which, part of the Bid Security payable through the E procurement Website i.e. an amount of Rs. Rs.10,00,000 shall paid along with its Bid before Bid Due Date (A): & 2.11 Submission of Bid This clause states that the Key Submissions as well as the financial Bid needs to be submitted through e procurement website. Please clarify if the original hard copies of these docs are also required to be submitted to KREDL. And if how and on which date? The Bidders shall be responsible to ensure that the payment and reconciliation with the E procurement Website is completed prior to the Bid Due Date. KREDL shall not be responsible for nonpayment due to technical/any other issues. Bids that are not accompanied with this payment shall be summarily rejected. The Bidder shall submit the documents in the electronic mode using their digital signature in the slots provided on E Procurement Website within Bid Due Date as per the manner and form detailed in the RFP. However, the demand drafts towards cost of the RFP document and the processing fee and the original Bank Guarantee towards Bid Security should be submitted upto 5

6 the due date ( Due Date ) "Financial Bids are invited for the Project on the basis of the effective tariff after discount in Rupees/kWh on KERC approved tariff (the "Effective Tariff) offered by a Bidder for energy to be sold to ESCOMs under the Agreement. The Effective Tariff payable by ESCOM/kWh to the Bidder shall constitute the sole criteria for evaluation of the Financial Bids. The Agreement Period is predetermined, as indicated in the draft Power Purchase Agreement. In case KERC issues a revised tariff order after the Bid Due Date and consequently, the Effective Tariff of any of the Selected Bidder(s) is higher than the tariff notified by KERC, then the revised tariff as notified by KERC would be applicable to those Selected In case the KERC reduce the tariff and if the reduced tariff less discount offered by the Bidder is not making the financially attractive for the Bidder, the Bidder should be given an option to withdraw from the Bidding process or the PPA without forfeiting of the Bid Security/Performance Security. Further we propose that instead of discount based tariff bidding, Bids should be invited for the Tariff only (not the discount) keeping a cap in tariff at Rs /unit (i.e. KERC Tariff) Discount based bidding shall lead to uncertainty in tariff which may keep various serious bidders away from participating in the bid process. As per Clause , KREDL reserves the right to seek original documents for verification of any of the documents or any other additional documents upon opening of the Bidding Documents. 6

7 Bidders Effective Tariff In case these Selected Bidders withdraw from the Bidding process or the PPA, the Bid Security the Performance Security, as the case may be, would be forfeited. In case KERC Issues a revised tariff order after bid due date lower than the effective tariff, then revised tariff notified by the KERC would be applicable. This is not consistent with clause 12.2 of Draft PPA which specifies revision of tariff only as a consequence of delay in commissioning of the project beyond scheduled commissioning date. It may be appreciated that financial projections for availing project loan from the Banks/Financial Institutions is made on the basis of firm agreed tariff. Provisions of Midway Tariff revision with no fault of the Developer will make financial closure of the project difficult. This may be modified in line with PPA Effective Tariff In case these Selected Bidders withdraw from the Bidding process or the PPA, the Bid Security/Performance Security, as the case may be, would be forfeited. If the Selected Bidders withdraw from the Bidding Process due to reduction in 7

8 Effective Tariff as applicable under revised KERC order, the Bid Security may not be forfeited You would appreciate that the tender documents have been released only on March 25, 2014 and the pre bid meeting is happening tomorrow. Release of clarifications to the developers on the bid documents would take at least a week by KREDL. The developers would not get any time after issue of clarifications to go back to their management and bankers to complete the e tendering process. We therefore request your good office to extend the deadline at least up to May 30, 2014 to provide a reasonable time to the developers for bid submission after the pre bid meeting and receipt of clarifications from the tendering authority on the issues/ concerns raised by the developers on the tender document Bid Validity Bid Validity Period: 365 days from Bid Due Date Bid Validity of 365 days is on higher side. Further, as per the Standard Bidding Documents (SBD) issued by MNRE, the validity of the Bid shall be up to 150 days from the Bid Due Date. Hence, we request you to revise the same. Refer to the Corrigendum We would also like you to allow 8

