India Court Dismisses Gujarat’s Appeal for Solar Rate Cut

An Indian court threw out an attempt by a government utility in Prime Minister Narendra Modi’s home state to backtrack on contracts by cutting the rate paid to solar plants for their power.

India’s Appellate Tribunal for Electricity dismissed an appeal by Gujarat Urja Vikas Nigam Ltd. to reduce the solar-power tariff as “devoid of merits,” according to a copy of the judgment. That upholds an August 2013 decision by the Gujarat Electricity Regulatory Commission.

“In effect, there can be no reduction in tariff,” nor any attempt to renegotiate the rate individually with plants, said Hemant Sahai, a lawyer representing the solar developers.

Modi, as chief minister of western Gujarat state, pioneered India’s first large-scale solar-power program in 2009 that attracted developers including Moser Baer India Ltd. (MBI), Adani Enterprises Ltd. (ADE), Tata Power Co. (TPWR) and Welspun Energy Ltd. GUVNL’s attempts to revise tariffs agreed to under 25-year contracts threatened to chill investment, raising fears that India would follow the retrospective changes made to solar policies by European governments, including Spain and Greece.

GUVNL, the bulk buyer of power in the state, signed 88 contracts for a total of 971.5 megawatts of solar capacity with the developers starting in 2010. Last year, it filed a petition seeking to lower the rates, citing the excessive profits of plant owners who benefited when solar equipment prices plunged after contracts were signed.

To contact the reporter on this story: Natalie Obiko Pearson in New Delhi at npearson7@bloomberg.net

To contact the editors responsible for this story: Reed Landberg at landberg@bloomberg.net Ana Monteiro, Indranil Ghosh

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