Projects and Infrastructure | July – September 2024

Regulatory Updates

NHAI Circular on Bid Security and Performance Security

National Highways Authority of India (“NHAI“) has, vide circular dated 1 July 2024, notified that the bid security and performance security in relation to national highway works will now also be accepted in form of insurance surety bonds, account payee demand draft, fixed deposit receipts, banker’s cheque, and bank guarantee (including e-bank guarantee) with immediate effect. The relevant existing clauses of the standard documents for Engineering, Procurement and Construction (EPC), Hybrid Annuity Model (HAM) and Build–Operate–Transfer (BOT) (toll) projects may be required to be amended accordingly for necessary compliance.

CERC (Fees and Charges of Regional Load Despatch Centre and other related matters) Regulations, 2024

The Central Electricity Regulatory Commission (“CERC“) has, vide notification dated 12 July 2024, notified the Central Electricity Regulatory Commission (Fees and Charges of Regional Load Despatch Centre and other related matters) Regulations, 2024 (“Regulations“). The Regulations are applicable during the period from 1 April 2024 until 31 March 2029, unless modified or extended by CERC. These regulations are applicable for the determination of fees and charges to be collected by Regional Load Despatch Centres (“RLDCs“) from the generating companies, distribution licensees, bulk consumers, and any other users.

The Regulations also provide that recovery of incentive by the RLDCs and National Loan Despatch Centre (“NLDC“) shall be based on the performance against the Key Performance Indicators (KPIs) as specified in the Regulations or such other parameters as may be prescribed by the CERC.

The Regulations also detail the requirements for capex plans which should cover aspects such as infrastructure upgrades, modernization, automation, replacement of obsolete assets, adoption of advanced information technology and communication systems, cyber security, innovative schemes, projects, and disaster recovery control centres.

Key Amendments to the Central Connectivity and General Network Access Regulations

The CERC has notified the Second Amendment to the Central Electricity Regulatory Commission (Connectivity and General Network Access to the inter-State Transmission System) Regulations, 2022 (such amendment, the “Amendment Regulations“) effective from 15 July 2024. Some of the key provisions of the Amendment Regulations are:

To avoid rejection of applications for connectivity with minor deficiencies, the nodal agency must now notify minor deficiencies within 10 working days of receipt of application, for rectification by the applicant within 7 working days thereafter, failing which the application will be closed.

A minimum installed capacity threshold of 25MW has been introduced, for applications for grant of connectivity in northeastern region and Sikkim.

For renewable energy generating station (other than hydro station) or energy storage system (other than pump storage) applicants and renewable park developers, in states where government order for allotment of land is issued to nodal agency (with advance possession to developer), such government order with advance possession letter (for at least 50% land required for connectivity purposes) will be considered as valid documents for land use towards grant of connectivity. Alternatively, a bank guarantee of INR 10 lakh per MW (for up to 1000 MW) or INR 100 crores plus INR 5 lakh per MW (for capacity above 1000 MW) may be provided.

The timeline for in-principle grant of connectivity has been extended from 30 to 60 days (from the last day or the month in which application is received) if no Associated Transmission System (“ATS“) is required. If ATS is required, the timeline has been extended from 60 to 90 days.

Renewable energy generating station (other than hydro station) or energy storage system (other than pump storage) applicants and renewable park developers, must submit proof of land ownership or rights within 18 months of an in-principle connectivity grant or within 12 months of a final grant, whichever is earlier (instead of the earlier time of 180 days from final grant). Financial closure must be achieved by 6 months before the scheduled date of commercial operation or start date of connectivity, whichever is later, with proof submitted within 15 days of achieving closure.

New Tariff Regulations for Pipeline Transportation of Petroleum and Petroleum Products

The Petroleum and Natural Gas Regulatory Board (“PGNRB“), vide notification dated 19 July 2024, notified the Petroleum and Natural Gas Regulatory Board (Determination of Petroleum and Petroleum Products Pipeline Transportation Tariff) Regulations, 2024 (“New Tariff Regulations“), effective from 1 August 2024, in supersession of the existing regulations in this regard.