9 Partnership firms to participate in the tender as it would help to garner better response to the tender and encourage investments in the state (c) The 50 MW solar tender released now is essentially to cover the five bids received in the last 130MW tender, who have not progressed beyond the Lol stage. The 12 successful bidders adding upto 80 MW who have already received projects in the previous round should be excluded and not considered for participation from this round of bidding. This would be consistent with the philosophy of KREDL to limit project size of 10MWto each bidder to give opportunity to more bidders "The Financial Bid should be furnished in electronic mode only clearly indicating the Effective Tariff. The Bidder shall, as part of its Financial Bid, submit separate Effective Tariff for each of the Project for which it is Bidding. The specimen of the Financial Bid is provided at Appendix VI of this RFP. The Financial Bid must clearly indicate the bid amount in Indian Rupees." Please clarify whether, the nonfinancial bid can be furnished through other modes such as hard copies, s etc.. Submissions shall be made as specified in Clause 2.11 of the RFP. 9

10 Minimum Equity holding/equity lock In should be three (3) years by lead member and collectively by all consortium Members It states that the Bidder needs to hold 51% equity in the project company up to a period of 3 years after COD. Requesting this to be reduced to 1 year. The same has been maintained in the JNNSM, the bidding conducted by the state of Madhya Pradesh and other state bidders The clause states that the approval of the Authority from national security and public interest will be obtained to qualify the Bidder. It is requested to clarify that no action is required from the Developer in the context of this clause While qualification is open to persons from any country, the following provisions shall apply: (a) Where, on the date of the Bid, more than 15% (fifteen percent) of the aggregate issued, subscribed and paid up equity share capital in a Bidder or its Member is held by persons resident outside India or where the Bidder or its Member is controlled by persons resident outside India; or (b) if at any subsequent stage after the date of the Bid, In our case, the subscribed and paid up share capital of the Bidding company is indirectly held by two non resident investors which is 50% of the aggregate subscribed and paid up share capital. The investment by non resident investors is approved by the Foreign Investment Promotion Board (FIPB), Department of Economic Affairs, Ministry of Finance, and Government of India under Foreign Direct Investment (FDI) Policy. The provisions of clause regarding qualification of Bidder from national security and public interest perspective is Refer to the Corrigendum. The Bidder is required to submit Annex VIII Declaration of Shareholding Pattern of the Bidder. Subject to verification of necessary documents during evaluation, KREDL may consider the Bidder. 10

11 there is an acquisition of more than 15% (fifteen percent) of the aggregate issued, subscribed and paid up equity share capital or control (by persons resident outside India) in or of the Bidder or its Member; then the qualification of such Bidder or in the event described in sub clause (b) above, the continue qualification of the Bidder shall be subject to approval of the Authority from national security and public interest perspective. The decision of the Authority in this behalf shall be final and conclusive and binding on the Bidder Shareholding commitments In case selected bidder is a single entity and exercises its option to incorporate SPV, then it shall hold at least 51% of subscribed and paid up equity share capital of the SPV until third anniversary of the commercial operation date of the project Parameter: Electronic Bid submission Description as per tender document: All documents of the Bids submitted in complied based on the Government of India approval. Hence, we believe that we are qualifying under this clause, Please confirm? The shareholding of a single entity bidder which does not opt to form SPV may be clarified. Lock in period of 3 years is too high. In the recent tender under JNNSM Phase II floated by SECI and tender floated by MPPCL, equity lock in period of 1 year was specified. Therefore equity lock in period may be reduced to 1 year from 3 years. Is there any limitation In size allowed in MB/GB on electronic bid contents submission? Refer to the Corrigendum. Clarification may be sought from the e procurement department. The helpline numbers are available on e procurement the website 11

12 electronic mode under this RFP shall be uploaded on E Procurement Website: using digital signature Key Submissions" n. A copy of the draft Power Purchase Agreement with each page initialed by the person signing the Bid in pursuance of the Power of Attorney's referred to in sub clause (b) and sub clause (c) Hereinabove. change whatsoever to the financial and commercial conditions will be made after accepting the Bid Please allow the selected bidders to review the final draft PPA before signing the PPA as the PPA has to be approved by the KERC as per clause (a) Processing Fees of Rs.1.10 lakh/mw is quite high. Our request is to reduce or make it refundable (a) Key Submission Please specify the city at which the DD will be payable for the amount of RFP Cost & the Processing Fee i Copy of certified annual reports of bidder and Draft PPA and copy of COL, MOA Please clarify if these documents need to be submitted electronically or in hard copy. request for changes in the Draft PPA will be entertained. As such, the draft PPA issued along with the Bid Documents will be used for execution. The executed PPA would then be vetted by KERC. Refer to the Corrigendum. Refer to the Corrigendum. The Bidder shall submit all the documents in the electronic mode using their digital signatures in the correct slots in E Procurement Website. However Demand Draft towards cost of the document and original Bank 12

