The National Solar Energy Federation of India (NSEFI) has written a letter to BS Yeddyurappa, the Chief Minister of Karnataka, asking him to direct the Karnataka Electricity Regulatory Commission (KERC) to disburse the additional costs incurred by the developers due to safeguard duty imposition during the development of 860 MW of solar projects across 43 talukas.

The letter mentions that the tender for the development of these projects was floated by the Karnataka Renewable Energy Development Limited (KREDL) in 2017, and the safeguard duty came into effect from July 30, 2018.

The solar developer who won the bid to develop projects were: ACME Solar, Asian Fabtech, Akialde Solar, Greenko Energies, Max Planc Solarfarms, Rays Power Infra, ReNew Solar, Shapoorji Pallonji, Talettutayi Solar, and TEP Rooftop Solar.

After the implementation of the safeguard duty, the developers incurred an increase in cost, which was not projected at the time of bidding for the projects.

“Further, the solar project developers had moved to the KERC for relief under ‘Change in Law.’ We wish to apprise you that it has been more than eight months since the solar developers have filed their petitions, and no relief has been provided to the developers by KERC yet. Such additional costs were never funded by lenders, and developers had to burn out their equity to fulfill their entire costs obligation under such cost. It has been approximately 1.5 years since the solar developers had invested their loans for this additional cost. As a result of which the developers are on the verge of becoming non-performing assets (NPAs) due to the non-payment of this additional cost incurred by them on account of safeguard duty,” states the letter.

In the letter, NSEFI has requested the Chief Minister to direct the concerned authorities to issue orders to the procurers to disburse such claim amounts to the developers and help them to reinstitute their financial strength.

In March this year, the Ministry of New and Renewable Energy (MNRE) released a circular stating that Goods and Services Tax (GST) and safeguard duty compensation to solar project developers should be paid within 60 days. Mentioning the orders already passed by the Central Electricity Regulatory Commission (CERC) on the ‘Change in Law’ compensation for GST and safeguard duty, the ministry added that there is now no need for the developers to approach the CERC for each case individually.

Earlier, Mercom Research found that solar developers have been struggling to get reimbursement for their additional expenses. This has adversely affected their business and the pace of project development in the country.

Notably, soon after the imposition of the duty, NSEFI had written to the Ministry of Commerce and Industry, and the Ministry of New and Renewable Energy (MNRE) expressing concerns regarding the negative impact of the final safeguard duty recommendations by DGTR on the growth of solar installations in India.