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RAJASTHAN ELECTRICITY REGULATORY COMMISSION
Petition No. RERC/462/14
In the matter of determination of Aggregate Revenue Requirement (ARR) &
Provisional Tariff for Unit-1(1x600 MW) of Kalisindh Thermal Power Project for FY
2014-15 from COD of Unit-1 to 31.03.2015.
Coram:
Sh. Vishvanath Hiremath, Chairman
Sh. Vinod Pandya,
Member
Sh. Raghuvendra Singh, Member
Petitioner:
Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (RVUN)
Respondent:
1. Jaipur Vidyut Vitran Nigam Ltd (JVVNL)
2. Ajmer Vidyut Vitran Nigam Ltd (AVVNL)
3. Jodhpur Vidyut Vitran Nigam Ltd (JdVVNL)
Date of hearing:
19.03.2015
Present:
1. Sh. P.S. Arya, Chief Engineer, RVUN
2. Sh. M. K. Khandelwal, CAO, RVUN
3. Sh. Ankit Sharma, Consultant, RVUN
4. Sh. S. T. Husain, Executive Engineer, Discoms
5. Sh. D. S. Agarwal, Rudraksh Energy
6. Sh. G. L. Sharma
7. Sh. B. M. Sanadhya, Samta Power
Date of Order:
14.05.2015
ORDER
1.1
Rajasthan Rajya Vidyut Utpadan Nigam Ltd. (in short ‘RVUN’), a
Generating Company under the provisions of the Electricity Act 2003,
filed a petition for determination of Aggregate Revenue Requirement
(ARR) & Provisional Tariff of KaTPP Unit-1 (1x600 MW) for FY 2014-15 from
COD i.e. 07.05.2014 to 31.03.2015 (329 days).
Page 1 of 70
RERC/462/14
1.2
In exercise of the powers conferred under Sections 62, 64 and other
provisions of the Electricity Act, 2003, read with RERC (Terms and
Conditions for Determination of Tariff) Regulations, 2009, RERC (Terms
and Conditions for Determination of Tariff) Regulations, 2014 and other
enabling Regulations, the Commission has carefully considered the
submissions of the Petitioner and the suggestions/objections submitted
by the various stakeholders. The Commission has passed the following
Order.
1.3
This Order has been structured in 5 sections, as given under:
(1) Section 1:
General
(2) Section 2:
Summary
of
filing
of
Aggregate
Revenue
Requirement (ARR) & Provisional Tariff and Tariff
determination process.
(3) Section 3:
Summary of objections/ comments/ suggestions
received from stakeholders and RVUN’s response
on the instant petition.
(4) Section 4:
Determination of provisional Capital Cost of
Kalisindh Thermal Power Station-Unit-1 (600 MW) as
on COD i.e. 07.05.2014.
(5) Section 5:
Determination of ARR and provisional Tariff for
KaTPP Unit -1 (1x600 MW) for FY 2014-15 (329 days)
(6)
Page 2 of 70
Annexure-1 to Annexure-2
RERC/462/14
SECTION 2
Summary of filing of ARR & Provisional Tariff and Tariff determination process.
Summary of Filing
2.1
In accordance with Regulation 6 and Regulation 11 of RERC (Terms &
Conditions for determination of tariff) Regulations, 2014 hereinafter
referred to as “RERC Tariff Regulations, 2014”, Rajasthan Rajya Vidyut
Utpadan Nigam Ltd. (RVUN) filed a petition for approval of ARR and
Provisional Tariff for FY 2014-15 (329 days) of Kalisindh Thermal Power
Station-Unit-1 (600 MW) on 19.06.2014.
2.2
The Commission vide letter dated 26.06.2014 communicated data gaps
and deficiencies in the ARR and Tariff petition for FY 2014-15. The
Petitioner furnished the requisite information vide its letter dated
29.09.2014.
2.3
The matter was heard on 01.07.2014. Sh. A.K. Patni, Addl. Chief Engineer
appeared for Petitioner and prayed to admit the petition and allow
interim tariff for Kalisindh Unit-I as petitioned till final tariff is determined
by the Commission.
2.4
Accordingly, Commission vide its order dt. 04.07.2014 admitted the
petition and allowed 80% of proposed tariff as an interim tariff for
Kalisindh Unit-I till the final tariff is determined for FY 2014-15 subject to
adjustment of final tariff.
2.5
RVUN vide its letter dated 10.10.2014 filed additional submissions
claiming Return on Equity and Tax on Return on Equity (RoE) in the ARR
and Provisional Tariff for FY 2014-15.
2.6
The Commission vide letter dated 24.11.2014 communicated additional
data gaps in the petition. The Petitioner furnished the requisite
information vide its letter dated 19.02.2015.
2.7
As required under Section 64(2) of the Electricity Act, 2003, public notice
with salient features of the petition inviting objections/ comments/
suggestions from any desirous person was published in the following
newspapers on the dates mentioned against each.
Page 3 of 70
RERC/462/14
2.8
Sr. No.
Name of News Paper
Date of publishing
(i)
Rajasthan Patrika
07.12.2014
(ii)
Times of India
11.12.2014
The petition was also placed on RVUN and RERC website. The
objections/comments/
suggestions were
received from
following
stakeholders:
· Sh. G. L. Sharma
· Sh. B. M. Sanadhya representing Samta Power
· Sh. D.S. Agarwal representing Rudraksh Energy
2.9
The Commission forwarded the objections/ comments/ suggestions of
objectors to RVUN for its replies. The Petitioner replied to the objections/
comments /suggestions made by the objectors vide its letter dated
19.02.2015.
2.10 The Public hearing in the matter was held on 19.03.2015
2.11 To facilitate reference, the abbreviations used in this Order and an
index of the issues and points dealt with are placed at Annexure-1 and
Annexure-2 respectively.
Page 4 of 70
RERC/462/14
SECTION 3
Summary of Objections/Comments/Suggestions received from stakeholders
and RVUN’s Response on petition filed by RVUN for ARR and Provisional Tariff
for FY 2014-15.
Capital cost:
Stakeholder’s Suggestions/Comments
3.1 Rudraksh Energy submitted that against the original Project Cost of Rs. 4.6
Crore/MW, the cost had been revised to Rs. 7.9 Crore/MW, which
appears to be very high. They requested for information on the actual
expenditure incurred up to the COD.
3.2 Sh. G.L. Sharma submitted that RVUN in its reply to data gaps at page 10
has provided the following reasons for delay in commissioning of the
Project/Unit:
· Inordinate delay in payments leading to delay in supplies by the
vendors and site works by the Contractors.
· Non-realization of money had affected the cash flow for the project.
· Delay in approval of Railway Siding clearance.
· Delay in construction of Kalisindh Dam by Water Resources Deptt. Of
the Govt. of Rajasthan.
3.3 It was further submitted that the above reasons of delay show the
mismanagement of finances, slackness in project management like
improper coordination between various contractors/agencies. Further, it
was submitted that in accordance with APTEL’s order dated April 27, 2011
in Appeal No. 72 of 2010 in the case of Maharashtra State Power
Generation
Company
Ltd.
v/s
Maharashtra
Electricity
Regulatory
Commission, the cost due to time overrun due to delay in payments to
contractors/suppliers, mismanagement of finances, slackness in project
management like improper coordination between various contractors
should be borne by the generating company. Therefore, he has
requested to disallow Interest during Construction (IDC) increase of Rs.
1872 Crore and reduce the capital cost accordingly.
3.4 Sh. G.L. Sharma submitted that as per table available at page 7 of reply
to data gaps, the off shore supply cost as per Contract awarded has
been Rs. 1603.40 Crore and now as per 187th meeting of BOD dated
Page 5 of 70
RERC/462/14
4.5.2011 it has been stated as Rs. 1863 Crore on account of variation in
the exchange rate of Dollar. It was further submitted that in the Contract
awarded, the rates were firm but for off-shore supplies it was in Dollars.
Hence, the cost of off-shore supplies has increased due to variation in
exchange rate. Accordingly, applying exchange rate variation on the
total contract price does not appear to be correct. In this regard, he
further submitted that Clause/Para 7 of the detailed Order dated 13.10.08
provides the details of Terms of Payment (at page 21 of data gap reply)
which states as follows:
(i) First initial advance @5% of the Contract Price against LoI.
(ii) Second initial advance @ 5% of the contract price on execution of
contract agreement
(iii) Third 5% of contract value after approval of design & drawings
(iv) 75% payment against receipt of material at site, and,
(v) Final 10% payment including the following
a) 3 % payment to be released on completion of trial run of 1st Unit
b) 2% payment to be released on final taking over of 1st Unit
c) 3 % payment to be released on completion of trial run of 2nd Unit
d) 2% payment to be released on final taking over of 2nd Unit
3.5 In this regard, he submitted that with the above percentages of payment,
the incidence of variance of exchange rates should be put along with
the dates on which such payments have been made. He further
requested RVUN to provide the details of payment along with date of
such payment to suppliers, so that actual increase in cost due to variation
in exchange rate could be computed. Accordingly, the Commission
should determine the capital cost of the Unit.
3.6 Sh. G.L. Sharma submitted that the evaluation of contract prices of
bidders has not been correctly done. From the statement available at
page 16 of the replies to the objectors, the Petitioner has not provided
the details of (i) Guaranteed PLF., (ii) Guaranteed Design Heat Rate of the
Unit, (iii) Guaranteed Boiler Efficiency with percentage moisture. In
absence of such parameters, the evaluation may not be correct.
3.7 Sh. G.L. Sharma submitted that at page 15 of the replies to the objector,
the prices of BHEL were firm in ‘INR’, whereas, in case of M/S BGRESL, the
prices of off shore supplies portion was in terms of ‘Dollar’ which has the
Page 6 of 70
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effect of variation in exchange rate and thus cannot be said to be firm.
This aspect should be carefully taken into consideration.
3.8 Sh. G.L. Sharma submitted that M/S BGRESL has not given any break-up of
taxes and duties and it may lead to financial burdening of consumers.
Further, BHEL has given the detailed breakup of prices, amount of taxes
and duties, freight & insurance, details of mandatory spares (quantity,
rate, amount, taxes & duties, etc.). However, M/S BGRESL has not given
any such information except for off-shore components. M/S BGRESL has
not even mentioned the details of amount of taxes and duties (for
indigenous as well as off-shore portion), details of mandatory spares
(quantity and amount). In this regard, clarification should be provided.
3.9 Sh. G.L. Sharma submitted that RVUN has placed an Order with M/s
Lloyd’s Register Asia, New Delhi for Third Party Inspection of steam
generator (boilers), steam turbine generators and auxiliaries during
manufacturing at M/s DEC & its vendors in China at a lump sum price of
Rs. 3.00 Crore. RVUN has stated that it has appointed Third Party Inspector
to take care of quality of the equipment. However, Third Party Inspection
was not required as there was provision of Performance Guarantee and
Contractor Guarantee in the Order placed with M/s Lloyd’s Register Asia.
Further, para 20 of this Order covered the Control Quality Assurance
Programme as a part of the Contract. Thus, an amount of Rs. 3.00 Crore
should be disallowed and reduced from the Capital Cost.
3.10 Sh. G.L. Sharma submitted that RVUN has placed an Order for 4 nos. of
bulldozers at a total cost of Rs. 6.40 Crore. This includes a sum of Rs.