13 Guarantee needs to be submitted in hard copy as indicated in the Schedule of Bidding (a) Technical Criteria Request to provide confirmation whether any technical qualification criteria exists for Bidders to take part in the Bidding process Net Worth read with Annexure III of Appendix I Technical Capacity Net worth has been defined as follows: = Paid up share capital Add : Reserves Subtract: Revaluation Reserve Subtract: Miscellaneous Expenditures to the extent not written off. The bidder shall deploy commercially established technology wherein there is at least one project successfully operational of the proposed As per Accounting standard share premium collected in cash is considered as reserve for the purpose of computation of net worth. This may be confirmed. Clause 3.7 dealing with CDM appears to be wrongly Indicated. Nature of evidence in support of technical capacity may be elaborated. KREDL reserves the right to seek the hard copy of the bid submitted for the purpose of clarification. Refer to Clause (a) of the RFP. Share premium collected in cash is considered as reserve for the purpose of computation of net worth. Refer to the Corrigendum. 13

14 technology for at least one year anywhere in the world. The bidder is required to undertake to furnish evidence of meeting technical capacity in line with clause Financial Capacity For Newly Established Company, if the Managing Director (having 90% of the Share) having personal Net worth, will it satisfy the requirement of Net worth. (Class (b)). For Consortium, Proprietorship companies are Eligible or t (b) The Bidder shall have a minimum net worth equivalent of Rs. 2 crore (Rupees Two crore) or equivalent US$ per MW of the proposed capacity (the "Financial Capacity") as on March 31, 2013 or March 31, 2014 for companies incorporated after March 31, The Bidder shall have a minimum net worth equivalent of Rs. 3.5 crore (Rupees Three Crore and Fifty lakhs only) or equivalent US$ per MW of the proposed capacity (the "Financial Capacity") as on March 31, 2013 or March 31, 2014 for companies incorporated after March 31, 2013." Only the networth of the Bidder would be considered for demonstration of Financial Capacity. Proprietorship concerns (which are not incorporated under the Companies Act) are not eligible to Bid under this Bidding Process. The Clause remains unchanged. This is as per SBD issued by MNRE. Further, in a scenario when availability of funding is becoming more stringent and developers are increasingly expected by banks to put in upfront equity, it becomes imperative that developers 14

15 (b) Financial Capacity The Bidder shall have a minimum net worth equivalent of Rs. 2 crores (Rupees Two crores) or equivalent US$ per MW of the proposed capacity (the "Financial Capacity") as on March or March 31, 2014 for companies incorporated after March 31, The Bidder shall submit a certificate as provided in Annex III A along with the audited annual accounts for the financial year or have the requisite financial capability. This will ensure serious participation and rule out frivolous interest. Please allow the bidder to use the annual accounts for the financial year or for meeting the financial capacity irrespective of its year of incorporation. Further, it will be difficult for a company to arrange the audited annual accounts for current financial year I.e. FY by bid due date. Therefore it is also suggested that for those bidders who would use the net worth for FY for meeting financial capacity, they should be allowed to submit unaudited annual accounts for FY Technical Eligibility criteria The scheme provides that the bidder will deploy commercially established technology wherein there is at least one project successfully operational of the proposed technology. Solar industry in the country has evolved in the last few years and therefore, all Central and State schemes expect bidders to themselves have some experience of implementing a minimum of 50% of the bid capacity in 15

16 (b) Financial Capacity The Bidder should have a minimum net worth equivalent of Rs. 2 crore per MW of the proposed capacity as on March 31, 2013 or March 31, 2014 for companies incorporated after March 31, India in last year s. This ensures that only experienced and strong players bid under the schemes and make them successful. We, therefore, request that the technical eligibility criteria should be modified and bidders having experience of implementing projects equal to 50% of the offered capacity should only be made eligible to bid under the scheme. In case of newly incorporated companies, can the net worth be brought in seven days prior to the bid due date, as RFP was published on 25th March 2014, and it was not possible to bring in the paid up share capital of Rs. 6 Crore (for minimum capacity} in five days from the date of publication of RFP and also considering the fact that MCA site was closed from 28th March To amend the RFP accordingly (1)(b) Net worth whether net worth of a new company incorporated after ? Can the net worth of companies incorporated prior to be used as on ? Refer Clause (b). The Bidder should have a minimum net worth as on March 31, 2013 or March 31, 2014 in case the company is incorporated after March 31, Is net worth of the promoters duly certified by a chartered accountant will Net worth of promoters would not be considered for the purpose of computation of net worth. 16

