| Work Detail |
In a recent hearing with the Gujarat Electricity Regulatory Commission (GERC), Tata Power Renewable Energy Limited (TPREL) filed a petition seeking recognition of the imposition of safeguard duties on imported solar cells as a “Change in Law” under their Power Purchase Agreement (PPA) signed with Gujarat Urja Vikas Nigam Limited (GUVNL) in 2019. The imposition of these duties by the Ministry of Finance, covering a period from July 2020 to July 2021, is argued by TPREL to affect the financial terms of their agreement, necessitating compensation or adjustments.
At the hearing, TPREL’s legal representative reported that previous meetings between the company and GUVNL, conducted at the Commission’s request, were aimed at clarifying and aligning documentation related to the project. TPREL also submitted an affidavit to provide comprehensive documentation, which included shipping, customs, and insurance records as evidence of the impact of safeguard duties and Goods and Services Tax (GST) on project costs.
A significant point in TPREL’s argument was that both projects in the Dholera Solar Park—one with a capacity of 250 MW and another with 50 MW—were developed concurrently and share similar tariff rates. However, logistical challenges, including the COVID-19 pandemic, delayed some module installations and led to a mixing of solar modules intended for each project. TPREL emphasized that all relevant evidence had been provided to substantiate their claim for the increased costs resulting from the “Change in Law” conditions, which would allow them to adjust the tariff rates per the PPA terms.
TPREL also raised a new issue regarding GST rates, arguing that changes in GST policy in 2018 should allow for further tariff adjustments. They referenced a recent judgment by an appellate body on GST treatment for similar contracts, which sets a precedent. TPREL seeks to apply an 8.9% GST rate to their contract, calculated based on government regulations specifying GST allocations for goods and services in renewable energy projects. Their legal team requested the Commission to rule on whether the GST changes qualify as a “Change in Law” and, if so, determine the applicable rate for tariff adjustments.
GUVNL’s representatives countered TPREL’s claims by challenging the accuracy and completeness of the documentation provided. They noted discrepancies in five key documents submitted by TPREL, which include certificates from the Gujarat Energy Development Agency (GEDA) and Chartered Engineer, Chartered Accountant, and Chief Electrical Engineer, each listing different quantities of solar modules. GUVNL argued that the varied figures cast doubt on the exact number of modules imported and installed. This uncertainty, they claim, complicates verifying TPREL’s compensation claims related to safeguard duties and GST adjustments. GUVNL requested a new Chartered Accountant’s certificate to clarify the “Change in Law” claims in alignment with PPA requirements.
TPREL defended its documentation, asserting that the RFID tracking system allows for accurate identification of installed modules, which should satisfy GUVNL’s concerns. They argued that requiring additional certificates from the Chartered Accountant is unnecessary and emphasized that the existing certification aligns with the PPA’s stipulations.
After hearing both sides, the Commission allowed each party four weeks to submit further written responses, permitting time to address discrepancies raised by GUVNL and any additional arguments from TPREL. The Commission has reserved its final decision on whether the safeguard duties and GST modifications qualify as a “Change in Law” under the PPA, which would potentially allow TPREL to claim tariff adjustments for the increased costs incurred due to these regulatory changes. |