7.94 lacks for Annual Maintenance Charges for 3 years. Annual
Maintenance Charges are part of normative O&M expenses and as such
inclusion of such amount is not correct and should be reduced from
capital cost. Further, RVUN has placed an Order for erection, testing &
commissioning including all civil, structural & mechanical works including
operation & maintenance of the existing & new system of River Water
System for 5 years. Such O&M amount in this capital cost is Rs. 3.08 Crore
and this should be reduced from the Capital Cost. It was further
submitted that RVUN has placed an Order with M/s IVRCL Infrastructures
& Projects (page 100 of data gap) for Rs. 47.72 Crore for River Water
System of 2x600 MW Project. In the Scope of Work, para/clause 5, of the
Page 7 of 70
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Order operation & maintenance of water conveying system from
Kalisindh River to plant site for period of five years is included. Such
amount of O&M should also be reduced from the Capital Cost of the
Project.
3.11 Sh. G.L. Sharma submitted that cost of Dam which was originally
estimated as Rs. 50 Crore has been increased to Rs. 799 Crore. This
amount is being capitalized as a part of Kalisindh Power Project.
However, this Dam is for the use of two towns of Jhalawar & Jhalrapatan
and 107 villages for drinking purpose. Further, as per the data gap reply,
share cost of Kalisindh Major Irrigation Project will be paid by RVUNL in the
ratio of water utilization at 90% dependability which works out to be 12:18
for energy & WRD respectively. Hence, in all circumstances, cost of Dam
cannot be fully capitalized as a part of this project and has to be shared
in the ratio of 12:18, as mentioned above. Similarly, additional cost of Rs.
15.69 Crore in respect of marshalling yard is also not admissible and
should be reduced from the Capital Cost. Also, cost of Rs. 77 Crore in
respect of Permanent Township is also not admissible and should be
reduced from the Capital Cost.
3.12 Rudraksh Energy and Sh. G.L. Sharma have submitted that the capital
cost for Unit-1 as per Form 6.9 is indicated as Rs. 5083 Crore whereas as
per the petition, the capital cost as on 07.05.14 (COD) is submitted as Rs.
5555.18 Crore. They requested for clarification on this discrepancy.
3.13 Referring to the proposed cost of Unit- 1 as Rs. 5555.18 Crore which is 59%
of the total project cost of Rs. 9479.51 Crore, Rudraksh Energy requested
that the capital cost of Unit-1 & 2 be divided equally as against the
proposed higher cost for Unit-1 as compared to Unit-2. Sh. G L Sharma
also submitted that the ratio of Capital Cost for Unit-1 and Unit-2 works out
to 58.60:41.40.
3.14 Referring to the capitalisation certificate of CA as available at Page 13 of
reply to data gap, Sh. G.L. Sharma submitted that the last Para of the
certificate does not clearly say whether the cost of Rs. 5555.18 Crore
incurred up to 07.05.2014 is exclusively for Unit-1 or Unit-1 & 2 both,
therefore, clarifications should be sought on the same.
Page 8 of 70
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RVUN’s Response
3.15 RVUN submitted that the detailed reasons for increase in Capital Cost
have been provided in the Petition. RVUN also provided the copy of
certificate from the Chartered Accountant of actual expenditure
incurred.
3.16 RVUN further submitted that initially, at the time of filing of the petition, the
capital cost of Unit-1 was considered as Rs. 5555 Crore, however, the
Statutory Auditors on due verification of the cost had certified that the
actual expenditure till the date of COD is Rs. 5082 Crore and the balance
amount of Rs. 472 Crore is to be booked as an additional liability. RVUN
also provided the head wise details to be booked as additional liability.
3.17 RVUN further submitted that as per the various clauses of EPC contracts
awarded to M/s BGRSEL, the expenditure had been bifurcated for Unit -1
& 2 in the ratio 60:40 and other expenses such as on Railways, Dam, River
Water System, residential colonies etc have been bifurcated in the ratio
of 50:50.Therefore, capital cost of Unit-1is higher than that of Unit -2.
BTG Price:
Stakeholder’s Suggestions/Comments
3.18 Sh. G. L. Sharma, referring to the Table at Page 7 of data gap reply, had
sought clarification on the increase in prices of Rs. 401 Crore for supply of
BTG and Rs. 90 crore for EPC. He also referred to the order for BTG which
states that the prices are ‘firm in all respect’. He had also requested for
the details of the bid process and bid evaluation statement for award of
contract for BTG.
3.19 Referring to the Clause 6 of the contract / order no. 2354 dated 16.7.2009
awarded in favour of M/S. Lloyd’s Register Asia for third party inspection
at DEC works during manufacturing of BTG that mentions about the
guarantee on operation and performance by the manufacturer for a
period of 12 months, Sh. G.L. Sharma submitted that the additional cost of
Rs. 3.00 Cr on account of third party inspection be disallowed.
3.20 Rudraksh Energy requested to provide copy of the purchase order of the
main BTG Unit stating that, it constitutes the major part of the project cost.
Page 9 of 70
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RVUN’s Response:
3.21 RVUN submitted that there were two bidders namely M/s BHEL and M/s
BGRSEL and provided the details of bid evaluation. Further, the order was
placed for EPC contract to M/s BGRSEL at an evaluated price of Rs.
4900.06 Crore (USD 450 million + INR 3296.665 Crore) based on the dollar
rate @Rs. 39.59 (as on date 10.09.2008). The prices were firm, but the cost
increased from Rs. 4900.06 Cr due to upward revision of dollar rate from
Rs. 39.59/USD during execution of contract and further increase of Rs. 91
Cr is due to increase in entry tax and labour cess.
3.22 RVUN submitted that the copy of the purchase order of BTG is already
provided to RERC with the data gap reply.
3.23 As regard the appointment of third party inspection agency, RVUN
submitted that 600 MW Unit BTG package was purchased for the first time
by RVUN for which order had been placed on M/s BGR and 600 MW BTG
package was being supplied by M/s Dong Fang Electric Corporation,
China through M/s BGRSEL. Hence, to take care of quality of the
equipment, RVUN had appointed third party inspection agency M/s
Lloyd’s Register, Asia.
Return on Equity:
Stakeholder’s Suggestions/Comments
3.24 Rudraksh Energy had requested that in order to avoid tariff shock, the
Commission may consider allowing RoE @ 8% instead of 15.5% RoE as the
same is resulting in tariff increase of 36 paisa/unit.
3.25 Sh. G.L. Sharma had submitted that in the letter dated 10.10.2014 of the
Petitioner, equity had been shown as Rs. 1017 Crore. It was further
submitted that total equity sanctioned for the project, is Rs. 1544.60 Crore
(Rs. 920 Crore as per Govt. Letter dated 6.6.2007 -Page 37 of the petition
and Rs. 624 Crore as per Govt letter dated 7.9.2012-Page 43 of the
petition). Further, in the statement at page 198 of data gap reply, the
equity had been shown as Rs. 472 Crore only. He had requested for
clarification of these three different positions.
3.26 Sh. G.L. Sharma submitted that the Petitioner in their letter dated 10.10.14
had stated for having equity as 30% and during the last hearing in respect
Page 10 of 70
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of tariff petition for FY 2014-15, this point was raised and clarified by
Petitioner that 30% equity shall be in respect of newly commissioned
projects. Now that KaTPP is a new project, therefore Petitioner may clarify
the reason for not claiming 30% equity in its petition.
RVUN’s Response:
3.27 RVUN has submitted that the Commission may allow RoE as per the RERC
Tariff regulations, 2014.
3.28 RVUN submitted that the funds have been arranged at initial stage of
plant being envisaged. Further as per the statement, the total loan drawn
was Rs. 8626 Cr for Unit -1 &2. The equity considered for Unit -1 for work
completed till date of COD is Rs. 1017 Cr & Rs. 94 Cr for work to be
completed. The 20 % of actual capital expenditure incurred up to the
date of COD has been funded by the equity capital.
COD (Commercial Operation Date)
Stakeholder’s Suggestions/Comments
3.29 Sh. G.L. Sharma submitted that in Para 1.4 of the petition it had been
mentioned that KaTPP Unit-1 had achieved the COD on 07.05.2014
whereas, in Para 2.8 it had been stated that notice for trial run
commencement was given to Discoms on 27.4.2014 and declaration
certificate about COD was sent to Discoms on 8.5.2014. Further it was
submitted that RVUN has not submitted any document with regard to the
COD on 07.05.2014.
3.30 Sh. G.L. Sharma submitted that at page 208 of the Petition it is mentioned
that the Petitioner prior to commencement of trial run of 72 hours issued
Fax intimation on 27.4.2014 to CE (RDPPC) of Discoms. In this fax intimation
it was stated that “....after rectification of the Boiler Tube leakage, the
boiler and factory inspector has cleared the boiler of 600 MW KaTPP Unit1. The boiler will be lighted up shortly for subsequent synchronization of
the Unit with grid and for continuous running of the Unit, the 72 hrs trial run
for demonstrating the Maximum Continuous Rating (MCR) of 600 MW Unit1is likely to be commenced from dt. 03.05.2014.” Such fax message
cannot be termed as a notice in accordance with the Regulation 2(19) of
Tariff Regulations, 2014. In this regard, he suggested that the notice should
be given to the distribution licensees with whom RVUN has tied up for
selling of power. This has clearly been mentioned in the Agreement
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entered into by RVUN with the Discoms (at page 171 of the Petition).
Hence, the Fax message stated as a notice is not valid and an
appropriate Notice should be sent to the Discoms.
3.31 Sh. G.L. Sharma also submitted that it would be perused from the
readings available at page 233 of the petition, starting from 20 Hrs. On
03/05/2014, that just after 20.30 Hrs. of this day, the Unit has not been able
to take the full load of its installed capacity of 600 MW till 16.40 Hrs. of
04/05/2014. These readings are ranging between 530 MW to 580 MW.
Such readings cannot be said as satisfactory for declaration of COD.
3.32 Sh. G.L. Sharma further submitted that the above Fax intimation clearly
states that there was leakage in the boiler tube and after rectification of
the same Boiler & Factory Inspector cleared the boiler for work. In this
regard, he suggested that the boiler was to be lighted up and
accordingly this Unit would have been synchronized with the grid for
continuous running. Synchronization of the Unit with grid cannot be
considered as a notice for 72 hours running to demonstrate the MCR and
declaration of COD.
3.33 Further, Sh. G.L. Sharma has requested the perusal of the certificate
dated 7.5.2014 of three officers, viz., ACE (Opr) KaTPP, SE (O&M) JVVNL,
Jhalawar and XEN (M&P), Jhalawar as available at page 210 of the
petition. According to which these three officers have certified that they
have witnessed the trial run commencing from 20:00 hrs dated 03.05.2014.
In this regard, Sh. G.L. Sharma opined that how these officers have been
able to witness the trial run commencing from 20:00 hrs on 03.05.2014
specifically when they were advised to witness the trial run on 07.05.2014,
i.e. four days later of the date of commencement and further the trial run
also completed on 06.05.2014, i.e. prior to the formation of the
Committee. Accordingly, Sh. G.L. Sharma has contended that the above
reasons prove that there has been no satisfactory trial run and the
certificate issued by the officers was just to fulfil the requirements and
cannot be relied upon.
3.34 Sh. G.L. Sharma submitted that as per DPR (page 388 of the Petition) the
time schedule for commercial operation of Unit-1 has been 40th month
from zero date, i.e. date for placement of Order for main equipment.