17 Of the RFP deals with liquidated damages upon delay of the Project beyond the scheduled COD of the Project. It provides for encashment of Bank Guarantee of 20% whether the project is delayed by one day or one month. Similarly for other BG encashment of 40%. We submit that there should be a principle of proportionality followed here. The penalty on the delay in project commissioning should be calculated on the number of days for which delay occurs on pre rata basis. be considered for computing the net worth? Further to the point above, the penalty should be applicable only on uncommissioned capacity, and KREDL/ ESCOM should allow for part commissioning of the project, subject to a minimum capacity. The above provisions have been accepted by Punjab Energy Development Agency (PEDA) upon request of the developers for its 300 MW solar PV project RFP dated March Para 3 of their amendments issued dated April 9, 2013 provide for this amendment to RFP clause 3.23 Page 68 dealing with delay in commissioning of project The value of CPBG is also very high, may we request you to kindly reduce it Performance Security The performance security has been 10% of the estimated project cost and the amount will be Rs. 83 lakhs per Mw. Sir, in most of the recent schemes of the Central and State Governments the performance guarantee has been restricted to approx Rs. 30 Iakhs per MW only. This helps the bidders optimize their liquidity position and leads to projects being completed on or before time. The amount of Rs. 30 lakhs per MW is large ESCOM may take appropriate decision in this regard in the interest of the project on pro rata basis. 17

18 & 4.4 (c) Performance Security Parameter: Performance Security Description as per tender document: Performance Security shall be enough to ensure that only serious bidders come and bid under the scheme. We, therefore, request that the performance guarantee value should be reduced to Rs. 30 lakhs per MW. Performance Security Shall be submitted for an amount of Rs. 75 Lakh (Thirty lakh) per MW of the Contracted Capacity, The Performance security shall be initially valid for a period of eight (3) months after the Scheduled Delivery Date The Standard bidding documents issued by MNRE specifies performance security of 75 Lakhs /MW to discourage frivolous players participating in the bid and to ensure seriousness in development of projects so that developers who would be having the capability to execute projects will participate. Also once a project has been executed; there is no reason why should it be held for 12 months. It is therefore suggested that Performance security may be returned after 3 months of COD. In case of a Solar thermal power project, If cost/mw is less than 12 C/MW, then accordingly Is the performance security required to be revised? It is assumed that, the Solar Thermal projects are not as competitive as the Solar PV in terms of rate per unit. 18

19 45. Appendix I Annex III A submitted by the Selected Bidder in Favour of the concerned ESCOM in the form of Bank Guarantee. The Performance Security shall be valid for a period of 12 (twelve) months from Scheduled Commissioning Date. The Performance Security shall be calculated at the rate of 10" of the estimated project cost. The estimated project cost shall be calculated as Indicated below: Estimated Project Cost= Capital Cost/MW*Proposed Capacity in MW Capital Cost/MW as per the KERC Tariff Order dated October 10, 2013 Is: Solar PV Rs Crores/MW Solar Thermal Rs Crores/MW 46. ANNEX II Undertaking for Technical Capacity I/We hereby undertake to certify in line with Clause 3.7 the following details shall be furnished within 270 days of signing of PPA for each Project: Failure or delay on our part in achieving the above conditions shall constitute sufficient grounds for Please clarify that Annex III A has to be certified by statutory auditor of Bidding company As the commission time has been provided for Solar PV that projects is 18 months from PPA. Request KREDL to not to encash the PBG in case of non compliance of any of the clause as mentioned under ANNEX II Undertaking for Technical Capacity in line with Clause 3.7. As a promotional aspect, the same performance security is considered. The Bidder shall submit the Certificate from Statutory Auditor / Independent Auditor as the case may be for demonstrating the Financial Capacity of the Bidder. Refer to the Corrigendum 19

