The Central Electricity Regulatory Commission (CERC) recently ruled in favor of a solar developer, stating that they are entitled to compensation for additional expenses incurred due to the introduction of the Goods and Services Tax (GST) and the imposition of safeguard duty. The ruling came under the Change in Law clause of the power purchase agreement (PPA). The developer, SB Energy One (now Adani Solar Energy Jodhpur Three), filed a petition seeking relief for the increase in capital cost caused by these events.
The CERC directed the contracting parties, Rajasthan Urja Vikas Nigam (RUVNL) and Solar Energy Corporation of India (SECI), to reconcile the additional expenses and pay the solar developer accordingly. The payment from SECI to the developer would not be dependent on RUVNL’s payment to SECI. The CERC also mentioned that the post-commercial operation date period’s directions would not be enforced until the Supreme Court makes a ruling on the issue.
SB Energy One had set up three solar power projects in Rajasthan and was awarded the projects in an auction conducted in May 2017. The company requested compensation for the increase in capital cost due to the GST laws and safeguard duty. The CERC’s order considers the liability of payment for these expenses until the commercial operation date.
The developer appealed the order to the Appellate Tribunal for Electricity (APTEL), which stated that the CERC order would not be enforced until the Supreme Court’s verdict on compensation for invoices raised after the commercial operation date.
In summary, the CERC ruled in favor of the solar developer, acknowledging their entitlement to compensation for additional expenses incurred due to the introduction of GST and safeguard duty. The payment reconciliation is to be carried out by the contracting parties, and the post-commercial operation date directions are subject to the Supreme Court’s decision.
View the official order here: