CERC Asks SECI to Compensate Developer For BCD On Solar Cells

GERC Declines To Impose Charges For RTS Users Below 6kw

The CERC has maintained that ReNew Solar Energy (Jharkhand Three) Private Limited is entitled to compensation on a PPA signed with the Solar Energy Corporation of India Limited (SECI) following the imposition of safeguard duty on solar cells/modules. The firm said that the imposition has resulted in an increase in the rate of Basic Customs Duty (BCD) on the import of solar inverters, causing the project cost to shoot up.

SECI issued the RFS on March 13, 2019. The LOA for 300 MW of solar capacity was awarded on July 25, 2019, at Rs.2.54/kWh. The PPA was executed on November 18, 2019. The tariff was adopted on January 25, 2021, while the date of implementation of the safeguard duty was July 30, 2020.

ReNew Solar Energy (Jharkhand Three) Private Limited is engaged in the business of developing, building, owning, operating and maintaining utility-scale grid-connected solar power projects for the generation of solar power. SECI is a Government of India enterprise under the administrative control of the Ministry of New and Renewable

Energy (MNRE). SECI has been designated as the nodal agency for the implementation of MNRE schemes for developing grid-connected solar power capacity through VGF mode in India. Madhya Pradesh Power Management Company Limited (MPPMCL) is the DISCOM involved in the project.

ReNew Solar Energy (Jharkhand Three) asked CERC to evolve a suitable mechanism to compensate it for the increase in expenditure incurred by it on account of a “change in law” following the change in GST laws and Safeguard Duty levied on imports.

The CERC observed that the increase in BCD imposed on the import of solar inverters from 5% to 20% had a consequential and direct bearing on the increase of the quantum of social welfare surcharge and IGST imposed on such import.

The CERC, in its judgment, granted relief to ReNew Solar Energy (Jharkhand Three) and held that it was entitled to compensation on account of an increase in the quantum of social welfare surcharge on the imports and an increase in the quantum of IGST levied on the safeguard duty on the imports of machinery and auxiliary equipment. The CERC has also permitted a discount rate of 9%, saying that the annuity period of 15 years shall be applicable.

 “The liability of ‘Monthly Annuity Payment’ will start from 60th (sixtieth) day from the date of the order or from the date of submission of claims, whichever is later”, states the judgment.

Additionally, it directed SECI to compensate the firm for additional expenditures along with carrying costs. It further stated that MPPMCL is liable to pay SECI the claims. However, payment to ReNew Solar Energy (Jharkhand Three) by SECI is not conditional upon the payment to be made by the responding MPPMCL to SECI.

As per the CERC order, compensation for the period post Commercial Operation Date of the projects in question and the carrying cost will also be met. The Central Electricity Regulatory Commission is to take up the claim cases of other solar power project Developers for further proceedings and for passing necessary orders, allowing Change in Law (CIL) compensation (on account of GST laws and Safeguard Duty on Imports) from the date(s) of enforcement of the new taxes for the entire period of its impact, including the period post-Commercial Operation Date of the projects in question, and towards Operation & Maintenance (O&M) expenses, along with carrying cost subject, “however, to necessary prudence check.”

In a similar judgment, the CERC ordered compensation for Hero Solar SPV following the surge in GST rates from 5% to 12%.