The Madhya Pradesh Electricity Regulatory Commission (MPERC) has approved a joint petition filed by Rewa Ultra Mega Solar (RUMSL) and MP Power Management Company (MPPMCL) to exclude a Goods and Services Tax (GST) reduction from the scope of “change in law” under the power purchase agreement (PPA) for solar park projects at Morena, Madhya Pradesh.

RUMSL is conducting the bidding process under scrutiny in accordance with the Ministry of Power’s “Guidelines for Tariff-Based Competitive Bidding Process for Procurement of Power from Grid-Connected Solar PV Power Projects,” issued under Section 63 of the Electricity Act, 2003.

Background

RUMSL issued a tender for two ground-mounted, grid-connected solar photovoltaic projects, each coupled with a co-located battery energy storage system in September 2024.

The financial proposals were under evaluation at the time of the petition, with the e-reverse auction process yet to be conducted.

Approaching the Commission, the petitioners drew attention to the decision made by the GST Council at its 56^th meeting on September 3, 2025, which recommended reducing the GST on renewable energy devices and parts, including photovoltaic cells, from 12% to 5%, effective September 22, 2025.

A notification from the Central Board of Indirect Taxes and Customs was to give effect to this recommendation. Under the PPA terms, any change in tax rates occurring after a date seven days before the proposal due date (August 22, 2025) qualifies as a “change in law” event. The GST cut, therefore, technically fell within the period that would trigger such a classification.

The petitioners, however, requested that this GST reduction not be treated as a change in law under the PPA. They argued that allowing bidders to directly incorporate the revised GST rate into their tariff quotes during the e-reverse auction would simplify the process and avoid subsequent disputes.

They submitted that this approach would ensure that MPPMCL, as the procurer, would directly secure the financial benefit of the lower tax rate through the competitive tariffs discovered in the auction.

To facilitate this, the petitioners proposed a revision to the definition of “change in law” under the PPA, specifically excluding the reduction in the GST rate from 12% to 5% on renewable energy devices and parts.

The petitioners stated that all bidders eligible to participate in the e-reverse auction had confirmed their willingness to factor in the reduced GST rate when quoting tariffs. This confirmation, the petitioners argued, eliminated the need for any post-auction claims under the PPA’s change-in-law provisions.

Commission’s Analysis

Based on the reasoning of the petitioners, the Commission noted that the GST reduction effective from September 22, 2025, will not be treated as a change in law under the PPA for the Morena Solar Park projects.

It said the procurer would not seek any change in law relief on this account, and bidders must continue to factor in the revised GST rate during the auction.

In August this year, MPERC approved a tariff of ₹2.94 (~$0.0336)/kWh discovered in the fourth and fifth auctions conducted by Madhya Pradesh Urja Vikas Nigam under Component C of the PM-KUSUM.

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