TP Saurya Seeks Change In Law Declaration Due To Increased Customs Duties Affecting 20 MW Wind-Solar Hybrid Power Project

M/s. T. P. Saurya Limited (TPSL) has filed a petition seeking an in-principle declaration that the Notifications dated 19 October 2022 and 1 February 2023 constitute a Change in Law event under their Power Purchase Agreement (PPA) dated 22 July 2022, signed on 3 August 2022. This petition, submitted under Section 86 (1) (f) of the Electricity Act, 2003, addresses changes affecting TPSL’s hybrid power project.

Maharashtra State Electricity Distribution Co. Ltd. (MSEDCL) issued a Request for Selection (RfS) on 7 May 2021 for 500 MW of Wind-Solar Hybrid power projects. Bids were submitted by 23 June 2021, with TPSL emerging as a successful bidder for a 300 MW hybrid project. The letter of Award (LOA) was issued on 14 December 2021, specifying that the PPA would be signed within 30 days of tariff approval.

On 11 March 2022, the Commission refused to adopt the initially proposed tariff of ₹2.62/kWh, setting a revised tariff of ₹2.49/kWh. TPSL sought relief for tariff adjustments and filed a review petition requesting a tariff revision to ₹2.56/kWh, which was granted by the Commission on 7 July 2022. The PPA was executed on 3 August 2022, specifying a tariff of ₹2.56/kWh.

TPSL had sought relief from MSEDCL for delays and issues related to obtaining the necessary Recommendatory Letter from the Energy Department, Government of Maharashtra, required for importing components under the Project Import Regulations (PIR) 1986. The PIR allowed concessional duty rates, but amendments issued on 19 October 2022 excluded solar projects from these benefits. TPSL notified MSEDCL of the financial impact due to increased customs duties following the amendments.

In response, MSEDCL argued that TPSL was aware of potential changes in duty rates due to the MNRE’s Office Memorandum (O.M.) dated 9 March 2021, which anticipated higher customs duties from April 2022. MSEDCL contended that the O.M. and subsequent notifications were known to bidders and were factored into bid submissions. Therefore, MSEDCL claims no Change in Law relief should be granted for the impacts of the updated duty rates.

TPSL’s petition emphasizes the impact of the Notifications on the financial viability of the project, highlighting that the changes have compelled them to pay higher duties than initially expected. TPSL is seeking an in-principle declaration that the Notifications constitute a Change in Law event, entitling them to compensation for the additional costs incurred due to the increased customs duties.

The Commission must determine if the amendments qualify as a Change in Law under the terms of the PPA. TPSL argues that the changes directly impact the cost of solar modules and cells, essential for the project’s development. The outcome of this petition will affect TPSL’s compensation for the financial implications resulting from the revised customs duties.