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MERC Approves 60 MW Wind-Solar PPA Withdrawal, Citing High Tariff

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					</table>The Karnataka Electricity Regulatory Commission (<a href="https://karunadu.karnataka.gov.in/kerc/Pages/home.aspx" target="_blank" rel="noopener">KERC</a>) has ruled in favor of wind power generators and asked the state distribution companies (DISCOMs) to compensate them for the additional cost incurred due to the payment of income tax, surcharge, and cess for the assessment years 2017-18, 2018-19, and 2019-20.
The Commission directed the Hubli Electricity Supply Company (<a href="https://hescom.karnataka.gov.in/english" target="_blank" rel="noopener">HESCOM</a>) and the Gulbarga Electricity Supply Company (<a href="https://gescom.karnataka.gov.in/english" target="_blank" rel="noopener">GESCOM</a>) to pay the amounts to the wind generators within two months. Failure to do so would attract interest at 9% per annum on the due amount.
<a href="https://renewpower.in/" target="_blank" rel="noopener">ReNew Wind Energy (Sipla)</a>, Ostro Dakshin Power, and <a href="https://www.siemensgamesa.com/en-int" target="_blank" rel="noopener">Ostro Mahawind Power</a> had filed petitions seeking reimbursements.
The generators argued that the Commission had set a return on equity (RoE) of 16% and allowed income tax, surcharge, and cess to be passed through without factoring them into the tariff computations.
Background   
The Karnataka government had accorded GM Navarra Wind Energy permission to install 45 MW of wind power projects at Batakurki, Sopadla, Aneguddi, and Chennapur in the Belagavi district, which was enhanced to 60 MW.
The state government permitted the transfer of the project from GM Navarra Wind Energy to ReNew Wind Energy (Sipla).
The government also granted GM Navarra Wind Energy permission to install 205 MW of wind power projects in the Vijayapura, Kalaburgi, Belagavi, and Chitradurga districts. Approval was accorded for the enhancement of wind generation capacity from 38.6 MW to 200 MW at projects proposed at Babaleshwar and Mulvad village in the Vijayapura district.
Permission was also granted to Ostro Dakshin Power to install a 100 MW wind power project in the Koppal district of Karnataka.
Additionally, the government had allowed Gamesa Wind Turbines to install 30.6 MW wind power projects, of which 10.2 MW was in the Chikkodi taluk and 20.4 MW in the Soundatti taluk in Belagavi district.
The state government restricted the Soundatti taluk wind power project to 60 MW and permitted it to change of the name of the developer from Gamesa Renewable to Ostro Mahawind Power.
The petitioners sought reimbursement of the amounts paid by it toward income tax, surcharge, and cess for the assessment years 2017-18, 2018-19, and 2019-20.
They argued that the Commission had earlier said that the amount of tax, surcharge, and cess that must be claimed should be calculated based on the approved RoE and the tax rate in the relevant years and should be claimed separately from the DISCOMs.
Later, the DISCOMs filed a report, reconciling the amount of ₹72.17 million (~$873,113) for Ostro Mahawind Power and ₹43.04 million (~$520,698) for Renew Wind Energy (Sipla). Similarly, the reconciled amount for Ostro Dakshin Power stood at ₹49.9 million (~$603,690).
Commission&#8217;s analysis   
The state regulator noted that the generators were justified in seeking reimbursement of the amount and a direction needed to be issued to the DISCOMs.
The earlier orders unequivocally stated that the income tax, surcharge, and cess should be allowed as pass-through. With the pass-through of any hike in duties, developers are allowed to increase the tariffs based on which they have bagged the projects to recover the extra cost.
The Commission observed that it had fixed 16% as RoE in its earlier order and it had been implemented by all the stakeholders. Further, the Commission had decided to allow tax as a pass through as tax rates keep on varying. Therefore, the petitioners were justified in seeking reimbursement of the amount.
The Commission added that the wind generators restricted their claim to the quantified amount of income tax reimbursement and waived the other relief regarding the interest on the claimed amount. Hence, it was not easy to confer the relief without quantifying the amount and rate of interest.
KERC directed HESCOM to pay ₹43.04 million (~$520,698) to Renew Wind Energy (Sipla) in full settlement of the claim toward reimbursement of income tax, surcharge, and cess for the assessment years 2018-19 and 2019-20.
Similarly, it asked GESCOM to pay ₹49.9 million (~$603,690) to Ostro Dakshin Power for the assessment year 2019-20 and HESCOM to pay ₹72.2 million (~$873,113) to Ostro Mahawind Power for the assessment years 2017-18, 2018-19, and 2019-20.
Subscribe to Mercom&#8217;s real-time <a href="https://mercomindia.com/product/mercoms-renewable-energy-regulatory-updates/" target="_blank" rel="noopener">Regulatory Updates</a> to ensure you don&#8217;t miss any critical updates from the renewable industry.

