GIB Row: MERC Allows Compensation To Azure Power Subsidiary

GIB Row: MERC Allows Compensation To Azure Power Subsidiary

The Maharashtra Electricity Regulatory Commission (MERC) in its latest order ordered compensation to a subsidiary of Azure Power in the light of judgement of the Supreme Court on the issue of Great Indian Bustards (GIB). This comes after the Azure Power Thirty Four Private Limited (APTFPL) moved the State Commission, seeking compensation.

The petitioner had set up a 130 MW (AC) solar power plant in the Bap taluka of Rajasthan. APTFPL had entered into a Power Purchase Agreement (PPA) with the Maharashtra State Electricity Distribution Co. Ltd (MSEDCL) in 2018 for the supply of the solar power produced from this solar plant. 

Earlier in April 2018, MSEDCL had issued a tender seeking procurement of 1000 MW of solar power. Azure Power was then selected as one of the successful bidders for the tender and bagged a 130 MW from the block. 

In 2019, a writ petition was filed before the Supreme Court seeking to protect two species of birds namely Great Indian Bustard (GIB) and Florican. The petitioner had sought certain directions regarding the installation of overhead power lines, etc. by the power generating companies. In 2021 the apex court imposed certain conditionalities for laying powerlines. Further, for existing overhead lines steps like installation of bird diverters were suggested.

The company said that the project lied within the GIB potential area and had to install bird diverters as mitigation measure. It told the CERC that the installation of the new equipment led to inflated project cost and demanded compensation. He pleaded the CERC to consider this as a ‘change of law’ event’ for the same.

The CERC in its written order accepted the plea of Azure Power to consider this as a ‘change of law’. It said, “The Commission notes that in present case, bid submission date was 27 April 2018 and project was commissioned on 6 September 2019. Supreme Court has issued GIB Order on 19 April 2021 i.e. post commissioning of the project. GIB order mandates APTFPL to install bird diverters on overhead lines. Such requirement of installation of bird diverters is modification of prevailing conditions in which APTFPL was operating. Hence, Supreme Court’s GIB Order mandating installation of Bird Diverters on overhead lines qualifies as Change in Law event under the present PPA.”

APTFPL submitted that, total of 4200 bird diverters have been installed having a cumulative cost of Rs. 86,27,511/- at the Project site. While opposing above submissions, MSEDCL contended that there is no one to one corelation of the locations wherein the bird divertors are installed, the court proceedings revealed. 

“In this regard, the Commission notes that in similar matters of payment of compensation on account of Change in Law, the Commission had opined that lumpsum payment would avoid further carrying cost on account of deferred payment. Further, Generator may willingly offer some discount on lumpsum payment. Considering all these aspects, the Commission had provided liberty to MSEDCL to decide whether it intends to opt for payment of the compensation on lumpsum basis or per unit basis over the PPA tenure. Accordingly, MSEDCL shall communicate its option of paying Change in Law compensation to APTFPL within a month from date of this Order,” MERC said in its order.