Gujarat government canceled a solar project auction it had held at the end of the March without giving any reasons. The industry sources stated that it was because the state government felt that the tariff quoted by the bidders to supply the power was too huge. Rebidding for the solar project is likely to take place after sometime.

GUVNL had held the reverse auction on March 28, to allot 500 MW (megawatt) of solar power projects. Kalthia Engineering & Construction, a Gujarat based company had quoted the lowest tariff of Rs 2.98 per unit to win 50 MW, whereas the Gujarat State Electricity Corporation, won 150 MW at Rs 3 per unit, Acme Solar Power gained 100 MW and Azure Power acquired the remaining 200 MW, both quoted a tariff of Rs 3.06 per unit.

There are a number of factors which are responsible for the tariffs to soaring high include the surging cost of imported solar power panels and modules, safeguard duty and anti-dumping duty charged on such equipment. Majority of the solar equipment used in India is imported from the foreign land. The reason being the local manufacturers are not in a position to contend with cost or quantity.

The local manufacturers have lodged a complaint with the Directorate General, Safeguards and the Directorate General of Antidumping and Allied Duties that the solar imports led to serious damage. Thus the DS Safeguards has recommended a 70% safeguard duty to be levied on solar imports, but the proposal is still under consideration.

The auction which was conducted in March by GUVNL was oversubscribed by three times. The Gujarat government does not set any kind of fixed price for auction unlike other states like Maharashtra and Karnataka, which sets up a fixed price.

In the absence of a fixed price, tarrifs in the Gujarat auction went up to around 13% compared to the last auction which was held in the month of September 2017.