The New Tariff Regulations provide for the procedure for determination tariff for pipelines, based on their classification in the following 3 categories: (a) pipelines commissioned before notification of the PNGRB (Determination of Petroleum and Petroleum Products Pipeline Transportation Tariff) Regulations, 2010 (“PNGRB Regulations“); (b) pipelines commissioned after the notification of the PNGRB Regulations; and (c) pipelines authorised by PNGRB prior to notification of the PNGRB (Authorizing Entities to Lay, Build, Operate or Expand Petroleum and Petroleum Products Pipelines) Amendment Regulations, 2023 and have completed pipeline operation of 10 years from the date of commissioning (for determination of tariff 11th year onwards).

New Regulations for Deviation Settlement Mechanism

CERC, vide notification dated 5 August 2024, notified the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2024 (“Deviation Settlement Regulations“), in suppression of the CERC (Deviation Settlement Mechanism and Related Matters) Regulations, 2022. The Deviation Settlement Regulations have come into effect from 16 September 2024.

The Deviation Settlement Regulations are applicable to all grid connected regional entities and other entities engaged in inter-state purchase and sale of electricity and seek to ensure that grid users do not deviate from their schedule of drawal and injection of electricity in the interest of security and stability of the grid.

Some key provisions of the Deviation Settlement Regulations are below:

Every grid-connected regional entity is required to adhere to its schedule as per the grid code and shall endeavour not to deviate from its schedule.

Deviation shall generally be managed through deployment of ancillary services, with computation, charges and related matters in respect of such deviation being dealt with as per the regulations.

Methodology of computation of deviation in a time block and charges for deviations have been provided for general sellers, WS sellers (i.e., sellers in case of wind / solar / wind-solar hybrid generators) and buyers.

Payment of charges for deviation shall have high priority, and the concerned regional entity shall pay the due amounts within 10 days of issue of the statement of charges for deviation by the regional power committee, failing which late payment surcharge of 0.04% shall be payable for each day of delay.

Amendment in Guidelines for Import/Export (Cross Border) of Electricity

The Ministry of Power has vide, an office memorandum dated 12 August 2024, issued amendments to the Guidelines for Import/Export (Cross Border) of Electricity, 2018, with the following key amendments:

Restrictions on export of electricity by domestic coal based generating plants (regarding use of imported coal, spot e-auction coal, coal obtained from commercial mining or from other sources specified by the Central Government), will not apply to collective transactions through power exchanges in India.

Export of electricity from gas based generating plants has been introduced, with similar restrictions as coal based generating plants.

Provision for permitting Indian generating stations supplying electricity exclusively to a neighbouring country through a dedicated transmission line to connect to the Indian grid to facilitate sale of power within India, in case of sustained non-scheduling of capacity or default notice issued by a generator under the power purchase agreement.

Revised Guidelines for Assessment of Environment Compensation for Violation of Plastic Waste Management Rules, 2016

The Central Pollution Control Board (“CPCB”), vide its notification in August 2024, issued the ‘Revised Guidelines for Assessment of Environmental Compensation to be Levied for Violation of the Plastic Waste Management Rules, 2016’ (“Revised Guidelines”).

The Revised Guidelines aim to strengthen the enforcement of the Plastic Waste Management Rules, 2016 (“PWM Rules”) by focusing on promoting compliance, imposing penalties for violations, and ensuring sustainable management of plastic waste, and inter alia provide for:

Details of environmental compensation (“EC“) and penalty to be levied for non-compliance of PWM Rules, for different categories of violations and violators.

Details of EC for violation of guidelines on Extended Producer Responsibility (“EPR“) for plastic packaging, for different categories of violations and violators.

Minimum & maximum amount of EC to be levied for different categories of violations and violators.

Further consequences in case the EC and financial penalties are not deposited by the violating facility within the stipulated time period.

Guidelines for Environmental Compensation under Waste Tyre EPR Regime

The CPCB, vide its notification dated 3 September 2024, issued the ‘Guidelines for Environmental Compensation under Waste Tyre EPR Regime’ (“EC Guidelines for Waste Tyre EPR“) under the Hazardous and Other Waste (Management & Transboundary Movement) Amendment Rules, 2022 (“HWM Rules”).