20 encashment of our Performance Security 47. Annex II Undertaking of Technical Criteria: Point Annex (III)A Certificate from Statutory Auditor/ Independent Auditor for Net worth Calculation Kindly clarify if there is any minimum land requirement for Solar PV & Solar Thermal Tech. Kindly confirm whether the Statutory Auditor/ Independent auditor needs to provide a separate certification showing the calculation of Net worth. 49. Appendix II Power of Attorney for Singing the Bid Request that a Board Resolution from the Bidder company authorizing a representative suffice instead of Power of Attorney 50. Appendix II Who has to sign the document of the bid? 51. Appendix II Who has to give the power of Attorney? whether by any member of bidding consortium or all the members have to sign and provide the declaration As per the industry standards the land for Solar PV and Solar Thermal shall be 5 acres and 7.5 acres respectively. However, the bidder is at liberty to adopt any technology which may reduce the requirement of land. The Bidder shall submit the Certificate from Statutory Auditor or Independent Auditor as the case may be for demonstrating the Financial Capacity of the Bidder. The Bidder is required to submit the Power of Attorney supported by board resolution as per the requirement of the RFP. Authorised Signatory of the Bidder shall sign the bid. The Bidder is required to submit the Power of Attorney. The Power of Attorney shall be given to the Authorised Signatory of the Bidder as per the format set out in Appendix II. The Managing Director/ Chairman/Director of the Bidder can give the Power of Attorney in favour 20

21 of Authorised Signatory. Power of Attorney shall be supported by chartered document/board resolution. 52. Appendix IV Para ref 1 Existing wording: without reservation guarantee the due and faithful fulfilment and compliance of the terms and conditions of the Bidding Documents (including the RFP Document) by the said Bidder and unconditionally and irrevocably undertake to pay forthwith to Authority an amount of Rs Proposed wording: without reservation guarantee the due and faithful fulfilment and compliance of the terms and conditions of the Bidding Documents (including the RFP Document) by the said Bidder and unconditionally and irrevocably undertake to pay forthwith to Authority on written demand an amount of Rs In case of consortium, authorised signatories of the consortium members would be required to give power of attorney in favour of authorised signatory of the lead member of the Consortium as per the format set out in Appendix III. 21

22 53. Appendix IV Para ref 4 Remarks: Inclusion of the words on written demand Existing wording: This Guarantee shall be irrevocable and remain in full force for a period of 365 (Three Hundred and Sixty Five days) from the Bid Due Date inclusive of a claim period of 60 (sixty) days or for such extended period as may be mutually agreed between Authority and the Bidder, and agreed to by the Bank, and shall continue to be enforceable till all amounts under this Guarantee have been paid. Proposed wording: This Guarantee shall be irrevocable and remain in full force for a period of 365 (Three Hundred and Sixty Five days) from the Bid Due Date inclusive of a claim period of 60 (sixty) days i.e., till <expiry date> 54. Appendix IV Para ref 9 Remarks: Inclusion of an expiry date in the wording Deletion of the strike out wordings as it leaves the Guarantee open ended Existing wording: We undertake to make the payment on receipt of your notice of claim on us 22

23 addressed to [name of Bank along with branch address] and delivered at our above branch that shall be deemed to have been duly authorized to receive the said notice of claim. Proposed wording: We undertake to make the payment on receipt of your notice of claim on us addressed to [name of Bank along with branch address and delivered at our above branch that shall be deemed to have been duly authorized to receive the said notice of claim till <expiry date> Remarks: Inclusion of an expiry date in the wording, as otherwise the clause remains open ended Proposed wording: The Beneficiary in his own interest may obtain confirmation of the genuineness of this bank guarantee from <full address of HSBC from where the guarantee is issued> twithstanding anything contained herein above: 1. Our maximum liability under this bank guarantee shall not exceed ( ) 2. This bank guarantee shall be valid only up to and 3. We are liable to pay the guaranteed amount or any part thereof under this 23

24 bank guarantee only and only if we receive a written claim or demand on or before 55. ANNEX V Statement of Legal Capacity Thanking you, Yours faithfully, (Signature. name and designation of the authorized For and behalf of (name of the company) Term of Agreement The PPA shall be valid up to Expiry Date Remarks: Inclusion of the following matter at the end of the BG Thanking you, Yours faithfully, (Signature. name and designation Director/Company Secretary) For and behalf of (name of the company) Expiry Date i.e. 25 years from the date of commencement of supply may be incorporated under this clause The RFP states that the selected bidder has to complete the following activities within 270 days from the date of signing the PPA: (i) achieve Financial Closure; (ii) furnish documentary evidence that technical criteria has been fulfilled; (iii) Furnish documentary evidence for the land required for the development of the project as per the annexure. The PPA, however, states that the conditions Refer to the Corrigendum. Refer to the Corrigendum. 24