Further, Order for main equipment was placed on 13.10.2008 (page 16 of
Page 12 of 70
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data gap reply). Thus, as per DPR the 1st Unit was to be commenced on
13.02.2012. In the detailed Order of the equipment, such period has been
mentioned as 39 months and accordingly COD of the 1st Unit should have
been 13.01.2012. But as per Petition, the COD is given as 7.5.2014, i.e.
delayed by 2 yrs 2 months and 20 days. He further submitted that as per
Agreement dated 07.06.2007 executed by RVUN with Discoms, the COD
of Unit-1 was August 2011 and later as per Agreement dated 18.5.2010 it
was revised as December 2011 and even as per Agreement dated
15.12.2010, the COD was also as December 2011. However, as per
Petition, the COD is given as 7.5.2014, i.e. delayed by 2 yrs 4 months and 7
days.
3.35 Sh. G.L. Sharma had stated that in the detailed order, commissioning
schedule for Unit-1 had been mentioned as 39 months (up to 08.10.2011)
(Page 23 of data Gap reply) whereas, the actual COD stated by
Petitioner is 07.05.2014. He also referred to the agreement dated 18.5.2010
between the Petitioner & the Discoms wherein COD had been mentioned
as Dec 2011, therefore stating that the COD is delayed by 2 yrs and 7
months.
3.36 Sh. G. L. Sharma stated that the Petitioner may provide information
about the necessary liquidated damages recovered (if any) and
payment of additional charges (if any) on account of variation in the
various charges occurred during the period of delay. He also submitted
that the amount of excess IDC for such delayed period works out to
about 1693.96 Crore.
3.37 Sh. G.L. Sharma also requested information on the following:
· The readings of each block of the period 3.5.2014 to 7.5.2014 with the
certificate of completion of successful full load operation. The reading
chart of the period 3.5.2014 to 7.5.2014 during which the trial run had
been carried out.
· Documents
(or
copy
of
such
documents)
where
under
the
manufacturer of the Unit had guaranteed the maximum continuous
output at generator terminals with water or steam injection and
corrected to 50 Hz grid frequency and specified site conditions.
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· Whether the boiler feed pumps are steam driven or electrically driven
and further whether these Units are with induced draft cooling towers
or with natural draft cooling towers or without cooling towers.
RVUN’s Response:
3.38 RVUN submitted that the details of trial run of 72 hrs had already been
provided at Page 211 to 225 of the petition. The trial run of 72 hrs starts
from 00:00 hrs of 05.05.2014 to 23:50 hrs of 07.05.2014. The meter shows
dates in MM/DD/YY pattern. Further, it has provided the details of the
guaranteed maximum continuous output at generator terminals.
3.39 RVUN further submitted that the plant had both steam driven and
electrical driven boiler feed pumps. At the time of low load ( about 350
MW) , electrical driven feed pumps remain in operation and after
increase in load (from 350 MW to upper) the electrical driven feed pumps
change over to steam driven boiler feed pumps. The plant had natural
draft cooling tower.
3.40 RVUN submitted that the initial delay (about 8-9 months) in construction
was due to time taken in environmental clearance and other reasons for
delay were delay in construction of water dam & railway siding. Further,
the matter related to liquidate damages is still under process and yet to
be finalised.
Interest during Construction (IDC) :
Stakeholder’s Suggestions/Comments
3.41 Sh. G.L. Sharma citing the reasons for delay, as submitted by the
Petitioner, submitted that all the reasons for the delay are due to factors
attributable to the Generating Company and in accordance with the
judgment of Hon’ble APTEL in Appeal No. 72 of 2010, the entire cost due
to time over run had to be borne by the Generating Company. Hence,
the total increased IDC of Rs. 1693.96 Cr (approx), as worked out for 2.5
years delay should be disallowed and the capital cost should be reduced
to that extent.
Page 14 of 70
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RVUN’s response:
3.42 RVUN submitted that the reasons for delay have been explained in the
Petition and requested the Commission to take considered view towards
RVUN.
Interest on term loans & finance charges and interest on Working Capital
Stakeholder’s Suggestions/Comments
3.43 Sh. G L Sharma submitted that 13 % Interest on term loan & finance
charges seems to be on the higher side and Interest on working capital
should be allowed on a normative basis.
RVUN’s response:
3.44 RVUN submitted that interest on working capital and Interest on term loan
& finance charges have been claimed as per RERC Tariff Regulations,
2014.
O& M Expenses:
Stakeholder’s Suggestions/Comments
3.45 Sh. G.L. Sharma submitted that Repair & Maintenance expenses of 4 nos.
of bulldozers (referring to the purchase cost for bulldozers of Rs.
6,40,00,260 and an amount of Rs. 7,94,160 for annual maintenance for 3
yrs after the warranty period, as mentioned in the purchase order) and
the river water system (referring to order no. 737 dated 30.12.2010 placed
with M/s IVRCL Infrastructure & Projects, Jaipur for erection, testing &
commissioning) should not be included in the capital expenses stating
that the same have already been covered under O & M expenses.
RVUN’s Response:
3.46 RVUN submitted that the annual maintenance of 3 years in respect of
bulldozer is a part of work order. RVUN also submitted that the work order
for erection, testing and commissioning was not a separate order. It was
part of the main civil works, which was divided into two parts – i) supply &
ii) erection, testing & commissioning.
Fuel Sale Agreement & GCV of Fuel:
Stakeholder’s Suggestions/Comments
3.47 Sh. G. L. Sharma requested for information on the following:
Page 15 of 70
RERC/462/14
· Whether the Joint Venture Agreement between the Petitioner & Adani
Enterprises Ltd. (AEL) dated 03.08.2007 for coal mining is in line with the
GoI letter dated 19/25 June 2007 which states that exploration and
coal mining shall be carried out by Petitioner or a separate company
to be created out by the Petitioner provided that separately created
company is a Govt. Company. Samta Power had also raised the same
concern.
· Information on the authority determining transfer price of coal.
· Rate of the coal received at pit mouth and the rate components being
added on to the pit mouth rate.
· Price list of SECL.
· The ceiling rates of coal and the percentage of transit loss.
· Grades & GCV of the coal recovered from the mines and whether the
coal is washed coal or unwashed coal.
3.48 In additional written submission, Sh. G. L. Sharma submitted that the
Petitioner is using coal from the allotted coal mines “Parsa East and Kanta
Basan” coal blocks. As per Regulation 11(8) of Tariff Regulations, 2014, any
person who owns or is allotted captive mine for fuel supply to thermal
power plant is to file petition to the Commission for determination of fuel
transfer price at mine mouth if it is not determinable by the Govt. or
government approved mechanism. However, RVUN has neither filed any
petition for determination of fuel transfer price nor has supplied any
document where under fuel transfer price has been determined by the
Govt. or under Government approved mechanism. In this regard, RVUN
has replied that selection of JV partner has been with the approval of the
Govt. and that price of coal has been through transparent bidding
process and as such it is considered to be determined by the Govt. or
Government approved mechanism. Such reply of RVUN is not satisfactory
and not in accordance with the Regulations.
3.49 He further submitted that the Petitioner at page 94 of the Petition has
provided a copy of Order dated 25.7.2008 placed with M/s Aryan Coal
Beneficiary Pvt. Ltd. for beneficiation/washing of raw coal grade ‘F’. In
this order, transportation charges of Rs. 45.27/MT (=Rs. 20.38 + Rs. 24.89)
are also included as mentioned at page 95 of the Petition. Further, in
accordance with the DPR para 4.4 (page 255 of the Petition), washery is
to be installed at mine head by the JV Partner and Clause 2.1 of the JV
Page 16 of 70
RERC/462/14
Agreement clearly states that it is the responsibility of JV Company to
undertake all necessary activities for mining, beneficiation, transportation
and delivery of coal from the coal blocks to RVUNL TPS in terms of Coal
Mining and Delivery Agreement and any other activity incidental or
complimentary to the primary objective and permitted by law.
Accordingly, there was no necessity to take any help of the Order dated
25.7.2008 placed with M/s Aryan Coal Beneficiary Pvt. Ltd. This washery
was to be installed at mine mouth and would have saved the
transportation charges of Rs. 45.27 per MT. Therefore, he has requested
the Commission to disallow such unnecessary charges and reduce the
coal cost.
3.50 Further, Sh. G. L. Sharma submitted that Coal Mining and Delivery
Agreement (CMDA) at Clause 5.3d at page 75 of the Petition also states
that notwithstanding anything to the contrary herein, in respect of any
quantities supplied, the contract price excluding railway freight charges
shall never be allowed to exceed the ceiling price. The ceiling price is to
be calculated in the performa as given at page 92 of the Petition.
However, RVUN has not provided any such calculation. Further, the
Petitioner has not furnished the grade of coal mined from the mines,
comparison of rates of similar coal with that of SECL, etc. In this regard, he
has requested the Commission to determine the coal price considering all
the terms and conditions of CMDA and JV Agreement.
RVUN’s Response:
3.51 RVUN made the following submissions in its response:
· The State Government has accorded the approval for 26% stake in
Joint Venture Company. RVUN also submitted the details of the same.
· The price of the coal at mine mouth had been determined /approved
by the Govt. and also by Govt. Approved mechanism, i.e. through
transparent bidding process by inviting wide publicity tenders and ‘No
Objection’ of the State Govt. was also obtained for issuance of “Letter
of Intent” for selection of JV partner as approved by BOD of RVUN for
developing and operating the mine in the coal blocks and undertaking
all necessary activities for mining, beneficiation, transportation and
delivery of coal blocks to RVUN TPS. Thus, the procedure adopted to
determine fuel transfer price is covered under sub regulation 7 of
Regulation 12 ‘Petition for determination of transfer prices or landed
Page 17 of 70
RERC/462/14
price of fuel’ of RERC tariff Regulations, 2009 and therefore petition for
determination of transfer price or landed price of fuel is not applicable
in case of coal being mined & supplied to CTPP Unit -1&2 and KaTPP
Units 1&2 from Parsa East & Kanta Basan coal blocks.
· The coal being received is washed coal with calorific value of 4500
kcal/kg.
· The applicable contract price dated 16.09.2014 (excluding Railway
freight) is Rs. 1236.20 per MT and this price includes all the taxes, cess,
royalty, duties etc (details as in Annexure J & K).
· KaTPP is not using SECL coal.
· Actual rate of coal vary from rack to rack. RVUN submitted the details
in support of GCV & price of coal.
· As per the agreement, the payment of coal received from coal mines
is being made for the quantity received at TPS and hence, there is no
transit loss.
· As per the agreement, the contract price will always be within the limit
of the ceiling price.
Station Heat Rate (SHR):
Stakeholder’s Suggestions/Comments
3.52 Sh. G.L. Sharma requested for information on the following:
· Method of arriving at the SHR value of 2320.63 kcal/kWh.
· Pressure and temperature rating of the Unit.
· Actual turbine cycle heat rate
· Design heat rate guaranteed by the supplier with copy of documents
RVUN’s Response:
3.53 RVUN submitted as follows:
· The SHR had been taken as 2320.63 kCal/kWh based on 2220.7 (Design
Heat Rate) X 1.045, as per RERC norms.
· Main stream pressure 16.67 mpa & Temp 538 degree C.
· Turbine cycle heat rate 8074 kJ/kWh (on 100% TMCR ,0%make up),
turbine cycle heat rate 8032 kJ/kWh (on 100% TMCR,3% make up),
turbine cycle heat rate 8241 kJ/kWh (80% TMCR,0% make up), turbine
cycle heat rate 8202 kJ/kWh (on *0% TMCR, 3% make up)
· Boiler efficiency 86.84%
· Design heat rate - 2220.7 kCal/kWh.
