Karnataka Electricity Regulatory Commission (KERC) has reduced the reimbursement amount payable by Bangalore Electricity Supply Company (BESCOM) to Talettutayi Solar Projects Two from ₹117.5 million (~$1.33 million) to ₹111.9 million (~$1.27 million), following corrections in a review petition.

The case stems from the imposition of safeguard duty (SGD) on solar imports by the Finance Ministry on July 30, 2018, which the Commission confirmed as a “change in law” event under the terms of the power purchase agreement (PPA) signed on March 7, 2018, for a 20 MW solar project.

Background

Talettutayi Solar Projects Two executed a PPA with BESCOM and imported solar modules for its 20 MW project. The Finance Ministry imposed SGD on July 30, 2018, on solar imports after the company had submitted its bid.

The company approached KERC seeking reimbursement of the SGD and the Integrated Goods and Services Tax (IGST) on this duty, claiming a total of ₹1.18 billion (~$13.4 million). Its claim included three lots of imports:

• Lot 1 with an invoice value of ₹148.5 million (~$1.68 million), SGD of ₹37.1 million (~$421,496), and IGST of ₹1.85 million (~$21,016)

 

• Lot 2 with an invoice value of ₹149.2 million (~$1.69 million), SGD of ₹37.3 million (~$423,778), and IGST of ₹1.86 million (~$21,130)

 

• Lot 3 with an invoice value of ₹152 million (~$1.72 million), SGD of ₹38 million (~$431,680), and IGST of ₹1.9 million (~$21,584)

The cumulative SGD amounted to ₹112.4 million (~$1.276 million), and the IGST on the duty totaled ₹5.62 million (~$63,855).

In the original order dated November 26, 2024, KERC recognized SGD as a “change in law” event and directed BESCOM to reimburse ₹1.17 billion (~$13.29 million), along with carrying costs at 10% per annum from March 22, 2022.

The reduction from the petitioner’s total claim was due to modules worth ₹547,000 (~$6,218) that were imported but not installed in the project. BESCOM was allowed to discharge the liability in 12 monthly instalments, with the first instalment due on or before January 5, 2025, subject to default conditions.

In a delayed review petition filed on June 12, 2025, Talettutayi admitted that the IGST amount of ₹5.62 million (~$63,855) recorded as paid in the earlier pleadings had, in fact, not been paid. The company clarified that the IGST would be paid as and when it becomes due. KERC noted that this admission reduced BESCOM’s liability.

Commission’s Analysis

The Commission condoned the delay in filing the review petition and substituted the operative part of its earlier order, revising the reimbursement to ₹1.11 billion (~$12.62 million) with carrying cost at 10% per annum from March 22, 2022, until payment.

It held that BESCOM will continue to have the option to pay in 12 instalments, with the condition that the default of two consecutive instalments would make the entire balance immediately payable.

The Commission also corrected a typographical error in its earlier order, changing the commencement date for carrying cost from February 23, 2022, to March 22, 2022. Both parties were directed to bear their own costs.

In July this year, KERC issued the Intra-State Deviation Settlement Mechanism and Related Matters Regulations, 2025, to establish a commercial mechanism to ensure grid users’ adherence to scheduled electricity drawal and injection, and maintain grid security and stability.

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