The Central Electricity Regulatory Commission (CERC) has rejected a solar developer’s petition seeking approval for the land tax imposed by the Rajasthan Government to be considered as a ‘Change in Law’ event.

Since the land tax is yet to be levied, the Commission said it could not issue orders in anticipation of future claims being raised.

Background

In January 2018, Solar Energy Corporation of India (SECI) issued a request to select solar power developers for setting up 2 GW of the interstate transmission system (ISTS)-connected solar power projects on a build, own, and operate basis.

 Adani Solar Energy Four Private Limited (formerly Kilaj Solar (Maharashtra)) submitted its bid to develop a 50 MW ISTS-connected solar project in Rajasthan. In July 2018, SECI issued a letter of award to the solar developer to set up the 50 MW project.

In November 2018, SECI entered into a power purchase agreement for 25 years with the company for purchasing 50 MW solar power as an intermediary procurer for onward sale of solar power to BSES Yamuna Power Limited through a power sales agreement signed in August 2018.

The developer commissioned the project in April 2020 at Rawra in Jodhpur, Rajasthan.

The Government of Rajasthan, in November 2019, issued a notification reinstating land tax at ₹1 (~$0.013) per square meter or 5% of the market value of the land, whichever is lower, on the specified categories of land, including land measuring 500 hectares or above.

The state government, in March 2020, also increased the applicable land tax to ₹2 (~$0.027) per square meter for industrial land above 10,000 square meters.

With the effect of these notifications, the land tax was imposed upon the company’s 50 MW project’s land measuring 1,011,714 square meters.

In its petition to the CERC, the developer said the state government’s notifications were issued after the last date for bid submission and thus, should qualify as a ‘Change in Law’ event per the PPA.

In its response, SECI submitted that the land tax is yet to be levied upon the project land of the solar developer; thus, there are no grounds for the appeal.

Commission’s analysis

 After examining submissions made by both parties, the Commission observed that the land tax is yet to be levied on the developer for the project land.

Therefore, the Commission opined that the cause of action arises only when the land tax is levied and if the developer had to pay for the land tax.

The central regulator said, “It is a settled law that no order can be made in anticipation for any future claims to be raised.”

The Commission said the solar developer could approach SECI to settle ‘Change in Law’ claims when the cause of action arises and thereafter approach the Commission to verify the calculation and adjust the amount of the impact in the monthly tariff or charges within 60 days from the date of the receipt of the relevant documents.

Earlier this month, in a similar order, the central Commission rejected solar developers’ plea seeking approval for the tax to be imposed by the government of Rajasthan on land for the development of 300 MW of solar projects to be considered as a ‘Change in Law’ event.

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Harsh Shukla is a staff reporter at Mercom India. Previously with Indian Express, he has covered general interest stories. He holds a Masters Degree in Journalism from Symbiosis Institute of Media and Communication, Pune.

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