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Furnish Detailed Documents To Claim ‘Change Of Law’ Benefits, GERC Asks Azure

The order from GERC came after an Azure Power subsidiary moved the state power regulator seeking compensation due to the imposition of safeguard duty on imports of solar cells.

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Manish Kumar
Furnish Detailed Documents To Claim ‘Change Of Law’ Benefits, GERC Asks Azure

Azure Power subsidary had moved GERC seeking compensations due to rise in duties on solar cell imports. Photograph: (archive)

The Gujarat Electricity Regulatory Commission (GERC), in its latest order, asked a subsidiary of Azure Power to furnish all relevant documents to claim ‘change of law’ benefits. The order from the state regulator came to light when Azure Power Thirty Three Private Limited, a subsidiary of the firm, moved the state power regulator seeking compensation due to the sudden imposition of safeguard duty on imports of solar cells.

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The case pertains to a 260 MW solar project the firm was building in the state. The bid for the project was issued in 2017, and the PPA was signed between the firm and GUVNL, the state discom. However, the Finance Ministry, in July 2018, imposed safeguard duty on solar cells imported from China and Malaysia. This, the firm claimed, increased their raw material cost. The company said the move led to an increase in the project cost by around Rs 75 crore (Rs 75,98,26,529 to be precise). On account of this, the company sought compensation by declaring the move as a ‘change of law’ event.

Demand For Interest & Carrying Costs

It also demanded interest of 15% per annum and carrying costs, arguing that principles of restitution and unjust enrichment under the Indian Contract Act, 1872, warrant such compensation for delays in payment and losses incurred.

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GUVNL contended that, as per the agreement, the 'Change in Law' provision was limited to taxes levied "on the generation of electricity... or sale of electricity," which refers to the final output, not inputs like solar modules. Therefore, safeguard duty on imported solar cells falls outside this scope.

GUVNL also cited the Appellate Tribunal for Electricity's (APTEL’s) 2018 judgment in Adani Power Limited v. CERC, where a similarly worded 'Change in Law' clause (Gujarat Bid-01 PPA) was held not to cover duties on the procurement of goods and services.

GERC's Observations

GERC, however, highlighted that while Azure Power had provided "Declaration/Undertaking Bonds/Provisional Duty Bonds" showing shipping details, these alone were insufficient to "complete the chain necessary to be proved regarding actual installation of solar modules at the project site."

“The Petitioner is directed to submit complete and detailed documentation and evidence to substantiate its 'Change in Law' claim, and calculations as per the PPA, within a period of two months from the date of this Order, with a copy to the Respondent. The Respondent shall file their response thereto, if any, within a period of two weeks therefrom. It is appropriate to proceed further thereafter to adjudicate the claim on merits. Office is instructed to list the matter thereafter,” the GERC order said.

Solar Azure Power Gujarat Change of Law
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