Azure Power to Get Compensation For Increase in Costs Due to Safeguard Duty

The Maharashtra Electricity Regulatory Commission (MERC) recently heard two petitions made by Azure Power in two cases in which it had requested the commission to consider the levy of safeguard duty as Change in Law and had asked it for approval and determination of compensation for the increase in project cost following the imposition.

In the first petition, Azure Power had requested the MERC to direct Maharashtra State Power Generation Co. Ltd (MSPGCL) and Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) to consider the levy of safeguard duty as Change in Law. Azure was selected to develop 150 MW of solar PV projects by Maharashtra State Power Generation Co. Ltd (MSPGCL) for the tender floated by it under Mukhyamantri Sour Krishi Vaahini Yojana.

MSPGCL had floated the tenders for Phase- II (300 MW) and Phase – III (A) (50 MW). Under the tenders for Phase – II, Azure was selected as the lowest bidder for four tenders of 50 MW in each block of Vidarbha-A & B, Marathwada and western Maharashtra-B.

The solar power developer had filed this petition in February 2019, requesting approval and to fix the compensation on account of ‘Change in Law’ due to the announcement of safeguard duty.

In its order, the commission noted that all the parties to the petition including Azure have admitted that subsequent to the adoption of tariff by the commission in its order dated 29 November 2018, the final PPA is yet to be signed. Claims related to ‘Change in Law’ need to be decided based on the provisions of PPA signed between the parties. 

“It would be premature to adjudicate this matter based on the provisions of draft PPA, in absence of a legally binding PPA between the parties, present petition is premature for adjudication” reads the commission order. “Accordingly, APIPL can approach the Commission at later date for determination of the increase in cost or/and revenue expenditure on account of imposition of Safeguard Duty, if any and the mode of recovery of the same. The issue of carrying cost can also be dealt with appropriately at that stage.”

For more information click here.

In the second petition, filed by Azure Power Thirty Four Private Limited, the developer requested the commission for compensation on account of Change in Law for its solar project from MSEDCL.

In this case, MERC partly allowed the petition and that imposition of Safeguard Duty qualifies as Change in Law event. “The additional expenditure and other consequential impacts shall be considered on actual basis for reimbursement under Change in Law subject to prudent check after the Azure Power Thirty Four Private Limited files its petition with all the details in accordance with the provisions of PPA,” the commission issued in its order.

For more information click here.