GERC Petition Seeks ‘Change in Law’ Status for Safeguard Duty on 100 MW Solar Project In Gujarat

Tata Power Renewable Energy Limited filed a petition with the Gujarat Electricity Regulatory Commission (GERC) to seek a declaration that the safeguard duty imposed from July 30, 2020, to July 29, 2021, on the import of solar cells should be considered a ‘Change in Law’ event under Article 9 of its Power Purchase Agreement (PPA) with Gujarat Urja Vikas Nigam Limited (GUVNL). The company had entered into the PPA on August 28, 2019, for supplying 100 MW of solar power at ₹2.70 per unit. This agreement followed a competitive bidding process conducted by GUVNL.

Tata Power’s planning was based on the understanding that the previous safeguard duty, which expired on July 29, 2020, would not be extended. Accordingly, the company planned its solar module imports after this date. However, the Ministry of Finance issued a fresh notification on July 29, 2020, extending the safeguard duty by another year, which affected Tata Power’s cost projections.

The company argued that this imposition was not foreseeable at the time of bidding and should therefore qualify as a Change in Law. It also pointed out that the Central Electricity Regulatory Commission had previously treated similar safeguard duty impositions as Change in Law events. Tata Power invoked the relevant provisions under the PPA and submitted a formal notice to GUVNL, asserting the impact of the new duty and requesting future permission to recover the additional costs incurred.

GUVNL, in response, acknowledged that any claim for Change in Law must be decided by the Commission and that appropriate supporting documents must be submitted to substantiate the claim. They highlighted that the safeguard duty notification is prospective in nature and applies only to imports after July 30, 2020. GUVNL argued that Tata Power should have imported the modules before that date, and in such a case, the duty would not apply. They also noted that no specific claim amount or detailed cost impact had yet been filed by Tata Power and requested proper documentation, including bills of entry, payment challans, audit certificates, and independent engineer verifications to establish the correlation and impact.

In reply, Tata Power maintained that the safeguard duty imposition after July 30, 2020, was an unforeseen event and directly impacted the cost of setting up the solar project. They emphasized that the project was in the development stage when the petition was filed and that quantification of claims would follow after the project was commissioned. The project was eventually commissioned on August 10, 2021.

Tata Power also stressed that the decision to procure modules from China was based on commercial factors such as pricing, reliability, and supply timelines. It argued that the New Notification created a new cost burden that was impossible to foresee at the time of bidding, and thus, it qualified under the PPA as a Change in Law. The company assured that it would furnish all required documentation in support of its claims.

The matter continues to be examined by the Commission, which must determine whether the safeguard duty imposed by the July 29, 2020, notification qualifies as a Change in Law and whether Tata Power is eligible for compensation under the PPA.