25 precedent set out in Clause 4.2 which are similar to that in the clause 3.6 of RFP, have to be satisfied within 180 days from the date of signing the PPA unless the same is affected by any Force Majeure event. 1) There' is a discrepancy between the terms of RFP and PPA as regards the number of days in which the conditions precedent (vis a vis the three activities) have to be satisfied. Presently, the RFP states those 270 days, the PPA provides 180 days to meet this Condition Precedent. Request that it be clarified whether it will be 270 days or 180 days. 2) Since the land conversion process takes a long time, request that 270 days be provided in the PPA to meet these CPs 3) Fulfilment of some of the conditions precedent (including the three activities) set out in Clause 4.2 of the PPA by the Developer is dependent on the action of the ESCOM or third parties (government of Karnataka). 25

26 Conditions Precedent for the Developer d) made adequate arrangements to connect the Power Project switchyard with the Interconnection Facilities at the Delivery Point; In addition to the force majeure events, non performance or a delay on the part of the third parties or ESCOM should also be included as a ground for extension of timelines provided under the PPA. Please clarify the term "adequate arrangements" as per our understanding it only means getting STU feasibility letter from KPTCL/ESCOM as the case may be We strongly suggest to exclude land use conversion from conditions precedent to PPA. Adequate arrangement also includes necessary approvals for the drawings from generation point to interconnecting point including equipments, from KPTCL/ESCOM. In Karnataka, In Karnataka, Companies, on farmers are barred from purchase of agricultural land as per Section 79 & 80 of Karnataka Land Reforms Act, 1961 (KLR Act) for industrial purpose. Companies have to take approval under section 109 of the KLR Act to acquire land for industrial purpose. Currently acquisition and conversion of agricultural land for industrial purpose takes around 12 months. It is practically not feasible to achieve the land use conversion in the stipulated time due to administrative 26

27 Sub Clause (d) & (e) Draft PPA Damages for delay by the Developer In the event that the Developer does not procure fulfillment of any or all of the Conditions Precedent set forth in Clause 4.2 within the period of 180 days and the delay has not occurred for any reasons attributable to ESCOM or due to Force Majeure, the Developer shall pay to ESCOM Damages in an amount calculated at the rate of 0.2% (zero point two per cent) of the Performance Security for each day's delay until the fulfillment of such Conditions Precedent, subject to a maximum period of 30 (thirty) days. On expiry of the said 30 (thirty) days, ESCOM at its discretion may terminate this Agreement. processes involved 1. How are Clauses (d) and (e) different? 2. What documentary evidence is to be submitted by the Developer to prove that condition under sub clause (d) has been complied with? Based on the amendment proposed under clause 4.1, the clause 4.3 will be amended as under: "In the event that the Developer does not procure fulfillment of any or all of the Conditions Precedent set forth in Clause 4.2 within the period of 270 days and the delay has not occurred for any reasons attributable to ESCOM or due to Force Majeure, the Developer shall pay to ESCOM Damages in an amount calculated at the rate of 0.2% (zero point two per cent) of the Performance Security for each day's delay until the fulfillment of such Conditions Precedent, subject to a maximum period of 30 (thirty) days. "Further, we would request KREDL to remove the condition for termination of PPA: "On expiry of the said 30 (thirty) days, ESCOM at its discretion may terminate this Agreement" The interconnections shall be as per the approval from KPTCL/ESCOM The tenure of CPBG is very long 27

28 approx.30 months. If a new tariff order comes, that should not affect this tender (b) Appropriation of the Performance Bank Guarantee This clause sets out the grounds on which the bank guarantee provided by the Developer shall be enchased and casts an obligation on the Developer that within 30 days from the date of encashment, the Developer shall replenish the bank guarantee to its original amount Right to Contracted Capacity and Energy In the event the PBG is replenished, a clause be inserted in the PPA whereby the Developer's obligation to' replenish the bank guarantee shall imply that (i) ESCOM has waived its right to terminate the Agreement for the incident for which the bank guarantee has been enchased and (ii) all the timelines under the agreement shall automatically stand extended to the extent for the delay for which the bank guarantee is enchased. Request you to consider sale of excess APPC to ESCOM. Suggestion: New Clause: Energy generated in excess of 21% in any contract year may shall be purchased by 28

29 ESCOM at the then prevailing APPC (Obligations of the Developer) read with Schedule 2 (Solar Tariff Order issued by KERC) attached to the RFP. While the developer plant design is based on the energy analysis on historical data, the actual CUF may exceed in some contract year: The same has been observed JNNSM phase I projects where the generation of specific plants exceeded 21%. Even if this excess generation is allowed to sell to third party, it is practically difficult to sell this power as the capacity is contracted with procurer Point (k)' of Schedule 2 of RFP states that the taxes actually paid by the generators (in this case, the Developer) can be claimed directly from the distribution licensees (in this case, the ESCOM). Clause (g) of the PPA states that the Developer shall be responsible to pay all the taxes and other liabilities imposed by any government or other competent authority on land equipment, material or works of the project to or on the electricity consumed by the Project or by itself or on the income or assets owned by it. 29