· Station heat rate 2320.63 kCal/kWh
Page 18 of 70
RERC/462/14
RVUN
also
submitted the
supporting
documents for
the
above
parameters.
Unit Size:
Stakeholder’s Suggestions/Comments
3.54 Rudraksh Energy requested to provide the reason as to why the Unit size
of 600MW was selected against the normal size of a super critical Unit as
660 MW.
RVUN’s Response:
3.55 At the time of approval of DPR, there was no concept of super critical
power plant and it was a sub critical plant of capacity 500 MW. Further,
the design of boiler was 500 MW + or – 20% and DPR was also approved
of 500 MW + or – 20%. Therefore, RVUN considered the capacity of the
plant as 600 MW i.e. the maximum capacity as approved in the DPR.
Water Utilisation:
Stakeholder’s Suggestions/Comments
3.56 Sh. G.L. Sharma submitted that copy of 187th meeting of BOD dated
04.05.2011 had not been provided with the letter dated 31.07.2014 (Page
205) of SE (PP) RVUN addressed to SE (Commercial) RVUN. Further, the
letter does not throw any light on the quantum of water to be utilised by
KaTPP and the ratio of utilisation of water between KaTPP and other
agencies, if any. He further requested the Petitioner to provide reasons for
the increase in the cost of dam from Rs. 50 Crore to Rs. 799 Crore.
RVUN’s Response:
3.57 RVUN in reply submitted that it has provided the copy of the 187th BOD
meeting. RVUN further submitted that the water shall be utilised for plant
and drinking water system for nearby villages. In this regard, the reasons
of increase in dam cost had been mentioned in the 235th BOD meeting
attached with the petition, in which the cost had been estimated by the
Water Resources Department. RVUN provided the detailed justification
towards increase of cost of water dam from Rs. 50 Crore to Rs. 760 Crore
along with the cost estimation by the Water Resources Department.
Page 19 of 70
RERC/462/14
Insurance Charges:
Stakeholder’s Suggestions/Comments
3.58 Rudraksh energy asked RVUN to provide information on the amount and
date of insurance premium payment and the name of insurance
company referring to the revised insurance charges of Rs. 9.95 Cr against
Rs. 10.86 Cr as shown in the original petition. Sh. G.L.Sharma had
requested for relevant documents for claiming the insurance charges.
RVUN’s Response:
3.59 RVUN submitted that the insurance charges have been taken in the
original petition as Rs. 10.86 Crore, considering the capital cost as Rs.
5555.18 Crore. It was further revised to Rs.9.95 Crore on the basis of the
capex incurred up to COD as Rs. 5082.88 Crore as per RERC Tariff
regulations, 2014. However, no expenditure had been incurred so far
against the insurance charges by RVUN, as the same was borne by M/s
BGRSEL till the date of final takeover of the plant.
Miscellaneous:
Stakeholder’s Suggestions/Comments
3.60 Sh. G.L. Sharma submitted that expenses on account of CSR should not
be admissible.
3.61 Samta Power suggested for implementation of TQM (Total Quality
Management),
TPM
(Total
Productive
Management)
and
TAP
(Transparency Accountability Participatory) as management tools for
improving efficiency and productivity.
3.62 Further, Samta Power requested the Commission to get the details
examined from CBI/CAG as well as also get the aspects of socio
economic and socio psychological examined.
3.63 Samta Power submitted that the reasons for importing some equipment
from China may be clarified and whether the provisions for spare parts
and repair services for such equipment have been made.
3.64 Samta Power had sought reasons for forming Joint Venture Company for
coal mining.
Page 20 of 70
RERC/462/14
3.65 Samta Power submitted that the reasons for delay in submission of replies
to data gaps by the Petitioner and not having audio/visual presentation
for public may be explained. Further, the list of stakeholders and
Respondents be made available.
RVUN’s Response:
3.66 RVUN submitted that as the Commission has already decided the matter
in its order date 9th October, 2014, it has no objection on the issues of
CSR.
3.67 Further, RVUN appreciates the concern of the stakeholders regarding
implementation of management tools and shall try to implement them in
future.
3.68 RVUN submitted that the plant had been ordered on the basis of
International Bidding. Further, the decision was taken on the basis of lower
bid. The necessary steps/arrangements shall be made for procurement of
spare as per the requirement of the plant by the plant authority.
3.69 RVUN submitted that the joint venture company has been formed as per
direction of the State Government which has accorded the approval for
26% stake in JV Company.
3.70 RVUN submitted that for preparation of petition, various information and
data have to be collected from various plants and offices of RVUN. RVUN
also provided the details to the stakeholders.
Normative Expenses
Stakeholder’s Suggestions/Comments
3.71 Sh. G.L. Sharma submitted that normative expenses such as O&M
expenses, depreciation, interest on term loans (after deducting the equity
to be applied on the debt amount), WCL, etc. should be allowed as per
Regulations and based on Capital Cost determined and admitted for
purpose of determining the tariff.
Commission’s Views on Issues Raised by Stakeholders
3.72 The Commission has taken note of all the comments/suggestions/
observations of the stakeholders raised in writing as well as during the
course of hearing and RVUN’s responses to them. The Commission has
attempted to
Page 21 of 70
capture
all
the
comments/suggestions/observations.
RERC/462/14
However, in case any comment/suggestion/observation is not specifically
elaborated, it does not mean that the same has not been considered.
The Commission has considered all the issues raised by the stakeholders
and RVUN’s response on these issues while carrying out the detailed
analysis of the ARR and provisional Tariff for FY 2014-15 in accordance
with RERC Tariff Regulations, 2014 as detailed in the next Section of the
Order.
Page 22 of 70
RERC/462/14
SECTION 4
Determination of provisional Capital Cost of Unit-1 (600 MW) Kalisindh Thermal
Power Project- (2X600 MW) as on COD i.e. 07.05.2014.
In the subject petition, the Petitioner has submitted the following:4.1
Kalisindh Thermal power project is coal based power project of the
Petitioner located in Nimodha, Devri, Karmakheda, Undel & Narayanpura
villages of Jhalawar district. The site is 12 Km away from National Highway12 and about 4 km. to 5 km. away from State Highway-19.
4.2
The proposal for setting up 2x500 MW Kalisindh Unit-1 and Unit-2 was
approved by the Board of Directors in its 117th meeting held on January
06, 2007. The State Govt. accorded “Administrative & Financial” approval
vide its letter dated 06.06.2007 at an estimated project cost of Rs. 4600
Crore comprising of equity support of Rs. 920 Crore from the State Govt.
and debt portion (borrowings from PFC/Commercial Banks) of Rs. 3680
Crore.
4.3
The State Government vide its letter dated 25th and 26th of June, 2007
accorded approval for revising the Unit sizes of Kalisindh Thermal Power
Project from 2X500 MW to 2X600 MW. Further, the Board of Directors in its
187th meeting held on dated May 04, 2011 increased the estimated
capital cost from Rs. 4600 Crore to Rs. 7723 Crore. The Government of
Rajasthan vide its letter dated 09.08.2011 and 07.09.2012 accorded
approval of enhanced capital cost and additional equity support
respectively.
4.4
Out of the total project cost of Rs. 7723 Crore for Kalisindh Unit-1&2, equity
support from GoR was approved as Rs.1544.60 Crore and balance
amount of Rs. 6178.40 Crore was to be arranged as borrowings from FIs /
Commercial Banks. Power Finance Corporation (PFC) vide its letters
dated March 31, 2008 and November 14, 2011 sanctioned term loan of
Rs. 3680 Core and Rs. 2498.4 Crore respectively, totalling to Rs. 6178.4
Crore.
4.5
The Board of Directors of the Petitioner, in its 235th meeting held on dated
27th March, 2014 accorded approval for increase in the estimated project
cost from Rs. 7723 Crore to Rs. 9479.51 Crore. The increase was
necessitated mainly due to increase in the cost on account of “Interest
Page 23 of 70
RERC/462/14
During Construction and financing charges” from Rs. 907 Crore to Rs. 2502
Crore due to delay in completion of the project.
4.6
The State Govt., vide its letter dated 11.08.2014 accorded approval for
increase in the estimated project cost from Rs. 7723 Crore to Rs. 9479.51
Crore with the condition that the additional equity will be provided by the
State Govt. taking into consideration the actual cost of the project to be
determined by the RERC.
4.7
The Petitioner submitted that the Unit-1 (1X600 MW) of Kalisindh Thermal
Power project (2X600 MW) has achieved COD on dated 07.05.2014.
4.8
The Petitioner submitted the detailed breakup of original estimated
project cost and revised project cost, as shown in the table below:
Table 1: Breakup of Capital Cost of project (2x600 MW) (Rs. Crore)
Sr. No.
1
2
3
4
5
6
Description
Land & Site Development
Access
Temporary Construction &
Enabling works
Water Storage System
Water Transportation
System
Railway System
Original
Sanctioned
Project
Cost
Revised
Project
cost (187th BoD
meeting
dated.
May 04, 2011)
12
3
20.5
3
3
6
50
760
75
86
75
228
7
Steam turbine generator
island including taxes,
duties & ETC
2010
8
Balance of Plant (Incl. in
EPC Contract)
1453
9
10
11
12
12(a)
13(a)
Control & Instrumentation
(Incl. in EPC Contract)
Operators Training
Start up fuel
Construction Insurance
Special T&P
Sub Total of 7 to 12(a)
Other Works (EPC
exclusion)
Page 24 of 70
54
2
5
5
10
3539
5301 Crore (Total
EPC Contract)
Revised
Estimated
Project
Cost as on
anticipated
COD
of
Unit-2
18.47
11.40
4.75
799
86
243.69
5391 Crore
(Total EPC
Contract)
RERC/462/14
Description
Original
Sanctioned
Project
Cost
Revised
Project
cost (187th BoD
meeting
dated.
May 04, 2011)
i
Construction of permanent
township
Included in
8
77
ii
Construction of Store &
Colony boundary wall and
fencing
Sr. No.
iii
iv
v
vi
14
15
15.1
15.2
15.3
15.4
15.5
15.6
15.7
16
17
17.1
17.2
6
Construction of store
shed/field hostel
Fire tender & Dozer
Additional raw water
reservoir for 20 days
storage (2 million m3)
Third party inspection
agency
Total cost of works ( sum of
1 to 13)
Overheads
Development Expenses
Legal Expenses
Establishment/Construction
supervision @ 2%
Consultancy & Engineering
Audit and Accounts @ 1%
Contingency @ 3%
Total (15)
CSR
Project cost excl. financial
cost & IDC ( Total of 1 of
15)
Financing & IDC
Financial expenses @ 1%
Interest during
Construction
Total (17)
Total Project cost incl.
financial cost & IDC (Total
of 16& 17)
Revised
Estimated
Project
Cost as on
anticipated
COD
of
Unit-2
5
8
156 (Total
for Other
Works)
70
3
3757
6573.5
6710.31
4
4
4
4
75
75
4
4
75
10
38
112.2
243.2
0.00
10
38
112.2
243.2
0.00
10
38
112.2
4000.2
6816.7
6977.51
36.8
57
564 (20:80)
850
57
2445
600.8
907
2502
4601
7723
9479.51
24.00
Commission’s Analysis
Regulation 16(3) of RERC Tariff Regulations, 2014 states as follows:
Page 25 of 70
RERC/462/14
“The capital cost shall be admitted by the Commission after prudence check
and shall form the basis for determination of tariff. Provided that the actual
capital expenditure as on COD for the original scope of work based on audited
accounts of the company may be considered subject to prudence check by
the Commission. If sufficient justification is provided for any escalation in the
capital cost beyond the original scope of works, the same may be considered
by the Commission during prudence check.”
