How a GST transition created a Rs 3453 lakh hole in West Bengal’s solar project funding
The West Bengal Electricity Regulatory Commission (WBERC) has granted in-principle approval to West Bengal State Electricity Distribution Company Limited (WBSEDCL) to seek recovery of expenditure incurred, or to be incurred, due to a shortfall in government grants for six 10 MW solar photovoltaic (PV) projects. However, the Commission has directed that such claims may be made only through truing-up petitions for FY 2024-25 onwards.
The order relates to a funding gap arising from the difference between the grant sanctioned by the Government of West Bengal and the amount actually released for the projects.
Funding shortfall
The six solar PV projects are located at Dhaka-I and Dhaka-II Blocks in Birbhum district, Chalbalpur in Paschim Bardhaman district, Salboni and Patina Blocks in Paschim Medinipur district, and Haptiagach-Chopra Block in Uttar Dinajpur district.
According to the order, the total sanctioned project cost was Rs 36,313.01 lakh. Work orders worth Rs 32,100.77 lakh were awarded, while the Government of West Bengal released grants amounting to Rs 28,647.28 lakh, leaving a funding shortfall of Rs 3,453.49 lakh.
WBSEDCL submitted that the shortfall arose mainly due to the transitional impact of the Goods and Services Tax (GST) regime and subsequent revisions in GST rates during project execution. The utility has also requested additional financial assistance from the state government.
Pending receipt of additional grants, WBSEDCL has made payments to engineering, procurement and construction (EPC) contractors from its working capital, amounting to Rs 432 lakh in FY 2022-23, Rs 383.28 lakh in FY 2023-24 and Rs 323 lakh in FY 2024-25, taking the total payments from internal resources to Rs 1,138.28 lakh.
Commission observations
The Commission observed that the value of the awarded work orders remained within the approved project cost and that the issue arose from the non-release of the full government grant rather than any increase in project cost.
However, WBERC noted that the truing-up proceedings for FY 2022-23 and FY 2023-24 had already been completed. Accordingly, expenditure relating to those years cannot be considered through the present petition.
The Commission directed WBSEDCL to submit claims for expenditure incurred or to be incurred, to the extent of the grant shortfall, only in the truing-up petition for FY 2024-25 and subsequent years.
The order has been issued under Regulation 2.11.1 of the WBERC (Terms and Conditions of Tariff) Regulations, 2011. The Commission clarified that its approval is limited to permitting WBSEDCL to file such claims and does not amount to approval of the expenditure itself. The petition has been disposed of.
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