AGEL Arm Wins Compensation Claim From CERC For Rajasthan Wind Solar Hybrid Project

In a petition brought forward  as the developer of a 450 MW ISTS connected Wind-Solar Hybrid power project, entered between Adani Solar Energy Jaisalmer One Private Limited (formerly known as SBE Renewables Ten Projects Private Limited) and Solar Energy
Corporation of India Limited seeking Change in Law compensation along with Carrying Cost, the CERC had to rule on three issues.

Adani Solar claimed grounds for compensation linked to three events as listed below, basis the Article 12.1 of the PPAs dated 31.12.2019 read with Wrap Agreement dated 21.12.2021.

a) Hon’ble Supreme Court’s Order dated 19.04.2021 directing the installation of bird diverters on transmission lines (SC GIB Order)

b) Department of Revenue, Ministry of Finance, (Government of India)’s Notification dated 01.02.2021 which increased the rate of Basic Custom Duty (BCD) from 5% to 20% on Solar Inverter (2021 BCD Notifications)

c) Department of Revenue, Ministry of Finance, (Government of India)’s Notification dated 30.09.2021 increasing the rate of GST from 5% to 12%(2021 GST Notification)

After due consideration and deliberations, the CERC ruled in favour of Adani in its order, detailing the final steps as below.

On the GIB order of the Supreme court and the expense incurred on Bird Diverters, it accepted  Adani’s claims, and allowed it to claim compensation from SECI, which in tirn could claim it from the discoms it had signed PSAs with.

The increase in import duty on solar inverters was also accepted as a change in law event, making the developer entitled to compensation on account of a Change in Law as per the terms of Article 12 of the PPAs due to the SC GIB Order, 2021 BCD Notifications, increase of quantum of social welfare surcharge on the imports, and an increase in the quantum of IGST levied on the imports and 2021 GST Notification.

CERC directed the contracting parties to carry out reconciliation of additional expenditure as per Article 12 of the PPAs by exhibiting clear and one-to-one correlation with the projects and the invoices raised supported with auditor certificate on account of 2021 BCD Notifications, an increase of the quantum of social welfare surcharge on the imports, and increase in quantum of IGST levied on the imports; 2021 GST Notification and from 19.04.2021 up to 21.03.2024 qua SC GIB Order dated 19.04.2021.

Compensation at the discount rate of 9.12% and annuity payment of 15 years was settled as the appropriate methodology towards change in law compensation. The liability of SECI/ Discoms for ‘Monthly Annuity Payment’ shall start from the 60th (sixtieth) day from the date of the CERC order or from the date of submission of claims by the Petitioners, whichever is later. Provision of late payment surcharge in the respective PPA/PSA shall kick in if the of monthly annuity payment is not made by the Respondents within the due date .
The CERC also ruled that the petitioner shall also be eligible for carrying cost starting from the date when the actual payments were made to the Authorities/vendors till the date of issuance of this Order, at the actual rate of interest paid by the Petitioners for arranging funds (supported by Auditor’s Certificate) or the rate of interest on working capital as per applicable RE Tariff Regulations prevailing at that time or the late payment surcharge rate