MERC Approves Compensation Of Safeguard Duty Under Change In Law

Maharashtra Electricity Regulatory Commission (MERC) recently passed an order on approval of “Change in Law” and mechanism for grant of an appropriate adjustment/ compensation to offset financial/ commercial impact of change in law events on account of imposition of safeguard duty on solar cells/modules.

The Petitioners were  M/s Atnu Solar Private Limited (Jalna) (ASPLJ), M/s Atnu Solar Private Limited (Jamkhed) (ASPLJK), M/s Atnu Solar Private Limited (Mohol) (ASPLM), M/s Atnu Solar Private Limited (Kinwat) (ASPLK), M/s Atnu Solar Private Limited (Parner) (ASPLP), M/s Atnu Solar Private Limited (Wadwani) (ASPLW), M/s Atnu Solar Private Limited (Kannad) (ASPLKN) and M/s Aurinko Energy Private Limited (AEPL) have filed their Petitions for approval of ‘Change in Law’ and mechanism for grant of an appropriate adjustment/ compensation to offset financial/ commercial impact of change in law events on account of imposition of Safeguard Duty (SGD) on solar cells/modules of the Power Purchase Agreement (PPA) dated 27 December , 2018 between them and Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL).

As all Petitions have been filed on the same subject with more or less similar prayers, commissions have passed Common Order.

Petitioner’s main prayers were Declare the imposition of safeguard duty via Safeguard Duty Notification as Change in Law in terms of the PPA, which has a direct effect on the Project,  Evolve a suitable mechanism to compensate the Petitioner for the adverse financial loss incurred by the Petitioner on account of Change in Law through a lump sum payment or an incremental tariff for the period of the PPA, Grant carrying cost from the date of incurring of the cost by the Petitioner till the date of disbursal of the compensation considering that increase in cost has been financed by both debt and equity, 

The Commission after analysing  passed an order stating that the Petitioners are eligible for claiming compensation on account of imposition of Safeguard Duty (including additional GST) under Change in Law provisions of PPA for their individual total capacity of 13.68 MW of Solar module/panel post commissioning of the project.

It further added that they must provide undertaking that all modules installed at all project sites for supplying power to MSEDCL have been imported from the Country/ies which are subjected to Safeguard Duty. 

Commission also directed Maharashtra State Electricity Distribution Co. Ltd. to act upon such undertaking given by the Petitioners and ascertain the compensation amount under Change in Law.  It highlighted that such ascertainment of compensation amount will be at risk and cost of the Petitioners. 

It also ordered that MSEDCL must complete this process within 15 days from the date of this Order. Based on the scrutiny of documents (to be completed within 45 days) and/or physical verification of RFID tag (to be completed within 6 months), compensation amount ascertained .earlier must be re-verified and in case of any deviation, same shall be adjusted with holding/carrying cost in future payments.

The Commission concluded by stating that Compensation for Change in Law event must be computed and paid .

To know more about the order refer to the document below: