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Solar Developers to be Compensated for Safeguard Duty

The Maharashtra Electricity Regulatory Commission has , however, rejected the solar developers’ request for an extension in the financial closure and commissioning deadline

Solar developers who won solar projects just before safeguard duty on solar panels and modules was imposed last year can now breathe a sigh of relief.

Safeguard duty of 25 per cent on the import of on solar modules and cells from China and Malaysia has been in effect since July 30, 2018.

On Friday, Maharashtra’s power regulator passed an order maintaining that such duty amounted to a “change of law” and that developers should be adequately compensated for it, ET reported.

Mention may be made that Tata Power, Acme Solar and Adani Green Energy had won 150 MW, 250 MW and 200 MW respectively in a 1000 MW solar auction conducted by Maharashtra State Electricity Distribution Co Ltd (MSEDCL) in May last year. While the first two quoted a tariff of Rs 2.72 per unit, Adani Green Energy sought Rs 2.71 per unit.

When the safeguard duty order came into effect, these three developers had filed separate petitions before the Maharashtra Electricity Regulatory Commission (MERC), seeking it to acknowledge that the imposition of safeguard duty was indeed a change of law, and fix the compensation they should receive.

They had raised their concern that as most of the panels and modules used in solar projects are imported, the safeguard duty would significantly raise their input costs.

No increase in tariff

MERC, however, reportedly declined to fix any compensation or increase in tariff. In its order, it noted that “impact of the safeguard duty is dependent upon the period in which solar panel/modules are imported from China PR or Malaysia. From the submissions of the petitioners it is observed that they are in the process of importing the solar panels and hence exact impact of change in law is not quantified.”

Last year, the Directorate General of Trade Remedies (DGTR) recommended a 25 per cent safeguard duty on solar cell imports from China and Malaysia for the first year, followed by 20 per cent in the first six months of the second year and 15 per cent in the latter half of the second year.

The petitioners had also asked for an extension in the financial closure and commissioning deadline. But the commission rejected this request as well.