The Central Electricity Regulatory Commission (CERC) has passed an order that will give four developers compensation for protection obligations from developers on the grounds of legal change clauses. In other words, the import security tax compensation applied by the four developers has been approved.
The four developers include ReNewSolarPower
PhelanEnergyIndiaRJPvt.Limited, CleanSustainableEnergyPvtLtd and MahobaSolar(UP)PvtLimited. The four companies have previously filed petitions with Indian solar companies and related units to compensate for the import tax on imported solar cells and modules.
The petition mentioned, “If certain solar cells and modules are imported as part of O&M by July 30, 2020, the imposition of such a protection tax may also result in an increase in non-recurring expenses.”
The four petitioners requested a one-time payment of INR 739.5 million (US$10.5 million) to the petitioner for additional safeguards and IGST taxes and interest on imported solar cells. They have asked the Central Power Authority of India to instruct the Indian Solar Company to pay within 60 days from the date of the petitioner's claim, otherwise, the late payment fee will be charged in accordance with the PPA.
Currently, the Central Electricity Authority has instructed the SECI to reconcile the documents related to the claim within 15 days of the petitioner's submission. The order also suggests that the petitioner and the SECI may negotiate a mechanism to pay compensation based on the annuity and within the time limit not exceeding the time limit for the purchase agreement, in accordance with the percentage of the electricity price agreed in the PPA.
Mercom reported in September 2019 that the Karnataka Power Regulatory Commission (KERC) stated that the imposition of a safeguards tax on ACMESolar's projects in Karnataka would be considered a “legal change”. The Maharashtra Electricity Regulatory Commission also reiterated in its February order that the safeguards tax is an event of legal change and therefore will consider additional expenditures and other effects.