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CERC Has Approved GST Compensation To Solar Edge Energy

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Recently, the central electricity regulatory agency (CERC) ordered SECI or Maharashtra State Electricity Distribution Company Limited (MSEDCL) to compensate Solar Edge and Energy Ltd for the additional cost incurred due the imposition of Goods & Services Tax (GST), on an annuity basis.

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Background

From a total of 450MW of tender capacity, SECI granted 130MW of solar capacity to Solar Edge and Energy Ltd on June 2016. Through a request for selection (RFS) under the National Solar Mission Phase-II, Tranche III in Maharashtra, the total capacity of 450MW was offered. Afterwards, Solar Edge and SECI signed three separate PPAs, with two projects each of 50MW and the remainder of 30MW, respectively. Scheduled commissioning date (SCOD) for the total 130MW was 23.12.2017. Subsequently, power sale agreement (PSA) between SECI and the off-taker i.e. MSEDCL, was signed.

Meanwhile, on 1st July, 2017, GST was introduced in India. As a result, the petitioner, Solar Edge, incurred huge additional cost in terms of project cost escalation and increased O&M carrying cost. To assess the extent of additional cost born by the developer, SECI and the petitioner reconciled their respective change in law claim due to GST imposition before the SCOD. Also, SECI forwarded the reconciled claim to MSEDCL, which was neither objected or commented.

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Estimated Claim Detail

Project IDCapacityClaim
submitted by
Petitioner
Claim
evaluated by
SECI
Claim
evaluated by
MSEDCL
P2B4T3- SEPEPL-B- 5MH-1V50 MW8,27,44,2718,04,84,9598,06,65,967.5
P2B4T3- SEPEPL-B- 5MH-2V50 MW8,53,42,8148,24,90,7778,23,33,544.7
P2B4T3- SEPEPL-B- 5MH-3V30 MW5,06,74,9554,87,82,5314,85,20,801.5

The difference in SECI’s and MSEDCL’s evaluations of petitioner’s GST claims came out to Rs.1,81,000.088 for the 50MW Parli Project, Rs.1,57.232 for the 50MW Muktainagar Project, and Rs. 2,61,729 in the case of the 30MW Parli.

Commission’s Analysis:

After analyzing all inputs from petitioners and respondent, the commission observed that the imposition of GST rule before the SCOD of the project will cover under the ‘Change in Law’ clause of signed PPA. Commission also observed the estimated claim prepared by SECI, which was forwarded to MSEDCL , was neither objected or commented by the off-taker.

Thus after analyzing all observation, the commission approve the claim of GST compensation to the solar developer. It also ordered, the compensation need to be paid on an monthly annuity payment basis, which need to be started before 60 days after the issuing of this order. On account of any non payment after 60 days timeline, the SECI/MSEDCL would be liable to pay a penalty as late payment surcharge.

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