Electricity Commission Grants Compensation To Mahoba Solar For Safeguard Duty Impact

In a recent development, M/s. Mahoba Solar (UP) Private Limited (MSUPL), a company engaged in solar power projects, filed a petition seeking compensation for the impact of safeguard duty on the import of solar cells and modules. The petition was based on the Power Purchase Agreement (PPA) signed with Solar Energy Corporation of India Limited (SECI) and BSES Yamuna Power Limited (BYPL).

The Electricity Commission had initially allowed compensation for safeguard duty but rejected claims for carrying costs. MSUPL appealed the decision to the Appellate Tribunal for Electricity (APTEL). The Commission referred to previous similar cases where compensation was granted for additional expenses and carrying costs due to a change in law events.

The Commission, in its recent order, acknowledged that MSUPL was entitled to compensation for the impact of the safeguard duty, both before and after the Commercial Operation Date (COD) of the project. The compensation would cover additional expenses and carrying costs up to the date of reimbursement by the Respondents.

MSUPL would also be eligible for carrying costs from the date of actual payments to the authorities until the issuance of the order, at the actual interest rate paid by MSUPL for arranging funds, or the applicable late payment surcharge rate as per the PPA, whichever is lower. Late payment surcharge would apply if the Respondents fail to make payments within the due date after MSUPL raises a supplementary bill.

The Commission directed a reconciliation of additional expenditure and carrying costs, correlating them with projects and supported by auditor certificates. It clarified that BYPL, the distribution utility, is liable to pay SECI the reconciled claims that SECI has to pay to MSUPL. However, SECI’s payment to MSUPL is not dependent on BYPL’s payment to SECI.

The Commission’s directions regarding compensation and carrying costs after the Commercial Operation Date would be subject to further orders of the Supreme Court in a related case. The petition was disposed of in accordance with these decisions.

Please view the document below for more details.