Settle CIL Case with SECI Directly, Not in Court, CERC tells Adani Solar

By Soumya Duggal/ Updated On Mon, Feb 21st, 2022

Highlights :

“The Commission is of the view that the cause of action arises only when the land tax is levied and the Petitioner has to pay for the tax. It is a settled law that no Order can be made in anticipation for any future claims to be raised,” CERC ruled.

Settle CIL Case with SECI Directly, Not in Court, CERC tells Adani Solar

GERC Declines To Impose Charges For RTS Users Below 6kw

The Central Electricity Regulatory Commission has declined to accord the ‘in-principle approval’ sought by Adani Solar for a ‘Change in Law’ event with regards to its PPA with SECI for a 50 MW solar plant in Rajasthan.

In November 2018, Adani Solar Energy Four Private Limited (formerly known as Kilaj Solar (Maharashtra) Private Limited) (ASEFPL) entered into a 25-year Power Purchase Agreement (PPA) with Solar Energy Corporation of India (SECI) to set up an ISTS-connected 50 MW solar plant in Rajasthan. As an ‘intermediary procurer’, SECI agreed to purchase such solar power to further sell it to BYPL on back-to-back basis under a power sale agreement (PSA) signed with the latter in August 2018.

Notably, the Rajasthan state government had exempted the payment of land tax on all classes of lands with effect from April 2013. Thus, due to its inapplicability on the project land at the time, land tax was not factored into the quoted price put forth by ASEFPL during the bid submission process.

In November 2019, however, the state government notified the reinstatement of land tax payment at Rs.1 per sq. meter, later increased to Rs 2 per sq. meter in March 2020, on specific categories of land, which included ASEFPL’s project land. In April, the developer successfully commissioned the 50 MW solar project.

Since the two land tax notifications were issued post the bid submission deadline, ASEFPL approached the Central Electricity Regulatory Commission (CERC) to seek an ‘in-principle approval’ of the tax imposition to be considered a Change in Law (CIL) event. As in the case of other similar petitions, such an approval was sought before the land tax could be levied upon the project land.

In response to ASEFPL’s request, the commission noted that there was no provision for the grant of an ‘in-principle approval’ either in the PPA or in the CIL Rules. “As per Change in Law Rules, on occurrence of an event of Change in Law, the affected party [ASEFPL]…and other party [SECI]…is to settle the Change in Law claims between themselves and approach the Commission only in terms of Rule 3(8) [concerning the verification and adjustment of the claim amount] of the Change in Law Rules,” said CERC.