MNRE Entitles Solar Project Developers to Compensation in Case of Change in Law

The Ministry of New and Renewable Energy (MNRE) has amended the guidelines for tariff-based competitive bidding process for  procurement of power from grid-connected solar photovoltaic (PV) projects.

To remove any ambiguity, the MNRE has stated, “Change in the rates of any taxes as mentioned in clause 5.7.2 of Guidelines for Tariff Based Competitive Bidding Process for Procurement of Power from Grid Connected Solar PV Power Projects, includes change in rates of taxes, duties and cess”.

Further, in case a change in law results in any adverse financial loss or gain to the solar power generator then, under the new amendment,  the MNRE has entitled them to compensation by the other party to ensure that the power generator is not adversely affected.

The amount to be paid and mechanism for the compensation payment will be determined and effective from the date decided by the appropriate commission.

The MNRE in its order also stated that the term ‘Change in Law’ will refer to the enactment of any new law or an amendment, modification or repeal of an existing law or the requirement to obtain a new consent, permit or license. The MNRE has also clarified that Change in Law will not include any change in taxes on corporate income or any change in any withholding tax on income or dividends.

When contacted, an MNRE official told Mercom, “This was required in the current scenario, stakeholders had been making it known to us (MNRE) that they are unable to account for uncertainties due to proposed duties or cases that are ongoing. This clause now allays their fears and the business can continue as usual. Even our Power Minister, a few days ago, had announced that the bidding rules will be amended to provide for the new changes in Indian solar ecosystem.”

The amendment comes on the heels of Power Minister R.K. Singh’s recent statement in which he asserted that the government will ensure that the rules are not implemented retrospectively. “The government will amend the bidding rules to allow the pass through of any safeguard duty hike,” Singh had said.

Meanwhile in Odisha, the Grid Corporation of Odisha (GRIDCO) has tendered 200 MW of grid-connected solar photovoltaic (PV) projects with a pass through option for bidders in case there is any change in the statutory laws like anti-dumping or safeguard duty on the solar PV modules.

Saumy Prateek Saumy has been with MercomIndia.com as a staff reporter covering business and energy news since 2016. Prior to Mercom, Saumy was a copy editor at Thomson Reuters. Saumy earned his Bachelors Degree in Journalism & Mass Communication from the Manipal Institute of Communication at Manipal University. More articles from Saumy Prateek.