4.9
The Commission observes that the project comprises of two Units of 600
MW each and only one of the two Units has achieved COD on
07.05.2014. The Unit-2 of the project is yet to achieve the COD. The DPR
and the original as well as subsequent sanctioned estimated project cost
are combined for both the Units. The booking of actual capital
expenditure in the books of accounts of the Petitioner is also combined
for both the Units. The Petitioner has filed the petition for determination of
the provisional capital cost of Unit-1 based on allocation of actual capital
expenditure on certain assumption basis. Since the complete project has
not achieved COD, the completed project cost is not available and the
Petitioner in its Petition has only submitted revised estimates of the Capital
Cost for the entire Project. The Commission also observes that the
combined orders have also been placed for both the Units. The
Commission is, therefore, of the view that as the actual capital
expenditure incurred for the entire Project is not available at this stage
and the capital cost of Unit -1 depends upon the capital cost of the
entire project, the Commission at this stage can only provisionally
approve the capital cost. Therefore, the Commission, in this Order, has
carried out the preliminary prudence check based on the information
provided by the Petitioner and has provisionally approved the estimated
capital cost of the Project for the purpose of approving the provisional
tariff for Unit -1 for FY 2014-15 i.e. from COD i.e. 07.05.2014 to 31.03.2015
with certain directions to be complied with at the time of filing the
petition for final approval of the capital cost of the project. The
Commission shall undertake final determination of capital cost based on
detailed prudence check after the project has achieved COD and the
capital cost as on COD is audited and made available by the Petitioner.
The Commission directs RVUN to file the Petition for approval of final
capital cost and Tariff for Unit-1 along with the petition for approval of the
final capital cost and tariff of the entire project i.e. Unit-1 & Unit-2 based
on completed actual Capital Cost as on COD of Project. The Commission
Page 26 of 70
RERC/462/14
also directs RVUN to get the completed Capital cost of the entire project
audited by the Statutory Auditors after COD of Unit-2 and submit the
Statutory Auditor’s certificate of actual capital cost based on audited
accounts along with the petition for determination of the final capital
cost and approval of final tariff of the entire project.
4.10 The Commission for carrying out the preliminary prudence check of the
Capital Cost asked RVUN to submit the detailed package wise reasons for
increase in the revised estimated Capital Cost with respect to the original
estimated Capital Cost. RVUN in its reply, submitted the reasons for
increase in capital cost, as discussed hereunder:Land and Site Development:
4.11 RVUN submitted that the revised project cost estimate in respect of land
and site development is Rs. 18.47 Crore as against the original project
cost estimate of Rs. 12.00 Crore.
Access:
4.12 RVUN submitted that the revised project cost estimate under the head
“Access” increased to Rs. 11.40 Crore against the original project cost
estimate of Rs. 3.00 Crore which has resulted in increase of estimated
project cost under the head by Rs. 8.40 Crore. The revised project cost
estimate includes works of Road from plant gate to SH-19A, security
barrack and balance roads outside plant boundary.
Temporary Construction and Enabling Works:
4.13 RVUN submitted that the original estimated project cost provision under
the head was Rs. 3.00 Crore which was revised to Rs. 6.00 Crore in BoD
meeting dated May 4, 2011 and the same is now revised / estimated as
Rs. 4.75 Crore.
Water Storage System:
4.14 RVUN
submitted
that
the
Water
Resources
Department
(WRD),
Government of Rajasthan, is constructing dam on Kalisindh River as
Deposit work of RVUN. RVUN further submitted that the original project
cost estimate for Water Storage System was Rs. 50.00 Crore. However,
after considering the revised estimate furnished by WRD, estimated
project cost was revised to Rs. 760 Crore. RVUN submitted that WRD has
Page 27 of 70
RERC/462/14
again revised the estimated cost and increased it to Rs. 799 Crore
resulting in a further increase in capital cost by Rs. 39 Crore.
Water Transportation System:
4.15 RVUN submitted that against the original project cost estimate of Rs. 75
Crore under the head “Water Transportation System”, the estimated cost
has been revised to Rs. 86 Crore.
Railway siding:
4.16 RVUN submitted that the revised cost estimates were considered as per
DPR submitted by M/S IRCON to WCR, Jabalpur, being done as deposit
work. The original project cost was estimated as Rs. 75 Crore, which was
subsequently revised to Rs. 228 Crore and now revised to Rs. 243.69 Crore.
EPC Contract
4.17 RVUN submitted that the provision for EPC contract as per original
estimated project cost was Rs. 3539 Crore. However, the contract /
award for EPC contract was finalized at an evaluated price of Rs. 4900.80
crore which includes foreign component of 405 Million USD, evaluated at
Rs.39.59 per USD. The estimated cost was revised by the BoD as Rs. 5301
Crore in its 187th meeting held on dated May 4, 2011. The EPC contract
was placed on M/S BGRESL, Chennai, as detailed here under;
Table 2: Breakup of Cost of EPC Contract (Rs. Crore)
Sr.
No.
1
2
3
4
5
6
Item
As per contract awarded
Approved project cost as per
187th meeting held on 04.05.2011
Off shore
405 million USD ( Rs. 1603.40 405 million USD ( Rs. 1863 Crore @
supplies
Crore @ Rs. 39.59 per USD)
Rs. 46 per USD)
T&D off shore
Rs. 431.29 Crore
Rs. 502.29 Crore
supplies
On shore
Rs. 1843.22 Crore
Rs. 1843.22 Crore
Supplies
Civil work and
Rs. 1022.15 Crore
Rs. 1022.15 Crore
ETC
Entry tax
to be paid as per contract
Rs. 19.00 Crore
Labour cess
Additional liability
Rs. 51.00 Crore
Grand Total
Rs. 4900.06 Crore
Rs. 5301.00 Crore
Page 28 of 70
RERC/462/14
4.18 RVUN further submitted that due to the currency exchange rate variation,
the value of the contract has further been increased by Rs. 90 Crore to Rs.
5391 Crore.
Other Works & Third party Inspection
4.19 RVUN submitted that the cost of other civil and mechanical works which
were not included in the scope of EPC contract and third party
inspection are as under:
Table 3: Breakup of Cost of Other Works and Third Party Inspection (Rs. Crore)
Sr.
Description
No.
Original
Project
Cost
Earlier
revised
project cost
Now
revised
project
cost
Increase
in
project
cost
A
Construction of permanent
township
0.00
77.00
77.00
0.00
B
Construction of plant, and colony,
boundary wall and fencing
0.00
6.00
2.28
-3.72
C
Construction of store shed/field
hostel
0.00
5.00
12.97
7.97
D
Fire tender and dozer
0.00
8.00
8.00
0.00
E
Additional raw water reservoir for 20
days storage
0.00
70.00
52.00
-18.00
F
Third party inspection agency
0.00
3.00
3.75
0.75
Total
0.00
169.00
156.00
-13.00
Overheads:
4.20 RVUN submitted that the Corporate Social Responsibility Policy adopted
by RVUN was approved by Government of Rajasthan on May 20, 2011.
RVUN further submitted that CSR works of Rs. 24.00 Crore have been
identified by CSR Implementation Committee of the project site and
proposed to be carried out for upliftment of project affected persons and
project affected area as per provision laid down in the policy, i.e. @ Rs.
2.00 Lakh per MW of installed capacity. RVUN accordingly submitted that
the project cost has been increased by Rs. 24.00 Crore on account of one
time implementation of CSR.
IDC & Financial Cost:
4.21 RVUN submitted that in the original estimated project cost, there was a
provision for “IDC & financing cost” of Rs. 600.80 Crore including Rs. 564
Crore on a/c of IDC and Rs. 36.80 Crore on a/c of financing cost. This was
Page 29 of 70
RERC/462/14
subsequently revised to Rs. 907 Crore including of Rs. 850 Crore on a/c of
IDC and Rs. 57 Crore on a/c of financing cost. Due to delay in
commissioning of the project, the estimated project cost under the head
“IDC & financing cost” has been further revised to Rs. 2502 Crore
including Rs. 2445 Crore of IDC and Rs. 57 Crore on a/c of financing cost.
The Petitioner accordingly submitted that this has led to an increase in
estimated project
cost by Rs. 1901 Crore, in comparison to original
estimated project cost
4.22 RVUN also submitted the cost allocation of total expenditure of KaTPP in
Unit-1 and Unit-2 up to COD 07.05.2014 which is as shown in the table
below:
Table 4: Capital Cost of KaTPP Unit -1&2 as on 07.05.2014 (Rs. Crore)
S.No
1
2
3
4
5
6
7
8
9
10
·
Particular
Land & land rights
Building & Civil works of Power
plant
Hydraulic works
Other Civil works
Plant & machinery
Lines and Cable Networks
Vehicles
Furniture & fixtures
Office Equipments
Capital spares
Total
Unit-1
Unit-2
Total
10.49
10.49
20.99
767.38
703.85
182.31
3889.99
0.00
0.07
0.86
0.24
0.00
5555.18
504.05
660.66
171.22
2577.91
1271.44
1364.51
353.53
6467.89
0.00
0.07
0.86
0.24
0.00
9479.51
3924.33
The figures in above heading are subject to change with finalization & audit of Accounts
4.23 The Petitioner submitted that the total estimated cost of the project as on
anticipated COD of Unit -2 is Rs. 9479.51 Crore. The Petitioner further
submitted that out of the total project cost, Rs. 5555.18 Crore (including
IDC of Rs. 1432.82 crore) has been allocated to Unit-1 and Rs. 3924.33
crore has been allocated to Unit-2.
4.24 The Commission in its data gaps further asked the Petitioner to provide the
statement of actual capital expenditure incurred up to the Commercial
Operation Date of Unit-1, duly certified by the Statutory Auditors. Further,
the Commission also asked for the copies of the orders placed for Unit-1
for main plant equipment, BOP, Civil Works and all other packages.
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4.25 The Petitioner vide its letter no. RVUN/CE (PPMC&IT.)/F.D.1462 dated
September 29, 2014 provided statement of actual capital expenditure,
duly certified by the Statutory Auditors. Further, the Petitioner also
submitted the copies of the purchase orders/work orders, as detailed
below:
· Purchase Order for off shore supplies – M/s BGR Energy Systems Ltd.
· Purchase Order for on shore supplies – M/s BGR Energy Systems Ltd.
· Work Order for Civil, Erection, Testing and Commissioning Works – M/s
BGR Energy Systems Ltd.
· Quality Assurance (QA)/Quality Surveillance (QS)/Third Party Inspection
(TPI) of Steam Generators (Boilers), Steam Turbine Generators and
Auxiliaries during manufacturing – M/s Lloyd’s Register Asia, New Delhi
· Design, Engineering, Manufacture, Assembly, Testing at Works, Supply,
Erection, Testing & Commissioning of all Electrical System including 33
kV overhead transmission line and Instrumentation & Control System on
turnkey basis for River Water System – M/s SPML Infra Limited.
· Consultancy Engineering Services – M/s TCE Consulting Engineers Ltd.,
Bangalore
· Outside Electrification of colony – M/s Ishwar Metal Industries
· Design, Manufacture, Supply & Commissioning of 4 nos. 2x600 HP, Twin
Power Pack Diesel Hydraulic Shunting Locomotives with all accessories,
tools & tackles and mandatory spares – M/s SAN Engg. & Locomotive
Co. Ltd.
