TPREL Gets MERC Relief For Change of Law Events

The Maharashtra Electricity Regulatory Commission (MERC) has granted relief to Tata Power Renewable Energy Limited (TPREL) in a case related to ‘change of law’ events. The company had earlier signed an agreement with MSEDCL for a 150 MW solar project in Maharashtra.

The tender for the same was floated by MSEDCL in June 2022. TPREL received the Letter of Award (LoA) on August 4, 2022. The project was located at Achegaon in the Solapur district of the state. The Tata Power subsidiary had won the award at a tariff of Rs 2.91/kWh. The PPA for the same was signed on July 4, 2023.

Imported Solar Cells 

The company told MERC that at the time of bid submission, TPREL had planned to commission the project under the concessional customs duty regime of PIR 1986, which allowed solar power projects to import solar cells at a reduced customs duty rate.

However, the company said that the Basic Customs Duty (BCD) of 25% imposed on solar cell imports, along with the applicable cess and GST arising from the MNRE’s order of March 2021, affected the cost of the project.

MSEDCL, on the other hand, said that TPREL used domestic solar cells/modules rather than imported ones and hence did not incur any additional expenses on account of the change in GST rate.

In reply, TPREL submitted that while the modules are domestically manufactured as per Government of India guidelines, the solar cells were imported. TPREL further clarified that it is claiming increased expenses only on solar cells and not on modules. It also stated that the present petition is only seeking in-principle approval of the Change in Law event, and for quantification of change in law compensation, it will approach separately with all supporting documents.

MERC Order

The MERC, in its order, said that the PIR Notifications dated October 19, 2022, and February 1, 2023, accounted for a ‘change of law’ event under the PPAs and therefore TPREL should be eligible for compensation for the increase in customs duty.

“Increase in customs duty on account of the notifications dated October 19, 2022, and February 1, 2023, is considered as a Change in Law event under the PPA, and Tata Power Renewable Energy Limited shall be eligible for compensation on account of the same,” the MERC order said.