Tuesday, July 30, 2013: The nation’s biggest lender, State Bank of India is in the process of drafting a letter to a state regulator. The letter is intended to warn the state regulator that any move to backtrack on contracts by reducing the price of solar power will ultimately curb investment.
In Gujarat, a state buyer of solar power is trying to get approval from Gujarat Electricity Regulatory Commission to cut the rate paid to plants by 28 per cent. The commission is evaluating whether the case should be accepted or not. They will come up with the decision next month.
SBI, the nation’s biggest lender, is drafting a letter to a state regulator warning that a move to backtrack on contracts by reducing the price of solar power will curb investment.
The state buyer of solar power in Gujarat state is seeking approval to cut the rate paid to plants by 28 per cent. The Gujarat Electricity Regulatory Commission is evaluating whether to accept the case. A decision is due next month.
According to Rajat Misra, senior vice president of the infrastructure group at SBI Capital Markets Ltd, lender’s investment banking arm, the petition alone can have “an adverse impact on investors’ outlook.” “It only takes a couple of projects to go back for the entire sector to fall through,” he added.
Funding for 95MW of solar capacity has been arranged by SBI Capital for projects in Gujarat. The projects are owned by developers such as Tata Power Co. (TPWR), France’s Solairedirect SA, billionaire Vinod Khosla-backed SunBorne Energy Holdings LLC, and Kiran Energy Solar Power Pvt. whose investors include Bessemer Venture Partners.
The petition submitted by power buyer, Gujarat Urja Vikas Nigam Ltd. is the solar power buyer that has submitted the petition to lower the average megawatt-hour price to Rs 9,000 ($152) from Rs 12,540 for projects including 857 megawatts of capacity. This can impact more than 80 developers including SunBorne Energy Holdings LLC and Moser Baer India Ltd. (MBI) who want the petition to be dismissed.
