MoP directs CERC to pass through changes in tax/cess to tariff

The Ministry of Power (MoP) has invoked its powers under Section 107 of the Electricity Act, 2003, to issue a direction to the Central Electricity Regulatory Commission (CERC) to allow changes in any central or state government duties to be passed on to electricity tariffs of consumers post bidding. The MoP has stated that if there is any change in domestic duties, levies, cess and taxes imposed by the central government, state government or by any government instrumentality leading to corresponding changes in the cost, the same may be treated as “change in law” and may be allowed as a pass-through (unless provided otherwise in the power purchase agreement [PPA]), subject to approval of the appropriate commission. The MoP further stated that the delay in decision-making at the regulator’s end was affecting the power sector and was one of the factors causing stress owing to cash flow problems with the generators.

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