30 It is requested to clarify that no taxes, including With Holding Taxes, will be deducted from the Effective Tariff quoted by the bidder and at which the PPA is signed. The net payment to the Developer will be energy metered at the Delivery point Tariff quoted by the Developer. If that is not the case, a suitable mechanism has to be introduced in the PPA wherein in addition to the tariff, the Developer can claim all the taxes levied on sale of electricity, paid by it, from the ESCOM (e) The tender document envisages the developer building and operating the project. However as per the tender document it mentions of owning the project please clarify on the same Equity lock in condition The selected bidder shall hold at least 51% of subscribed and paid up equity share capital In the SPV until third anniversary of the of the commercial operation date of the project. (a) It may be clarified if the shareholding of all the shareholders of the bidding company or shareholders holding 15% or more shareholding as indicated at Annexure VIII needs to be incorporated in the table at 5.2 (a). The Developer shall at its own cost and expense procure finance for and undertake the designing, constructing, erecting, testing, commissioning and completing of the Power Project and own the Power Project throughout the Term of Agreement. (a) In the table at Clause 5.2 (a) the shareholding pattern of the Developer as on the date of execution of PPA shall be provided. 30

31 (b) The shareholding of a single entity bidder which does not opt to form SPV may be clarified. (b) Refer Clause 2.3 of the RFP Contracted capacity & Energy ESCOM shall not be obligated to purchase any additional energy beyond 21% CUF. In case CUF goes below 12% compensation is payable computed at a rate equal to the compensation payable by ESCOM for non meeting RPO subject to minimum of 25% of the applicable tariff. Provision of purchase of 10% additional energy over and above specified 21 % CUF may be kept at the same rate. Compensation of minimum of 25% of the applicable tariff may be reduced to 10% CUF Request to clarify annual CUF of the Project required with corresponding upper and lower limits What is the time allowed to the authority to revise the tariff quoted by the bidders based on KERC orders after the bid due date (Acceptance I Performance Test) This clause states that the Developer has to get the Project certified for the acceptance or performance test It is requested that it be clarified, who should certify the successful acceptance or performance test. If it is going to ESCOM officials representatives, it is requested that a The Clause remains unchanged. Refer Clause of the Draft PPA. Refer to Clause 12.2 of the Draft PPA. 31

32 time frame be specified in which the ESCOM officials, Authorities will visit the plant to Certify the test. It may be noted that the onus of getting the Project certified is on the Developer Therefore, delay in obtaining the certification as specified may prevent the Developer from achieving the COD This is ambiguous as developer is penalized for not fulfilling CUF requirement of 16% in any Contract Year which is 12% in Article of PPA Refer to the Corrigendum. Suggestion: The third party shall carry out checks..., if the CUF of the Power Project is found to be below 12%..." This will ensure uniformity as per Article of PPA (Representations and Warranties) As per 7.1, sub clause g), Developer warrants that there are no actions, suits, proceedings or investigations pending or threatened against the Developer to its knowledge, the outcome of which may constitute a Developer Event of Default or which may result in a Material Adverse Effect. As per Clause 7.1., sub clause i), 32

33 The Developer shall provide at least sixty (60) days advanced preliminary written notice and at least thirty (30) days advanced final written notice to ESCOM of the date on which it intends to synchronize the Power Project to the Grid System. Developer represents that it has complied with all applicable laws and has not been subject to any fines, penalties or any civil or criminal liabilities, which in the aggregate may have any material adverse effect. The words "or which individually or in the aggregate may result in Material Adverse Effect" should be deleted. Material Adverse Effect has been defined to include a material adverse effect on the ability of either party to perform its obligations under the Agreement and which act causes a material financial burden or loss to either party. Developer cannot be held liable if any action causes a material loss to him. This clause is too broad in nature and needs to be deleted. The intent has already been covered in sub clauses a) to f). As the 60 days time period is a long duration for advanced preliminary written notice for Synchronization, Commissioning and Commercial Operation request you to kindly considered the reduced notice period as below: Refer to the Corrigendum. 33

