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Ostro Energy GC Rachika Sahay interview: Working in a regulatory minefield as busy & challenging as private practice

Sahay, as a young and growing power company’s general counsel, tells us about her work, how she endeavours to be self-sufficient, and how that is a challenge sometimes

Rachika Sahay likes to keep it in the house
Rachika Sahay likes to keep it in the house

Ostro Energy general counsel (GC) Rachika Sahay, who just closed her seventh power deal in less than two years said that in house roles are no less “grilling and consuming” than law firm life.

Sahay, who joined Ostro in May 2015, had recently for instance helped the company enter a joint venture (JV) agreement with wind-turbine maker Suzlon, assisted externally by HSA Advocates.

Ostro, specifically, has been “an aggressive platform” for her as a GC, she noted, due to the opportunity for her to negotiate contracts for six to seven projects after having joined the company less than two years ago, while taking care of issues arising out of commissioned projects, or projects that are in the process of being commissioned.

“In three years’ time – it is a very short time – we’ve already got a commission capacity of 300MW and have contracted out more than 400MW of power. We have around 700MW which means we have done seven to eight EPC contracts already. That is an intense amount of work.”

The Ostro work day

A typical work day for Sahay is 12-13 hours long, said Sahay.

“We laugh about it in Ostro as well,” she noted about the workflow. “Typically [we’re] not able to start work on any documentation during the first half [of the day, which] till 3pm or 4pm goes in handling newer issues and firefighting.”

Such “daily issues” include looking at agreements, rights and liabilities and advising the business on them. During the second half she is occupied with documentation and preparing for negotiation talks and meetings. If the company is involved in any litigation, the senior advocates it briefs are available for conferences only in the evenings.

“The law firm life is grilling and consuming, but today it is as much true for in house roles as well,” she remarked. “Because of the heavily regulated nature of the energy sector, the role of an in house counsel in this sector is more intense, particularly, on the drafting side.”

Commenting on deal negotiations she said: “In our industry, sometimes the [clauses] in the contracts are very market-practice driven. But every deal has its own nuances and unfortunately most negotiations on legal aspects also become driven by practices being followed by a particular organisation without appreciating or understanding specific legal issues in hand.

On the other hand, “it is also important for a lawyer to understand the business and its peculiar issues”, she remarked.

Reminiscing on the change from Trilegal to global oil and natural gas industry services giant Weatherford, which she had joined in Mumbai in May 2014, Sahay commented: “As an in-house counsel you’re privy to a lot of information. It gives a very different dimension to how you advise as a lawyer.

“At Weatherford there was a technical training conducted for all senior lawyers to understand the use of various equipment, on-site issues, etc. These kind of insights bring an enormous difference in the roles of external and in house counsel.”

Assistance

“We deal with specific issues in the energy sector: in renewable energy and regulatory work, only a handful of firms [specialise],” said Sahay.

Ostro’s legal arm of 3 lawyers including Sahay, handles most regulatory, corporate, tax and engineering, procurement and construction (EPC) contract work and negotiations internally.

Sahay outsources work to external counsel for two reasons: the need for super-specialised advice and to follow customary procedures.

“My endeavour is to minimise use of law firms and effectively manage costs. Therefore, only if an issue requires deep analysis of corporate law, we go out; otherwise we tend to retain work and do it ourselves including regulatory issues. Specific assistance is certainly sought from law firms in areas such as due diligence, whether it is regulatory diligence, land diligence or company diligence. The firms that we engage with also assist in drafting our contracts and eventually finalising them.”

“We handle most of the negotiations on contracts ourselves and send out final drafts to the law firm to highlight issues that are extremely critical, which we should still be negotiating. If there is any change in law they could point it to us. Then whatever advice comes to us from external sources we rationalise internally and close contracts accordingly.”

Go-to firms and foreign firms

Sahay said she often instructs her alma mater Trilegal, and HSA Advocates for most of its corporate, regulatory and EPC work, and has used Economic Laws Practice (ELP) and the Big Four consultancies for super-specialised tax advice, and uses local lawyers to conduct land diligence in the regions where Ostro sets up its projects.

Ostro has no official panel of law firms but Sahay said that her choice is “restricted to these, as we are quite happy with them” and also because she is familiar with the people in these firms, therefore leaving 80 per cent of her time free to focus on jobs other than dealing with external counsel.

For land diligence she hires local counsel to collect the first information on existing disputes and encumbrances of the targeted land.

However, the legal arm does not function on a tight budget, she claimed. “Actis is extremely professional and attaches a lot of value to legal issues,” said Sahay.

And in February 2015, global private equity fund Actis committed $230m towards Ostro, as Mint had then reported. Actis’ experience of dealing with lawyers from various industries and setting up various projects in India has made it fluent with the working of the legal arm in terms of time and infrastructure requirements, she explained.

In respect of opening up the legal sector to foreign law firms, she said that it would bring in greater professionalism in terms of the working conditions of lawyers, how they need to be treated and how much time and infrastructure needs to be given to them.

How can regulators help?

Sahay has worked extensively in the energy, projects and infrastructure sector since she graduated from NLIU Bhopal in 2005. She had joined Trilegal under partner Saket Shukla, straight out of law school, and re-joined the firm in 2008 after her LLM hiatus at LSE, eventually moving to oil and gas company Weatherford as head-legal in May 2014.

In Sahay’s view, because the energy sector is government driven as it is the government that buys power from the companies, the government should make sure its commissioned projects run uninterruptedly.

As such, she believes that the sector requires streamlining of the plethora of nods required from different regulators. “Basically really look at ‘single window clearance’ for projects,” she recommends, noting that the process of acquiring land from private players for projects is currently particularly protracted due to bureaucratic hurdles.

Clarity on certain government policies and building up infrastructure is another area India needs to focus on, she noted.

In the absence of such immediate reforms, in-house lawyers like Sahay (and their external advisers) will continue to be kept busy for the foreseeable future.

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