The EC Guidelines for Waste Tyre EPR are applicable to entities involved in manufacture, sale, transfer, purchase, recycling, and retreading of waste tyre or tyre as defined in the HWM Rules. The EC Guidelines for Waste Tyre EPR inter alia provide for the details of environmental compensation to be levied and penal action for non-compliance of HWM Rules in respect of the regime for EPR for waste tyres basis violators involved and the approach for assessment of such compensation.

Guidelines for imposition of environmental compensation under Battery Waste Management Rules, 2022

The CPCB, vide its notification dated 10 September 2024, issued the Guidelines for imposition of Environmental Compensation under the Battery Waste Management Rules, 2022 (“BWM Rules“) (such guidelines, the “BWM EC Guidelines“).

The BWM EC Guidelines are applicable to producers, recyclers, refurbishers and entities involved in collection, segregation and treatment of waste battery. The BWM EC Guidelines inter alia provide for:

The specific violations under the BWM Rules for which environmental compensation (“EC“) shall be levied.

2 regimes i.e. EC Regime 1 (for producers for non-fulfilment of metal use EPR targets) and EC Regime 2 (for any entity for non-compliance of BWM Rules), and calculation of EC for specific violations and violators.

Actions to be taken for different non-compliances of BMW Rules, including action under the 2 regimes above.

Further consequences in case the EC and financial penalties are not deposited by the violators within the stipulated time period.

Scheme Guidelines for Implementation of VGF Scheme for Offshore Wind Energy Projects

The Ministry of New and Renewable Energy has, on 11 September 2024, notified the Scheme Guidelines for Implementation of ‘Viability Gap Funding (“VGF”) Scheme for Offshore Wind Energy Projects’ (“VGF Scheme Guidelines“). The VGF Scheme Guidelines primarily focus on setting up 1000 MW of offshore wind energy projects, split between 500 MW projects located at the coasts of each of Gujarat and Tamil Nadu.

The VGF Scheme Guidelines inter alia provide for the following:

A total financial outlay of INR 74.53 billion, which includes INR 68.53 billion allocated for the installation and commissioning of the wind energy projects off the coasts of Gujarat and Tamil Nadu.

The scheme will be implemented by the Ministry of New and Renewable Energy (“MNRE”) through Solar Energy Corporation of India Limited (“SECI”) as the implementation agency. The developers will be selected through a transparent bidding process involving technical and financial eligibility criteria, with power purchase agreements for a 25-year period.

The successful bidders under the scheme must commission the projects within 48 months from the date of signing of agreements. The disbursal of amounts will be through SECI based on achievement of milestones and submission of claims by the successful bidders.

The VGF under the scheme will be provided till financial year 2031-32.

Pre-defined milestones for VGF disbursal, with the first instalment being disbursed only after pari passu contribution by developer as equity and/or debt.

Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure, 2024

In supersession of the existing regime, the Ministry of Power has issued the Guidelines for Installation and Operation of Electric Vehicle Charging Infrastructure, 2024, dated 17 September 2024 (“EV Charging Infra Guidelines“) with immediate effect.

The EV Charging Infra Guidelines are applicable to: (a) manufacturers, owners and operators of electric vehicle (“EV“) charging infrastructure located in private parking spaces, semi restricted places like office buildings, educational institutions etc., public places, and highways and expressways; and (b) power utilities, and central and state agencies.

The EV Charging Infra Guidelines inter alia provide for the following:

Public land may be provided by government / public entities at promotional rates for public charging stations.

All EV supply equipment shall comply with the standards indicated in the EV Charging Infra Guidelines.

Components of the total fee to be charged by charge point operators from customers.

Guidelines on tariff for supply of electricity to EV charging stations.
Guidelines for public charging stations, charging at residence, community charging for residents, charging stations for e-buses, charging station as solar carport etc.

For more information contact:

Jhinook Roy
Practice Head – Projects & Infrastructure
jhinook.roy@veritaslegal.in

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