New Delhi: ACME Aklera Power Technology Pvt Ltd, a subsidiary of ACME Solar Holdings Ltd, has been awarded Rs 47.40 crore as 'Change in Law' compensation by the Rajasthan Electricity Regulatory Commission (RERC), the company said in a statement on Monday. The compensation covers the financial impact of higher Basic Customs Duty (BCD) on solar modules and cells and the increase in GST on renewable energy equipment, which RERC has recognised as Change in Law events.
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In the regulatory filing, ACME said the case “sets a precedent for regulatory certainty and project development cost stability in the renewable energy industry.” The 250 MW project is contracted with SECI.
According to the RERC order, ACME had approached the Commission after statutory changes significantly increased project costs. The Commission recorded that the financial impact was Rs 39.22 crore towards BCD and Rs 11.26 crore towards GST, incurred during project execution.
RERC noted that the Centre had increased GST on renewable energy devices from 5 percent to 12 percent through a notification dated 30 September 2021, and imposed 40 percent BCD on modules and 25 percent on cells from April 1, 2022, while rescinding earlier customs exemptions on inverters.
RERC held that these statutory changes “materially increased the cost of setting up the project” and had already been recognised as Change in Law in a previous order, with the present petition filed to determine the quantum and methodology of compensation.
After several rounds of hearings, RERC, SECI and RUVITL carried out a joint reconciliation, during which certain portions of ACME’s claims — including costs arising from High Sea Sale transactions and modules exceeding installation report quantities — were disallowed.
The regulatory order states that Rs 39,91,47,948 (Rs 30.97 crore towards BCD and Rs 8.93 crore towards GST) was approved as the reconciled, admissible Change in Law compensation.
The Commission said this amount was “undisputed and found prudent upon verification of one-to-one correlation by the parties.”
While the total reconciled compensation is Rs 39.91 crore, ACME Solar that the award value is ~Rs 47.40 crore, which includes compensation for BCD, GST and carrying cost, to be recovered through a monthly annuity mechanism at a 9 percent discount rate for 15 years.
The Commission also ruled that ACME is “eligible for carrying cost from the date on which actual payments were made” towards the admitted Change in Law impact, until the date of the order, subject to submission of auditor-certified interest rates or applicable tariff regulations.
RERC clarified that the annuity payment would commence from the 60th day after the order is issued, failing which Late Payment Surcharge under the PPA would apply.
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ACME said the ruling reinforces “a supportive regulatory environment for renewable energy growth in the country.” The company added that the 250 MW SECI project is expected to gain around 3.5 percent in additional revenue over 15 years as a result of the compensation.