MERC Directs MSEDCL to Compensate Solar PV Project Developers

MERC Directs MSEDCL to Compensate Solar PV Project Developers

Solar PV Projects totaling 100 MW will be benefited

The Maharashtra Electricity Regulatory Commission (MERC) has provided partial relief to Juniper Green Energy Pvt. Ltd. (JGEPL), and Nisagra Renewable Energy Pvt. Ltd. (NREPL), developers of solar PV projects in Maharashtra.

JGEPL and NREPL had petitioned the MERC to intervene and finalize a compensation mechanism and amount to be availed by the developers from Maharashtra State Electricity Distribution Company Limited (MSEDCL), on account of Change in Law clause that became active upon imposition of safeguard duty in 2018.

NREPL had entered power purchase agreement (PPA) with MSEDCL for total of 70 MW (seven solar PV projects of 10 MW each) and JGEPL had entered PPA with MSEDCL for 30 MW (three solar PV projects of 10 MW each).

JGEPL submitted to MERC that it had incurred additional cost of Rs.14,73,84,043 due to imposition of safeguard duty. NREPL submitted to having incurred additional expenditure totaling Rs.34,49,14,006 due to safeguard duty levy.

JGEPL and NREPL had also requested that the MERC direct MSEDCL to pay interest from date of incurrence of safeguard duty and GST thereon till date of payment, and to reimburse the legal and administrative costs incurred by them in filing this petition.

After duly considering submissions made by the parties, MERC was of the view that JGEPL and NREPL will provide undertaking that all modules installed at their project sites for supplying power to MSEDCL have been imported from the countries subjected to safeguard duty. MERC directed MSEDCL to act upon such undertaking given by the petitioners and complete this process within 15 days. MERC specified that JGEPL and NREPL will bear the cost of the process of finalizing compensation.

MERC also stated that based on the scrutiny of documents (to be completed within 45 days) and/or physical verification of RFID tag (to be completed within six months), compensation amount ascertained earlier will be re-verified and in case of any deviation will be adjusted with holding/carrying cost in future payments.

MERC cited the principle of restitution provided under the Change in Law provisions of the PPA and directed that the petitioners will be eligible for carrying cost from the date they paid the amount to government authorities till the date of this order. Rate of interest for carrying cost will be equal to 1.25% in excess of 1-year marginal cost of find based lending rate (MCLR) of State Bank of India (SBI). Based on prevailing MCLR of SBI, rate of interest for carrying cost for each financial year would be different.

MERC has provided MSEDCL the option to decide whether it has to pay the compensation in lumpsum to avoid further carrying cost or make payment over the tenure of PPA with additional carrying cost. MSEDCL must decide on its option and communicate the same to JGEPL and NREPL within a week from ascertaining amount of compensation to be paid.

Recently, MERC also came to aid of Renew Power SPV (Special Purpose vehicle) Renew Vayu Urja Private Limited (Renew) in a case against the MSEDCL (Maharashtra State Electricity Distribution Company Ltd), Maharashtra Energy Development Agency (MEDA) and Maharashtra State Electricity Transmission Company Ltd. (MSETC).

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Saumy Prateek

Saumy has been a writer with Reuters, Mercom India and Rystad Energy.