Now, Safeguard Duty Clarification From MNRE Awaits

An active Ministry of New and Renewable Energy (MNRE) has been in overdrive in 2020, delivering a wishlist of moves for the sector so far. Not just that, some of the amendments planned for the Electricity act of 2003 soon, will add even more legal teeth to its orders, issued mainly to protect the sector in terms of payments, must run status, deemed generation etc.

With the notification for the extra month as a blanket extension for RE projects, the ministry has delivered on yet another announcement  made last week.

As reported by us, Anand Kumar, Secretary, MNRE, had mentioned how after GST (Goods and Service Tax) , the issue of Safeguard Duty (SGD) would also be resolved on the same model as the GST. In the GST issue, the cost enhancement due to GST has been finally paid to developers on an annuity basis.

“There was a standing concern of generators regarding a payment due to enhancement of GST and SGD. We resolved the GST issue earlier on, by paying the GST enhancement on annuity basis till commissioning date.Today we have taken a decision that SGD will also be paid on the same basis by SECI, within this week.” That should make it a likely announcement from SECI anytime today or tomorrow possibly.

Keep in mind that these two issues between them have accounted for a high number of project delays, with matters reaching state regulators, the national regulator (CERC), and even the Appellate Electricity authority.

Learning from the experience, MNRE has moved  much faster to clarify the status of RE projects impacted by the lockdown caused by the Coronavirus.

However, for the solar sector, the truly big bang reform remains the passage of the Electricity (Amendment) Act 2020, which, should it pass with the planned amendments, could do more to give a fillip to the sector than almost any other move in the past couple of years. Having a common minister in the form of Power Minister R.K. Singh will surely have helped. Not to mention the positive impact the prime minister, Narendra Modi himself made to the state discom in Gujarat during his own tenure as a Chief Minister.

That is because it would give a strong legal backing to MNRE notifications, besides also looking to tackle what many consider the root cause of many troubles, ie, the financial distress among state discoms. By pushing to make electricity charged at cost, without subsidies, it could do more to clean up, or clear up the smoke around discom performance and efficiencies, than anything else. Stricter enforcement of RPO (renewable purchase obligations) will also help, of course.