The Central Electricity Regulatory Commission (CERC) has passed an order that will give compensation relief from the safeguard duty to four developers after they petitioned the commission citing the Change in Law clause. The clause recognizes contracts that are already in force when a law change occurs, like in the case of the safeguard duty.
Four petitioners – ReNew Solar Power, Phelan Energy India RJ Pvt. Limited, Clean Sustainable Energy Pvt Ltd, and Mahoba Solar (UP) Pvt Limited. The companies had filed the petition against SECI, BSES Yamuna Power Limited, Jaipur Vidyut Vitran Nigam Ltd, and Ajmer Vidyut Vitran Nigam Ltd, and Jodhpur Vidyut Vitran Nigam Ltd, filed for relief, seeking compensation of the safeguard duty on the imports of solar cells and modules.
“Such imposition of safeguard duty may result in an increase in non-recurring expenditure as well, if certain modules are imported as a part of O&M up to July 30, 2020,” states the petition.
The four petitioners have asked for lump sum compensation of ₹739.5 million (~$10.5 million) to be paid to the petitioner on account of the additional levy of safeguard duty and IGST on importing solar cells, along with interest. They have requested CERC to direct the SECI to pay within 60 days from the date a claim was filed by the petitioner, failing which it will attract late payment surcharge as provided under PPA.
SECI had selected ReNew Solar Power, Phelan Energy India RJ Pvt. Limited, Clean Sustainable Energy Pvt Lit, and Mahoba Solar to develop solar projects in Rajasthan’s Bhadla Solar Park. The four solar developers submitted bids and separate PPAs were executed for the contracted capacity of 50 MW each. According to Mercom’s India Solar Project Tracker, SECI auctioned 250 MW Bhadla Phase IV solar park project – out of which Phelan Energy got 50 MW and they signed PPA on November 2017.
The commission has directed the four petitioners to submit to SECI all the relevant documents showing a clear and one-to-one correlation between the projects and the supply of imported goods until the scheduled commissioning dates.
The commission has directed SECI to reconcile the claim related documents within 15 days of submission by the petitioners. The commission has also suggested that the petitioners and SECI can mutually agree to a mechanism for the payment of compensation on annuity basis spread over a period not exceeding the duration of the power purchase agreements as a percentage of the tariff agreed in the PPAs.
In September 2019, Mercom reported that the Karnataka Electricity Regulatory Commission (KERC) stated that the imposition of the safeguard duty would be treated as ‘Change in Law’ for ACME Solar’s projects in Karnataka.
In February this year, the Maharashtra Electricity Regulatory Commission in its order also reiterated that the safeguard duty is an event of Change in Law, and therefore, the additional expenditure and other impacts will be considered for reimbursement.
News Source : Mercom Capital