NTPC Faces Setback As Commission Rules In Favor Of Solar Developer Amidst Safeguard Duty Dispute

In a recent development, Solairepro Urja Private Limited, a solar power developer, has emerged victorious in its legal battle seeking compensation for the imposition of Safeguard Duty by the Government of India. The dispute revolves around a Power Purchase Agreement (PPA) signed in 2018 between Solairepro Urja and NTPC Limited.

Solairepro Urja is currently working on a 250 MW Solar Power Generating System in the Kadapa Ultra Mega Solar Park in Andhra Pradesh. The company filed a petition in 2019, under the Electricity Act, 2003, and Article 12 of the PPA, claiming relief due to the imposition of Safeguard Duty as per Notification No. 01/2018 Customs (SG) dated 30.07.2018.

NTPC Limited, appointed as the nodal agency for the National Solar Mission, and its subsidiary, NTPC Vidyut Vyapar Nigam Limited (NVVN), were named as respondents. The power generated by Solairepro Urja is sold to distribution companies in Andhra Pradesh through NTPC acting as an intermediary procurer.

The dispute arose when the Electricity Regulatory Commission disposed of the petition in 2020, allowing the claims of Solairepro Urja regarding the 2018 Safeguard Duty Notification but disallowing claims for carrying costs. Aggrieved by this decision, the Andhra Pradesh Southern Power Distribution Company (APSPDCL) moved to the Andhra Pradesh High Court, seeking to quash the order.

One key argument raised by APSPDCL was the lack of jurisdiction of the Commission, asserting that the entire power supply from Solairepro Urja’s project remained within the state of Andhra Pradesh.

The Commission, in its recent order, rejected this argument, asserting its jurisdiction under the Electricity Act, of 2003. It emphasized that even if parties agree on a particular forum for dispute resolution, it does not negate the jurisdiction of the Commission as outlined in the law.

The Commission acknowledged the imposition of Safeguard Duty through the 2018 Notification, applying rates ranging from 25% to 15% ad valorem. It held that such a change in law event, occurring after the bid submission but before the scheduled commercial operation date, entitles Solairepro Urja to compensation.

While the Commission directed the petitioner to provide relevant documents for reconciliation, it also noted that the compensation for the post-commercial Operation Date would be subject to the outcome of a Supreme Court case related to a similar matter. In conclusion, the recent order is a significant win for Solairepro Urja, highlighting the legal recourse available to developers facing adverse regulatory changes affecting their projects. The decision emphasizes the need for clear documentation and evidence in support of claims for compensation under the change in law provisions.

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