GERC Review Sought Over GST Impact On Low-Tariff Solar Project In Gujarat

NTPC Renewable Energy Ltd. filed a review petition before the Gujarat Electricity Regulatory Commission (GERC) seeking reconsideration of its earlier order dated January 8, 2021 in Petition No. 1923 of 2021. The company requested the Commission to align the Power Purchase Agreement (PPA) it signed with Gujarat Urja Vikas Nigam Ltd. (GUVNL) to Clause 5.7 of the Ministry of Power’s 2017 Bidding Guidelines and to allow restitution for changes in Goods and Services Tax (GST) laws affecting project costs.

NTPC Renewable argued that the PPA’s “Change in Law” clause was materially different from the standard provisions in the Guidelines, excluding GST changes during construction while allowing relief for other levies like safeguard, anti-dumping, and basic customs duties. The company said this created an artificial distinction between similarly placed developers, violating principles of equality and undermining the National Tariff Policy, 2016, which requires passing on Change in Law impacts to tariffs.

The petition highlighted that GST on renewable energy devices and parts increased from 5% to 12% effective October 1, 2021, raising composite GST on EPC contracts from 8.9% to 13.8%. NTPC said this led to an additional cost of around ₹20 lakh per MW, or 11–12 paise per unit, making its 200 MW project—bid at ₹1.99 per unit, the lowest in India—commercially unviable without relief. They also pointed out that the PPA had been executed without GERC’s prior approval for deviations from the Guidelines, contrary to the Commission’s own 2018 order requiring such approval before tenders.

NTPC stressed the strategic and consumer benefits of retaining the project at its record-low tariff compared to later bids, which rose to ₹2.20–₹2.81 per unit. They urged GERC to review its order to protect the project’s viability and align with statutory and policy mandates.

GUVNL opposed the petition, stating that NTPC had knowingly accepted the PPA terms, executed it without objections, and only challenged them belatedly to cover delays in project execution. GUVNL argued that the restrictive Change in Law clause had been approved in earlier cases and that including more events in it did not constitute a material deviation from the Guidelines. They contended that the petition was an afterthought, beyond the scope of review, and filed over 11 months after the PPA execution.

The case revolves around whether GST changes during construction should be treated as Change in Law events under the PPA, and whether GERC’s prior order approving the tariff without explicit deviation approval should be revisited to ensure compliance with the national bidding framework and tariff policy.

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