· Design, Manufacture, Supply, Delivery, Testing & Commissioning of 4
nos. BEML model 155 bulldozers – M/s BEML Ltd.
4.26 The Commission has gone through the submissions made by the Petitioner
and observes that the Petitioner has merely stated the facts without
giving appropriate justification for the increase in the Capital Cost. The
Petitioner has not submitted the detailed reasons for increase in the
estimated capital cost for some of the works / packages. The Petitioner is
directed to submit the detailed individual package wise reasons for
increase in the actual project cost as compared to the original project
cost estimates in its petition for approval of the capital cost of both the
Units i.e. project. The reasons should elaborate the basis on which the
original cost estimates were considered vis-à-vis the actual project cost. In
case, some of the works / packages were not considered in the original
project cost estimates and the same are now considered in revised
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project cost, the reasons should elaborate the basis on which the same
were not considered in the original project cost estimates and the basis
on which the same are now being considered in the revised project cost,
alongwith the supporting documents.
4.27 The Commission has gone through the responses submitted by the
Petitioner and has provisionally approved the capital cost of Unit -1, as
discussed below:Scheduled Completion Period
4.28 The Commission observes that as per the EPC contract, the Unit -1 and 2
were scheduled to be commissioned within 39 months and 42 months
respectively from the date of Letter of Award (LOA) issued to the EPC
Contractor. The LOA was issued to the EPC Contractor on dated
09.07.2008. Accordingly as per the schedule, Unit -1 was scheduled to be
commissioned by October 08, 2011 and Unit -2 was scheduled to be
commissioned by January 08, 2012. As per DPR, the Unit-1 was scheduled
to be commissioned within 40 months and Unit-2 within 6 months
thereafter from the zero date i.e. the date of the placement of order for
the main equipment, which was 09.07.2008. According to DPR, the
scheduled completion date for Unit -1 was 8 Nov. 2011. After taking into
consideration the submission made by the Petitioner, the Commission
considers the scheduled commissioning date as October 08, 2011.
Date of Commercial Operation (COD)
4.29 Some of the objectors have objected on the procedure followed by
RVUN for declaring COD of Unit -1. The Commission has gone through the
submission of RVUN, including the certificate declaring successful trail run
for Unit -1 and has accordingly considered the actual COD of Unit -1 as
07.05.2014.
Delay in commissioning of the Unit
4.30 The Petitioner submitted that the Unit-1 of Kalisindh Thermal power project
has achieved COD on dated 07.05.2014. Thus, there is delay of around 31
months in commissioning of the Unit-1. The COD of Unit -2 is yet to be
achieved.
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4.31 The Commission, vide its data gap letter dated 26.06.2014 directed the
Petitioner to submit the detailed package wise reasons for such delay in
achieving COD of Unit-1.
4.32 The Petitioner in its response submitted that earlier the Units-1&2 of KaTPP
Project were planned to be commissioned in 11th Plan period. However,
commissioning of Units got delayed due to the following reasons:
· Inordinate delay in payments, leading to delay in supplies by vendors
and site works by contractors.
· Non-realization of money had affected the cash flow for the projects
· Delay in approval of Railway Siding clearance – The environment
clearance/forest clearance for Railway Siding was issued on 19.06.2012
by the MoEF, Regional Office, Lucknow. However, subsequent
clearance by the DFO, Jhalawar was issued on 11.09.2012 and after
that the work on Railway Siding was started on 16.09.2012.
· Long spell of rains in the year 2011 and 2012 in the region having black
cotton soil, has badly hampered the progress at site. The local soil
characteristics further limited the progress of erection work at site
during rainfall. Further, during the rainfall, the condition of roads
worsened, which made it difficult to deliver material and heavy
machinery.
· Delay
in
construction
of
Kalisindh
Dam
by
Water
Resources
Department.
4.33 The Commission, vide its letter dated 24.11.2014, further asked the
Petitioner to submit the detailed package wise reasons for delay
bifurcating the same into those attributable to the contractor / the
Petitioner and those beyond control of the Petitioner. The Petitioner did
not submit the desired information and replied that the reasons for delay
have already been submitted.
The Petitioner also submitted that all
activities are interlinked and therefore it is hard to identify whether the
delay caused is attributable to the Contractor or the Petitioner.
4.34 After considering the replies / submission made by the Petitioner, the
Commission is of the view that reasons like delay in payments and non
realisation of money are controllable factors and is entirely attributable to
the Petitioner. However, delay on account of getting Railway Siding
clearance, construction of dam and long spell of rains is concerned, the
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Commission is of the view that prima facie such factors appear to be
uncontrollable in nature.
4.35 Hon’ble APTEL in its Judgment in Appeal No. 72 of 2011 while allowing the
impact of increase in costs due to delay in achieving COD has
categorically stated as follows:
“7.4. The delay in execution of a generating project could occur due to
following reasons:
i) due to factors entirely attributable to the generating company, e.g.,
imprudence in selecting the contractors/suppliers and in executing
contractual agreements including terms and conditions of the
contracts, delay in award of contracts, delay in providing inputs like
making land available to the contractors, delay in payments to
contractors/suppliers as per the terms of contract, mismanagement of
finances, slackness in project management like improper co-ordination
between the various contractors, etc.
ii) due to factors beyond the control of the generating company e.g.
delay caused due to force majeure like natural calamity or any other
reasons which clearly establish, beyond any doubt, that there has
been no imprudence on the part of the generating company in
executing the project.
iii) situation not covered by (i) & (ii) above.
In our opinion in the first case the entire cost due to time over run has to
be borne by the generating company. However, the Liquidated
Damages (LDs) and insurance proceeds on account of delay, if any,
received by the generating company could be retained by the
generating company. In the second case the generating company
could be given benefit of the additional cost incurred due to time
over-run. However, the consumers should get full benefit of the LDs
recovered from the contractors/suppliers of the generating company
and the insurance proceeds, if any, to reduce the capital cost. In the
third case the additional cost due to time overrun including the LDs
and insurance proceeds could be shared between the generating
company and the consumer. It would also be prudent to consider the
delay with respect to some benchmarks rather than depending on the
provisions of the contract between the generating company and its
contractors/suppliers. If the time schedule is taken as per the terms of
the contract, this may result in imprudent time schedule not in
accordance with good industry practices.”
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4.36 Hon’ble APTEL in its Judgment with regards to sharing of impact on
account of increase in cost due to mix of controllable and uncontrollable
factors has ruled as follows:
“7.12. In view of above, we feel that this case falls under category (iii)
described in para 7.4. Accordingly, following the principles of prudence
check laid down by us, the cost of time over run has to be shared equally
between the generating company and the consumers. Admittedly, there is
no enhancement in cost of the contract price of the equipment as no price
variation escalation was permissible to BHEL beyond the schedule date of
completion of the Project according to the terms of the agreement. The
impact of time over run beyond the contractual schedule is only on IDC and
overhead costs. Accordingly, the same have to be shared between the
generating company and the consumers. Excess IDC and overhead costs for
time overrun from scheduled date of commissioning to actual date of
commissioning has to be worked out on prorate basis with respect to total
actual time taken in commissioning of the Unit. 50% of the excess IDC and
overhead costs will have to be disallowed. Deduction on account of 50% of
the
Liquidity
Damages
received
by
the
Appellant
from
its
suppliers/contractors has also to be allowed from the capital cost, to give
due credit for LDs to the consumers. This issue is answered accordingly.”
4.37 Considering the facts and documents submitted by the Petitioner at this
stage, it is observed that part of the delay is on account of reasons
attributable to RVUN. However, some of the delay in achieving COD was
due to factors not in the control of RVUN. Therefore, it is not established
that the entire delay was due to reasons beyond RVUN’s control. The
Commission is of the view that the present case falls under the category
(iii) described in the APTEL ruling cited above.
4.38 The Commission further observes that there is no price escalation clause in
EPC contract of M/S BGRES Ltd. for completing the project beyond
scheduled completion period. However, there is an impact on account
of exchange rate variation in respect of foreign currency payment to the
EPC contractor. Thus, there is impact of delay in completion period
beyond scheduled completion period only on account of “Interest During
Construction” and impact of exchange rate variation for foreign currency
payment to EPC contractor.
4.39 Accordingly, the Commission at this stage has provisionally allowed an
amount equal to 50% of extra IDC due to delay in completion of the
Project for the purpose of approval of provisional capital cost of Unit -1.
The Commission will carry out the detailed prudence check of the
reasons for delay in completion of the project as on COD of Unit -2 at the
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time of approval of final tariff based on actual Capital Cost as on COD of
project. The Commission directs the Petitioner to submit the following
information along with its Petition for approval of final tariff based on
actual audited capital cost till COD of Project.
· Activity wise Original L2 level Schedule agreed with EPC Contractor
· Activity wise Actual L2 level schedule
· Steps taken by the Petitioner to mitigate the delay with supporting
documents.
· Complete detailed reasons for package wise delay in completion
clearly identifying the impact of delay in completion of the project on
account of each reason.
· Bifurcation of the impact of each reason whether the same is
attributable to the contractor or the Petitioner or due to uncontrollable
factor. Whether each reason for delay was within or beyond control of
the Petitioner with supporting documents.
· The Petitioner should also furnish the copies of the correspondence
exchanged between the contractor / agency and the Petitioner in
support of the reasons for delay.
Approval of Hard Cost
4.40 The Commission observes that initially the project cost was estimated as
Rs. 4601 Cr including IDC and financing cost amounting to Rs. 600.80
Crore. The project cost was revised to Rs. 7723 Crore including IDC and
financing cost amounting to Rs. 907 Crore. Again, the capital cost was
revised to Rs. 9479.51 Crore including IDC and financing cost of Rs. 2502
Crore. Accordingly, the hard cost (without IDC & financing cost )of the
project was originally estimated as Rs. 4000 Crore which was revised to Rs.
6816.70 Crore and then again to Rs. 6977.51 Crore.
4.41 The Commission observes that some of the works were not anticipated in
original project cost estimates. However, the same have been considered
in
subsequent
revisions.
Further,
in
respect
of
some
of
the
works/packages, the estimated cost has been increased abnormally as
compared to the cost as per original project cost estimates. The
Commission vide its data gap letter dated 26.06.2014 and 24.11.2014
directed the Petitioner to furnish the detailed package wise reasons for
increase in estimated cost with supporting documents. The Petitioner was
also directed to furnish the detailed justification for inclusion of some of
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the works/packages in subsequent revisions which were not considered in
original cost estimates. In case, these works/packages were essential, the
reasons for not considering the same in original cost estimates should be
elaborated.
The
Petitioner
has
submitted
its
replies
for
certain
components of the hard cost, but for certain components of the hard
cost, the Petitioner has not submitted the complete details.
4.42 The Regulation No. 16(3) of RERC Tariff Regulations, 2014, provides as
under:“The capital cost shall be admitted by the Commission after prudence
check and shall form the basis for determination of tariff.
Provided that the actual capital expenditure as on COD for the original
scope of work based on audited accounts of the company may be
considered subject to prudence check by the Commission. If sufficient
justification is provided for any escalation in the capital cost beyond the
original scope of work, the same may be considered by the Commission
during prudence check.”