Regulator Asks Karnataka DISCOMs to Compensate Wind Generators for Income Tax Outgo

In the wake of the deadly Coronavirus (COVID-19) outbreak, which has affected the global economy, India’s Finance Minister Nirmala Sitharaman today announced relief measures for taxpayers and businesses as the country is fighting to curb the pandemic. The relief measures were announced, especially on statutory and regulatory compliance matters related to several sectors.
Addressing the media via a video conference, the finance minister said that the government is working on an economic package to deal with the tough times caused by the lockdown to control the COVID-19 crisis. Many renewable companies who are affected will likely get some relief as they face a tough few months ahead.
Sitharaman said that the last date of filing income tax (IT) returns for the financial year (FY) 2018-19, has now been extended to June 30, 2020, instead of March 31, 2020. The finance minister announced several measures for providing economic relief to taxpayers.
The finance minister announced that the last date for filing of GST for March, April, and May, has been extended to June 30, 2020.
No late fee or penalty will be charged for the late filing of GST returns for companies whose turnover is  ₹50 million (~$657,236) or less. For firms with over ₹50 million (~$657,236) turnover, no penalty will be charged on GST returns filed within 15 days after June 30, 2020.
Sitharaman said that for delayed payments, the interest rate has now been reduced from 18% to 9% for FY 2018-19. Similarly, for the delayed deposits of tax deducted at source (TDS), the interest rate has been reduced to 9% from 18%.
The minister also announced that the ‘Sab ka Vishwas’ indirect tax dispute redressal program had been extended to June 2020, and no interest will be levied on it.
The customs clearance will also be extended until June 30, 2020. The government said that 24X7 custom clearance would be provided until June 30, 2020. The due date for matters related to the compliance under the Customs Act and other associated laws has also been extended to June 30, 2020.
Newly incorporated companies have been given an additional time of six months for filing a declaration about the commencement of business.
Due to the financial distress that most companies are likely to face due to COVID 19, the ministry has decided to raise the threshold of default under section 4 of the Insolvency and Bankruptcy Code (IBC) 2016 to ₹10 million (~$131,447) (from the existing threshold of ₹100,000 (~$1,314)). This is expected to largely prevent the triggering of insolvency proceedings against MSMEs. If the current situation continues beyond April 30, 2020, the ministry said that it could consider suspending section 7, 9 and 10 of the IBC 2016 for six months to avert companies from being forced into insolvency proceedings in such force majeure causes of default.
She also announced an extension in the due date for the mandatory linking of AADHAAR with PAN card to June 30, 2020.
Recently, <a href="https://mercomindia.com/renewable-supply-disruption-coronavirus-force-majeure/" target="_blank" rel="noopener noreferrer">Mercom</a> reported that the Ministry of New and Renewable Energy (MNRE) issued an official memorandum, which states that the time extension in scheduled commissioning of renewable projects due to the disruption of supply chains in the wake of the pandemic will be treated as a ‘force majeure’ event.
In February 2020, it was reported that the Ministry of Finance <a href="https://mercomindia.com/coronavirus-covered-under-force-majeure-clause-ministry-of-finance/" target="_blank" rel="noopener noreferrer">issued</a> a clarification that Coronavirus will be covered in the force majeure clause and should be considered as a case of natural calamity.
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Image credit: Wikipedia

Finance Ministry Announces Economic Relief Measures Amid Coronavirus Outbreak

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