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Vena Energy Vidyuth Pvt. Ltd. (VEVPL), a wind power generating company in Karnataka, has filed a petition seeking declaratory relief under the Electricity Act, 2003, related to a Power Purchase Agreement (PPA) with Solar Energy Corporation of India Limited (SECI). The petition, dated 03.05.2021, pertains to a blended wind power project of 160 MW in Koppal District, Karnataka, and addresses the impact of certain regulatory changes on the project’s viability.
VEVPL initiated the petition on 24.01.2023, highlighting that any change in law event post the bid submission date (28.07.2020) affecting the project cost is deemed a ‘Change in Law Event’ under the PPA. The company contends that recent developments, including the introduction of Basic Custom Duty (BCD), alterations in Safeguard Duty rates, and changes in Goods and Services Tax (GST), necessitate compensatory payments per the terms of the PPA.
SECI, during the hearing on 20.09.2023, acknowledged the necessity of recognizing these events as a change in law events. However, concerns were raised by SECI regarding the project’s commissioning status and the potential need for substantive relief post-completion.
The Ministry of Power clarified that Change in Law Rules 2021 applies prospectively. The dispute revolves around the recognition of changes in rates of Safeguard Duty, GST, and BCD, which were not acknowledged by the Commission in a prior tariff adoption. SECI, in its reply, conceded the need for the Commission to consider these aspects from the date of the tariff adoption order.
The petition also refers to a Composite Works Contract with a Solar EPC Contractor and individual contracts for the blended wind power project. The petitioner argues that the treatment of GST rate changes should be based on the nature of the relevant works contract, not the composite contract as a whole.
VEVPL incurred additional capital expenditure due to the introduction of BCD, changes in Safeguard Duty rates, and GST modifications. The company seeks compensatory payments to offset the increased project costs and maintain project viability.
The Ministry of New and Renewable Energy’s Office Memorandum dated 09.03.2021 is cited as a relevant law under the PPA. The petitioner has paid BCD on solar modules & cells as directed by the Customs Department, with plans to approach the Commission for substantive relief.
SECI, in its reply dated 12.08.2023, acknowledged the need for considering Safeguard Duty, BCD on Solar Inverters, and GST claimed by the petitioner as a change in law events effective from the tariff adoption order dated 22.12.2021.
The petition emphasizes that it is seeking declaratory relief and not substantive relief at this stage. SECI, however, raised concerns about addressing substantive relief post-commissioning, citing a relevant judgment.
The Commission, after hearing submissions, observes that Change in Law Rules 2021 applies prospectively and decides that notifications issued before 22.10.2021, including Safeguard Duty, BCD, and GST changes, are to be considered under Article 12 of the PPA.
The Commission holds that the 2020 SGD Notification, 2021 BCD Notifications, and 2021 GST Notification qualify as Change in Law events. The petition is disposed of, granting the petitioner the liberty to approach the Commission for substantive relief when needed. VEVPL’s petition underscores the impact of regulatory changes on the wind power project’s viability, seeking recognition of these changes as Change in Law events under the PPA to receive compensatory payments. The Commission’s decision provides clarity on the retrospective application of Change in Law Rules and affirms the identified events as qualifying for declaratory relief.
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