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CERC Grants Relief to Wind Power Developer for GST Hike

The Central Electricity Regulatory Commission (CERC) has ruled in favor of M/s. Morjar Windfarm Development Private Limited, granting the company compensation for increased costs due to a Goods and Services Tax (GST) rate hike.

The company had filed a petition seeking recognition of the GST increase from 5% to 12% as a "Change in Law" under its Power Purchase Agreement (PPA) with the Solar Energy Corporation of India (SECI).

The 150 MW wind power project, located in Gujarat, faced delays due to COVID-19 and regulatory hurdles. The project's commissioning was completed in June 2023, surpassing the initial deadline of March 2021. The GST rate hike, implemented in October 2021, significantly impacted project costs.

CERC Ruling:

CERC recognized the GST increase as a legitimate "Change in Law" event under the PPA. The commission directed SECI to compensate the developer for the verified additional expenses incurred due to the GST hike. The compensation will be disbursed through a 15-year annuity model. Furthermore, the developer was granted the right to claim carrying costs for the period between incurring the expenses and receiving compensation, subject to ongoing legal proceedings.

Significance:

This decision underscores CERC's commitment to ensuring the financial viability of renewable energy projects while navigating unforeseen challenges. It aims to strike a balance between the interests of developers and procurers like SECI during India's transition to a greener energy landscape.