The Solar Energy Corporation of India Limited (SECI) has filed a significant petition seeking the adoption of tariffs for 1,170 MW Wind-Solar Hybrid Power Projects, Tranche-V, connected with the Inter-State Transmission System (ISTS). These projects were selected through a rigorous competitive bidding process following the ‘Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Wind-Solar Hybrid Projects,’ issued by the Ministry of New and Renewable Energy, Government of India.
Competitive Bidding Success
SECI’s competitive bidding process was met with resounding success. Thirteen bids were received, with a cumulative capacity of 4,370 MW, all satisfying the stringent technical criteria. Following a thorough evaluation, twelve bidders were shortlisted, and an e-reverse auction held on May 5, 2022, determined the final tariff.
The selected winners, TP Saurya Limited, AMP Energy Green Private Limited, and NTPC Renewable Energy Limited, were awarded these prestigious projects. Power Purchase Agreements (PPAs) have already been inked, and these projects are slated to be commissioned within 24 months. Additionally, Power Sale Agreements (PSAs) have been solidified with distribution licensees, MPSEZ Utilities Limited and CESC Limited. The petitioner’s request encompasses the adoption of tariffs, which include a trading margin of Rs. 0.07/kWh.
Change in Law Challenges
The process, however, was not without its share of challenges. TP Saurya Limited (TPSL) initially submitted its bid without concern for the Basic Customs Duty (BCD) on imported Solar PV Cells, as it was eligible for a concessional duty of 5% under the Project Import Regulation (PIR) 1986 Regime. TPSL diligently applied for project registration on August 3, 2022, seeking the vital Recommendation Letter.
However, while the application was pending with the Customs Department, a significant turn of events occurred. On October 19, 2022, the PIR Amendment 2022 was introduced, effectively stripping TPSL of its concessional duty privilege for Solar PV Cell imports and other critical components. This abrupt change in regulation impacted TPSL’s meticulously planned project development.
In a subsequent twist, the Government of Karnataka issued the Recommendation Letter to TPSL on November 5, 2022, allowing them to avail themselves of concessional customs duty benefits under the PIR 1986 Regime. This, however, was short-lived, as the Central Board of Indirect Taxes and Customs (CBIC) enacted the PIR Amendment 2023 on February 1, 2023. This amendment excluded Solar Power Projects from the PIR 1986 Regime’s favorable customs duty provisions, forcing TPSL to pay a hefty 25% BCD (plus applicable Cess and GST) on solar cells.
Under the definition of Change in Law as stipulated in the Power Purchase Agreement (PPA), the PIR Amendments in 2022 and 2023 qualify as events initiated by an ‘Indian Governmental Instrumentality,’ meeting the PPA’s criteria. This change significantly affected TPSL, preventing it from registering its project under the PIR Regime and obliging it to bear the brunt of the BCD imposed on its project.
It is worth noting that, in legal terms, a change in tax or duty rates is indeed considered a ‘Change in Law’ event, as emphasized by the petitioner. This interpretation is in line with regulatory principles and legal precedents.
Respondent Challenges and Commission Analysis
In response to SECI’s petition, the four respondents—TP Saurya Limited, AMP Energy Green Private Limited, AMP Energy Green Ten Private Limited, and NTPC Renewable Energy Ltd.—have presented their Change in Law challenges. They point to the PIR Amendments in 2022 and 2023, all of which transpired after the bid submission cutoff date.
Their responses align with TP Saurya’s original claim and reiterate their concerns regarding these post-bid submission Change in Law events. They argue that regulatory provisions do not preclude the Appropriate Commission from addressing Change in Law claims during tariff adoption proceedings.
They invoke the Appellate Tribunal for Electricity (APTEL) “Green Infra Judgment” of October 12, 2021, to underscore that it is the Commission’s statutory duty to consider such claims, ensuring regulatory certainty and determining relief for Change in Law events that occurred after bid submission but before tariff adoption. APTEL’s stance on this matter was subsequently reaffirmed in subsequent appeals, further supporting the respondents’ arguments.
The Commission’s analysis delves into the transparency and legitimacy of SECI’s competitive bidding process, reaffirming the legitimacy of the tariff discovery. The Commission recognizes the adoption of individual tariffs for Hybrid Power Projects, as agreed upon by successful bidders and supported by PPAs and PSAs with distribution licensees.
However, in a significant turn of events, the Commission highlights that SECI’s petition did not explicitly request the adjudication of Change in Law claims. Instead, all four respondents have independently sought Change in Law relief through their respective replies.
In light of the APTEL judgment and the petition’s limited scope, the Commission clarifies that the four respondents cannot seek Change in Law relief within SECI’s petition. The respondents are encouraged to approach the Commission separately for the adjudication of Change in Law claims following legal procedures.
SECI’s petition for tariff adoption for Wind-Solar Hybrid Power Projects reflects the success of a competitive bidding process. However, Change in Law challenges post-bid submission have arisen, and the Commission acknowledges the need for addressing such concerns but emphasizes the necessity of following appropriate legal procedures. The future of these projects and their tariffs remains subject to further legal deliberation and regulatory certainty.
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