Steel Authority of India Ltd. and Jindal Steel & Power Ltd. (JSP) were threatened with fines for flouting clean-energy rules as regulators crack down on lapses that undermine the nation’s renewable-credit trading market.
India’s second- and third-biggest steelmakers, under scrutiny in Chhattisgarh, failed to get the required portion of power from renewable sources in the three years through March, according to the State Electricity Regulatory Commission.
“According to the regulations, there are penalties, and we will take action,” Commission Chairman Manoj Dey said in a phone interview from Raipur. The commission will waive about 2.9 billion rupees ($49 million) of fines only for the first year to account for a late notification of the rules, he said.
The failure of companies to observe clean-power mandates weakens India’s market for renewable credits, which are trading at the lowest prices allowed. India requires industrial energy users to get as much as 10 percent of their electricity from wind, hydro and biomass and 0.25 percent from solar, and those failing to comply must cover the shortfall by buying credits.
Jindal Steel will purchase credits to fulfill its obligations, the company said in an e-mail. Arti Luniya, a Steel Authority spokeswoman, didn’t respond to an e-mail and two phone calls seeking comment.
Both companies can buy credits on India’s power exchanges if they can’t source enough clean electricity locally, according to the commission, which said they “did not exercise this option.” While Steel Authority has “made some efforts” in the past two years, Jindal Steel “is perpetually finding reasons to avoid purchasing renewable power,” the commission said.
Non-compliant companies must buy credits at the ceiling price of 3,900 rupees for biomass, hydro and wind allowances and 17,000 rupees for solar. That compares with June market prices of 1,500 rupees and 9,300 rupees, respectively. Each credit represents 1 megawatt-hour of electricity fed into the grid.
Jindal Steel and Steel Authority aren’t the only companies to be targeted by regulators. Vedanta Resources Plc (VED)’s Hindustan Zinc unit, Holcim Ltd. (HOLN)’s Ambuja Cements, Reliance Industries Ltd. (RIL) and Tata Steel Ltd. (TATA) have also been ordered to comply.
In September, the Rajasthan High Court ordered Hindustan Zinc and Ambuja Cements to pay penalties for failing to meet obligations in the northwestern state. In November, the Ministry of New and Renewable Energy sent letters to 50 companies including Tata, India’s biggest steelmaker, insisting they comply or face fines.
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