4.43 The Commission is of the view that the revised estimated capital cost of
Rs. 7723 Crore was on the basis of fairly actual data and has also factored
the actual award of EPC contract price and therefore the Commission
has considered the estimate of Rs. 7723 Crore as the base case capital
cost and has examined the variation in expenses with regards to the base
case capital cost which is as discussed below. However, in cases where
significant variation in revised estimated expenses is observed vis-à-vis the
original estimated cost in the DPR, the Commission has issued suitable
directions to RVUN for submission of detailed justification along with the
petition for determination of final capital cost of the project.
4.44 The Commission at this stage for the purpose of approval of provisional
tariff for Unit-1 has considered the allocation of the total cost for Unit-1 in
the same proportion as allocated by the Petitioner. The Commission for
the purpose of approval of provisional tariff for Unit-1 has considered the
minimum of cost allocated to the Unit-1 and the actual cost incurred by
the Petitioner till COD of Unit-1 under each head. The Commission will
once again examine this issue of allocation of costs amongst Unit-1 and
Unit-2 at the time of approval of completed Capital Cost as on COD of
project and final tariff for Unit-1 and 2.
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Land and Site Development:
4.45 The Petitioner has submitted that the revised estimated cost under the
head “land and site development” is Rs. 18.47 Crore as against the
original estimated cost of Rs. 12.00 Crore.
4.46 The Petitioner did not submit the due justification for increase in the
estimated cost under the head. In absence of the complete justification,
the Commission has provisionally considered 80 % of Rs.18.47 Crore i.e. Rs.
14.78 Crore only under the head “land and site development”. Further, as
discussed earlier, the Commission has allocated the cost on Unit -1 in the
same proportion as allocated by the Petitioner which works out to be Rs.
7.39 Crore. The Petitioner has, however, submitted that the actual cost
incurred as on COD of Unit-1 is Rs. 8.54 Crore.
4.47 The Commission has provisionally allowed minimum of cost allocated to
the Unit-1 and the actual cost incurred till COD of Unit-1. The Commission
has accordingly considered the cost of Rs. 7.39 Crore for Unit-1 under the
head “land and site development”. However, the Petitioner is directed to
submit detailed justification for increase in the revised estimated cost from
the original estimated cost of Rs. 12 Crore under this head in its Petition for
approval of final tariff based on actual completed cost of the Project as
on COD of Unit-2. The Petitioner should submit the following details
towards cost of the land towards justification for increase in cost:
· Total Land area with rate per hectare/bigha considered in the original
estimate.
· The details of the actual land area acquired with rate per hectare /
bigha for payment of the land with reasons for variation.
· Detailed break-up of the expenditure under the head with justification.
· Details of expenditure for site development other than land.
Access:
4.48 The Petitioner submitted that the revised estimated cost under the head is
Rs. 11.40 Crore against the original estimated cost of Rs. 3.00 Crore. The
Petitioner has not submitted the proper justification for increase in the cost
estimates.
Page 38 of 70
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4.49 In absence of the due justification, the Commission has provisionally
considered an amount equal to 80% of Rs. 11.40 Crore i.e. Rs. 9.12 Crore
under the head. Further the Commission has allocated the cost on Unit -1
in the same proportion as allocated by the Petitioner which works out to
be Rs. 4.56 Crore. The Petitioner has however submitted that the actual
cost incurred as on COD of Unit-1 is Rs. 0.61 Crore. The Commission has
provisionally allowed minimum of cost allocated to the Unit and the
actual cost incurred in the Unit. The Commission has accordingly
considered the cost of Rs. 0.61 Crore for Unit-1. However, the Petitioner is
directed to submit detailed justification for increase in the estimated cost
under this head in its Petition for approval of final tariff based on actual
completed cost of the Project as on COD of Project.
Temporary Construction and Enabling Works:
4.50 The Petitioner submitted that the original estimated cost under the head
was Rs. 3.00 Crore which has been revised to Rs. 4.75 Crore in the revised
cost estimate.
4.51 The Petitioner has not provided the detailed justification for increase in
the cost estimate. In absence of the same, the Commission has
provisionally considered an amount equal to 80% of the revised cost
estimate of Rs. 4.75 Crore i.e. an amount of Rs. 3.80 Crore under the head
“Temporary Construction and enabling works”. Further the Commission
has allocated the cost on Unit-1 in the same proportion as allocated by
the Petitioner which works out to Rs. 1.90 Crore. The Petitioner has
however submitted that the actual cost incurred as on COD of Unit-1 is Rs.
2.22 Crore. The Commission has provisionally allowed minimum of cost
allocated to the Unit and the actual cost incurred in the Unit. The
Commission has accordingly considered an amount of Rs. 1.90 Crore for
Unit-1 under the head “Temporary Construction and enabling works”.
However, the Petitioner is directed to submit detailed justification for
increase in the revised cost based on actual completed cost of the
Project as on COD of Project from the original cost estimate of Rs. 3 Crore
under this head in its Petition for approval of final tariff. The Petitioner is
also directed to furnish the complete break-up of the actual cost into cost
of works carried out, cost of material & labour, if any along with copies of
the orders.
Page 39 of 70
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Water Storage System:
4.52 The Petitioner submitted that the Water Resources Department (WRD),
Government of Rajasthan, is constructing dam on Kalisindh River as
Deposit work of RVUN. The Petitioner submitted that the original project
cost estimate for Water Storage System was Rs. 50.00 Crore. However,
after considering revised estimates furnished by WRD, project cost was
revised to Rs. 760 Crore. The Petitioner submitted that WRD has again
revised the estimates and accordingly, the revised cost estimate has
been increased to Rs. 799 Crore.
4.53 The Commission observed that original estimate towards water storage
system was Rs. 50 Crore which has now been revised to Rs. 799 Crore. The
Commission asked the Petitioner to submit detailed justification for such
increase towards water storage system.
4.54 The Petitioner in its reply dated 19.02.2015 submitted that initially when the
power plant was conceived in FY 2005-06, water requirement to the tune
of 1000-2000 mcft was to be met from the proposed Bhawarsa Dam to be
built by the Water Resources Department, GoR and accordingly in the
initial DPR prepared by RVUN, a provision of Rs. 50 Cr only was considered
for water storage system for the power project. Further, Bhawsara dam
was planned as major irrigation project with storage capacity of 5200
mcft, however, when the WRD submitted its proposal of Bhawsara Major
Irrigation project for issuance of Environmental/Forest Clearance, the
proposal was not approved by the Expert Appraisal Committee (EAC) for
the river valley and hydroelectric projects under Ministry of Environment
and Forest (MoEF), Government of India (GoI) which led to delay in water
availability for the power project and therefore in the interest of the KaTPP
project it was decided to construct a smaller dam of 16 m height as an
integral part of the power project with storage capacity of around 1200
mcft. RVUN submitted that it was also decided that RVUN would bear the
full cost of the Dam and WRD would construct the dam as deposit work.
RVUN submitted that the construction work of the dam has been
awarded to M/s SPML, Gurgaon and WRD has submitted a proposal of
likely expenditure of Rs. 756 Crore on this account which has been further
revised to Rs. 799 Crore.
Page 40 of 70
RERC/462/14
4.55 The Commission observes that the Petitioner has not furnished due
justification for such an abnormal increase in the project cost estimate
except that the estimate was revised by WRD department. The Petitioner
has not clarified the basis & justification of the estimate of Rs. 760 Crore,
as furnished by the WRD department and the basis for further revision of
the estimate to Rs. 799 Crore. In absence of the due justification, the
Commission has provisionally considered an amount equal to 80% of the
revised cost estimate of an amount of Rs. 799 Crore i.e. an amount of Rs.
639.20 Crore under the head “Water Storage System”.
4.56 Some of the objectors have stated that the Dam is for the use of two
towns of Jhalawar & Jhalrapatan and 107 villages for drinking purpose
and in accordance with the data gap reply, share cost of Kalisindh Major
Irrigation Project will be paid by RVUNL in the ratio of water utilization at
90% dependability which works out to be 12:18 for energy & WRD
respectively. The Commission sought information on the sharing of the
dam cost from RVUN. In response to the same, RVUN through its reply
dated 24.04.2015 submitted a letter dated 11.05.2012 from the WRD
stating that Kalisindh Dam Phase-I (1200 mcft capacity) is fully dedicated
to RVUN Power Project and the cost of dam is to be borne by RVUN.
4.57 The Commission has provisionally allocated the cost of Rs. 639.20 Crore on
Unit -1 in the same proportion as allocated by the Petitioner which works
out to be Rs. 319.60 Crore. The Petitioner has however submitted that the
actual cost incurred as on COD of Unit-1 is Rs. 308.42 Crore. The
Commission has provisionally allowed minimum of cost allocated to the
Unit and the actual cost incurred in the Unit. The Commission has
accordingly considered an amount of Rs. 308.42 Crore for Unit-1 under
the head “Water Storage System”. The Commission however would like to
clarify that in case there is any change in the end use of the dam water
for other purposes other than that required by KaTPP Unit-1 and 2, the
Commission shall review its allocation principle adopted in this Order.
4.58 The Petitioner is directed to submit detailed justification for increase in the
revised actual cost from the original cost estimate of Rs. 50 Crore under
this head in its Petition for approval of final tariff based on actual
completed cost of the Project as on COD of Project. The Petitioner is also
directed to furnish the complete details of the amount claimed giving
Page 41 of 70
RERC/462/14
details of the scope of work, items of the work with their rates along with
copy of the estimate submitted by the WRD department and terms &
conditions on which the work is being carried out.
Water Transportation System:
4.59 The Commission observes that the original cost estimate under the head
“Water Transportation System” was Rs. 75 Crore which has now been
increased to Rs. 86 Crore in revised cost estimate. The Petitioner has not
submitted any justification for such increase.
4.60 In absence of the detailed justification, the Commission has provisionally
considered an amount equal to the maximum of the original estimate of
Rs. 75 Crore and 80% of Rs. 86 Crore i.e. an amount of Rs. 68.80 Crore
under the head “Water Transportation System” which works out as Rs. 75
Crore. Further, the Commission has allocated the cost on Unit-1 in the
same proportion as allocated by the Petitioner which works out to be Rs.
37.50 Crore. The Petitioner has however submitted that the actual cost
incurred as on COD of Unit-1 is Rs. 41.75 Crore. The Commission has
provisionally allowed minimum of cost allocated to the Unit and the
actual cost incurred on the Unit. The Commission has accordingly
considered the cost of Rs. 37.50 Crore for Unit-1 towards water
transportation system. However, the Petitioner is directed to submit
detailed justification for increase in the revised cost vis-a-vis the original
cost estimate of Rs. 75 Crore under this head in its Petition for
determination of final capital cost based on actual completed cost of
the Project as on COD of Unit- 2.
Railway siding:
4.61 The Petitioner submitted that the original estimated cost under the head
“Railway siding’ was considered as Rs. 75 Crore only. The Petitioner further
submitted that the cost estimate was revised to Rs. 228.00 Crore on the
basis of DPR submitted by M/S IRCON, i.e. the contractor for the Railway
siding work. The cost estimate was further revised to Rs.243.69 Crore on
account of work of railway siding and marshalling yard being carried out
by M/S IRCON. The Petitioner has not provided due justification for
increase in the revised cost estimate. The Petitioner did not submit the
basis for awarding the contract in favour of M/S IRCON, whether it was on
open tender basis or it was on single offer/negotiation basis. If the
Page 42 of 70
RERC/462/14
contract was on single offer / negotiation basis, whether the contract was
on firm price basis / “Cost Plus Contract” basis or on deposit work basis.