34 (Synchronisation, Commissioning and Commercial Operation) The Developer shall provide at least thirty (30) days advanced preliminary written notice and at least Fifteen (15) days advanced final written notice to ESCOM of the date on which it intends to synchronize the Power Project to the Grid System The Developer shall commission the Project within 18 months from the Effective Date. This Clause should be made subject to the extensions of timelines under the PPA Fixing of meter Please clarify if the meter is fixed inside the plant premises or in substation area while connecting to the grid for energy accounting (iii) This clause as drafted is ambiguous. It may be noted that Solar PV power plant requires start up power as reference to PCUs and back charging of transformers every day. Hence, assumption of just 10% of the total imported energy for start up purposes is grossly inadequate. We request you to kindly include the definition of start up power in PPA document clarifying it as peak demand power or energy with Metering point shall be at the nearest delivery sub station as suggested by the ESCOM/KPTCL interconnectivity. 34

35 "... III. Import Billing: The Developer shall be permitted to use 10% of the installed capacity for startup after inspection by the concerned officer of ESCOM and 115% of such energy provided by ESCOM for startup power shall be deducted from the energy pumped in to the grid by the Developer for determining the periodicity. Further the Article also stipulates the inspection of MESCOM officer for checking of start up power. Please define if this is a onetime activity or periodical activity. In view of above, request you to kindly modify this article. Suggestion: Import Billing: 100% of the energy imported by the Company for start up and other purposes, during billing period will be billed under the tariff applicable to HT industries demand charges or Applicable Tariff whichever is minimum. Deducting 115% of energy drawn (imported) both on account of start up power and other, from energy exported by the developer for payment by ESCOM will reduce the revenue. The clause is too complex leading to uncertainty in the amount of import billing. Instead of that, we propose to make it simple by linking the import energy charges with either HT Industrial Tariff or with the netting off with the supplied energy by the Developer to ESCOM. 35

36 amount payable by ESCOM to the Developer. If energy over and above the requirement is drawn from the grid, the same shall be billed under the tariff applicable to HT industries demand changes... " (iii) Here it is mentioned at energy used for the start up of the plant will be considered at 115% of the actual energy consumed. It is requested that the energy be billed to the Developer at 100% only (Payment of monthly bills) read with Clause 20.l (Interest and Right to set off) ESCOM has a right to set off, at any time, any amount that is due from Developer under any invoice. ESCOM shall recover this amount by adjusting the same from the bill amount payable. In addition if the same is not paid within the time allowed, it shall be considered as a debt which will attract interest rates equal to prevailing medium term PLR of SBI per annum. Set off right should be deleted. The ESCOM has to pay the entire invoice amount without setting off or any deductions except as may be required under law. 36

37 If allowed, in our view, the right to set off should be exercised in a time bound manner and should be restricted to transactions under the PPA only. It should not be made applicable to transactions between the parties outside the PPA (Late payment Surcharge) Under this clause, late payment surcharge will be applicable only when the ESCOM does not pay a monthly bill within 30 days after its Due Date Rebate A rebate of 2% shall be payable for the payment made on the 5 th business day of the month and a rebate of 1% shall be payable for payment beyond 5 th business day of the month up to Due Date. The late payment surcharge on any unpaid invoice should be made applicable immediately after the expiry of the respective due date of the invoice until the date of actual realisation. Rebate of 1% If the payment IS released on the last day of due date cannot be open ended. This may be substituted by 1011\ business of the month. The Clause remains unchanged (Rebate) The ESCOM is entitled to get a rebate (at different rates) on the total billed amount if the payment is made as per the time lines mentioned in the clause. 37

38 Any rebate for early payment of a particular bill should not be available if a pervious bill has not been cleared or is payment is delayed for any reason Payment Security Mechanism Monthly, unconditional, revolving and irrevocable Letter of Credit has been provided has a Payment Security Mechanism. In most of the states, a Default Escrow Account is also provided as a Payment Security Mechanism. Further, the SSD issued by MNRE is also having the provision of Default Escrow Account. Hence, request you to include Default Escrow for the Payment Security Mechanism in addition to the Letter of Credit In case of any refund is made by the Developer under this Clause, the Developer shall also be liable to pay a surcharge as per the specified rates (Quarterly and Annual Reconciliation) Applicability of the surcharge on such refund should be deleted. This clause provides that all the invoices shall be reconciled on a quarterly and on annual basis to take into account the energy account, tariff adjustment payment, tariff rebate, late payment surcharge/interest. Refer to the Corrigendum. 38