The Petitioner has also not submitted as to how it has ensured the
competitiveness of the contract price and reasonability of the cost
claimed in the estimate / DPR.
4.62 In absence of the detailed justification for increase in the revised cost
estimate, the Commission has provisionally considered an amount equal
to 80% of the revised cost estimate i.e. Rs. 194.95 Crore under the head
“Railway Siding”. Further, the Commission has allocated the cost on Unit 1 in the same proportion as allocated by the Petitioner which works out to
be Rs. 97.48 Crore. The Petitioner has however submitted that the actual
cost incurred as on COD of Unit-1 is Rs. 70.44 Crore. The Commission has
provisionally allowed minimum of cost allocated to the Unit and the
actual cost incurred on the Unit. The Commission has accordingly
considered the cost of Rs. 70.44 Crore for Unit-1 under the head “Railway
Siding”. However, the Petitioner is directed to submit detailed justification
for increase in the revised cost based on actual completed cost of the
Project as on COD of Unit- 2 vis-à-vis the original cost estimate of Rs. 75
Crore under this head in its Petition for determination of final capital cost.
The Petitioner is also directed to submit the basis for awarding the
contract in favour of M/S IRCON along with basis of ensuring the
competitiveness of the offer and reasonability of the cost claimed in the
estimate / DPR.
EPC Contract
4.63 The Petitioner has submitted that the EPC Contract was awarded in
favour of M/S BGR Energy Systems Ltd., Chennai at a contract price of Rs.
4900 Crore. This contract price of Rs. 4900 Crore included payment of 405
million USD for off Shore supplies, which was evaluated at fixed exchange
price of Rs. 39.59 per USD for an amount equal to Rs. 1603.40 Crore. The
Petitioner has further submitted that the estimated contract price has
been revised to Rs. 5301 Crore, as per 187th meeting of BoD held on dated
04.05.2011, due to the following reasons:
a) Depreciation of Indian Rupee against the US Dollar. The payment of
405 million USD has now been evaluated at an amount equal to Rs.
1863 Crore @ fixed exchange price of Rs. 46/- per USD, thus increasing
the impact by Rs. 260 Crore.
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b) Impact of an amount of Rs. 71 Crore due to increase in cost towards
Taxes & Duties on off shore supplies.
c) Impact of an amount of Rs. 70 Crore due to Introduction of Entry Tax
and Labour Cess.
4.64 The Petitioner submitted that due to the currency exchange rate
variation, the value of award has been further increased by Rs. 90 Crore
to Rs. 5391 Crore.
4.65 The Commission has gone through the submissions of the Petitioner and
has provisionally accepted the increase in cost on account of increase in
taxes & Duties on off-shore supplies and introduction of entry tax and
labour cess.
4.66 The Commission observes that the Petitioner has claimed increase of an
amount equal to Rs. 350 Crore on account of foreign exchange rate
variation. The Petitioner has not submitted the basis / detailed statement
showing the date wise payment along with applicable exchange rate as
on the date of such payments. Further, some of the objectors have stated
that at the time of bid evaluation, the bids were evaluated without
anticipating the impact on account of any FERV and hedging cost and
had RVUN considered FERV or hedging cost, the outcome of the
evaluation process would have been different. The Petitioner has not
furnished the satisfactory reply of the comment of the stakeholders/
objectors. The Petitioner has also not submitted the basis for evaluating
the revised cost estimate on account of FERV at the fixed rate of Rs. 46/per USD, the basis for further increase of Rs. 90 Crore on account of FERV
& the basis for the increase on cost on account of Taxes & Duties on
Offshore supplies. Further, the project has been delayed significantly; it
may be most likely that few payments in USD has been made after the
scheduled completion date. The Petitioner has not furnished the
bifurcation of the impact of FERV along with the impact of Taxes & Duties
on Offshore supplies between within & beyond the scheduled completion
date.
4.67 In absence of the complete details, the Commission has provisionally
considered an amount equal to 50% of total additional claim of Rs. 350
Crore i.e. an amount of Rs. 175 crore for EPC contract. The impact of
additional claim of Rs. 71 Crore on account of Taxes & duties on Offshore
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RERC/462/14
supplies shall be reviewed at the time of approval of final capital cost of
both Units of KaTPP, after receipt of the complete details from the
Petitioner, as desired above.
4.68 The
Commission
has
accordingly
provisionally
considered
revised
estimated cost of EPC contract equal to amount of Rs 5216.00 Crore and
has allocated it to Unit-1 in the ratio of 60:40, as allocated by the
Petitioner which works out to Rs. 3149.86 Crore. The Petitioner has however
submitted that the actual cost incurred as on COD of Unit-1 is Rs. 3111.12
Crore. The Commission has therefore considered provisionally the
minimum of the two as Rs. 3111.12 Crore.
4.69 However, in order to determine the actual impact of FERV, the
Commission directs the Petitioner to submit following information along
with the Petition for determination of final cost of the project.
1) Payment Schedule with phasing agreed as per Contract along with
exchange rate for each bill to be raised as per Schedule.
2) Date wise Bills/Invoices raised by the EPC Contractor along with
exchange rate for each bill.
3) Date of payments made by the Petitioner against invoices raised along
with exchange rate for each invoice paid by the Petitioner.
4) Bifurcation of the impact of FERV and Taxes & Duties on offshore
supplies between, within & beyond the scheduled completion date.
5) Satisfactory reply of the observations / comments of the stakeholders/
objectors.
Other Works & Third party Inspection
4.70 The Petitioner has claimed in the revised project cost, the following works
/ packages at an estimated cost of Rs. 156 Crore:1) Construction of Permanent Township.
-
77
Crore
2) Construction of plant & colony Boundary
-
2.28 Crore
3) Construction of Store sheds/ field hostel
-
12.97 Crore
4) Fire Tenders & Dozers
-
08
Crore
5) Additional Raw Water reservoir
-
52
Crore
6) Third party inspection
-
3.75 Crore
4.71 The Petitioner has not given the due justification for considering these
works in revised cost estimates whereas the same were not considered in
original cost estimates. In case these works are necessary, the
Page 45 of 70
RERC/462/14
reasons/basis under which the same could not be considered in original
cost estimates are required to be elaborated. The Petitioner is directed to
submit detailed justification for the above works being not a part of
original cost estimates and the rationale behind considering such cost
now in its Petition for determination of final capital cost based on actual
completed cost of the Project as on COD of Unit- 2.
4.72 In absence of the due justification, the Commission has provisionally
considered 80% of the amount claimed as Rs. 124.80 Crore under the
head “Other works and third party inspection”. Further, the Commission
has allocated the cost on Unit-1 in the same proportion as allocated by
the Petitioner which works out to be Rs. 62.40 Crore. The Petitioner has
however submitted that the actual cost incurred as on COD of Unit-1 is Rs.
42.80 Crore. The Commission has provisionally allowed minimum of cost
allocated to the Unit and the actual cost incurred on the Unit. The
Commission has accordingly considered the cost of Rs. 42.80 Crore for
Unit-1 towards such works.
4.73 The Commission further observed that such works includes estimated cost
under the head “Construction of new township” amounting to Rs. 77
Crore. The Petitioner has not submitted any justification for including
township as additional scope of work as the same was not envisaged
earlier. The Commission further observes that as per DPR, the work for
Construction of Permanent Township is included in the scope of Balance
of plant / EPC contract. The Petitioner has not clarified the reasons for
carrying out this work separately from the Balance of plant / EPC
contract, as against the provision in DPR.
4.74 The Commission directs the Petitioner to submit the detailed justification
for carrying out the work of “Construction of new township” separately
from the scope of Balance of plant / EPC contract as against the
provision in DPR The Petitioner is further directed to submit the following
details with respect to the construction of township with the petition for
final capital cost determination for KaTPP Unit -1 and 2.
1) Nos. of site employees currently working in the plant
2) Nos. of dwelling Units constructed
3) The process followed for award of such works
Page 46 of 70
RERC/462/14
4) Participating entities in the tendering and basis of awarding the
contract to the selected Bidder
Overheads:
4.75 The Petitioner submitted that overhead expenses were originally
estimated as Rs. 243.20 Crore however it has been revised to Rs. 267.20
Crore on account of expenses to be incurred for complying with the
“Corporate Social Responsibility” Policy approved by Government of
Rajasthan on May 20, 2011. The Petitioner has claimed an additional
expense of Rs. 24 Crore on account of CSR activities.
4.76 The Commission observes that RVUN has submitted that it has framed a
CSR policy and got it approved by the GoR and has accordingly claimed
CSR expenditure as a part of capital expenditure. Further, RVUN has not
submitted the cost incurred on account of CSR activities. The Commission
prima-facie is of the view that no information has been submitted by
RVUN which substantiates that such obligation is in discharge of any
statutory responsibility. The Commission has accordingly provisionally
disallowed such expenses. RVUN is directed to submit necessary
documents to support its claim for allowing such expenses under the
capital cost with the petition for final determination of capital cost of the
project along with the actual expenses incurred by RVUN. RVUN should
also submit the copy of policy framed by it in this regard and clarify
whether such policy has been framed under any statutory obligation.
4.77 The Commission has provisionally considered Rs. 243.20 Crore towards
overhead which is within the acceptable range of 3%-5% of capital cost.
Further, the Commission has allocated the cost on Unit-1 in the same
proportion as allocated by the Petitioner which works out to be Rs. 121.60
Crore. The Petitioner has however submitted that the actual cost incurred
as on COD of Unit -1 is Rs. 64.17 Crore. The Commission has provisionally
allowed minimum of cost allocated to the Unit and the actual cost
incurred on the Unit. The Commission has accordingly considered the cost
of Rs. 64.17 Crore for Unit-1 towards such works.
Sale of Infirm power:
4.78 The Regulation No. 44 (2) of the “RERC Tariff Regulations, 2014” provides
as under:
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RERC/462/14
“ The Charges for sale of infirm power from the thermal power generating
station to the distribution licensee shall be based on the actual fuel cost,
including the stone cost, as the case may be, incurred during that period:
Provided that any revenue other than the recovery of fuel cost earned by the
generating company from sale of infirm power shall be taken for reduction in
capital cost and shall not be treated as revenue.”
4.79 The Petitioner is directed to furnish the details of the actual revenue
realized from sale of infirm power vis-à-vis actual fuel cost incurred on the
generation of infirm power along with the treatment in the books of
accounts in the petition for true up for tariff of KaTPP Unit-1 for FY 2014-15.
Total Hard Cost:
4.80 Based on the above discussions, the Commission provisionally approves
the estimated total hard cost for the project and the hard cost as on
COD of Unit -1 which is as shown in the table below:Table 5: Hard Cost of KaTPP Project and Unit -1 as on COD of Unit -1 (Rs Crore)
Particulars
Land and Site
Development
Access
Temporary
Construction and
Enabling Works
Water
Storage
System
Water
Transportation
System
Railway Siding
EPC Contractor
Other Works &
Third
Party
Inspection
Overheads
(including
CSR
activities)
Total Hard Cost
Page 48 of 70
Total
Total Hard
Unit-1
Hard
Provisionally
Hard Cost Cost of the
Hard Cost
Cost
Approved
of project
project
(Allocated Claimed
Hard Cost
as
Provisionally
Cost)
as on
as on COD
submitted
approved
COD of
of Unit-1
by RVUN
by the
Unit-1
Commission
A
B
C
D
Min(C,D)
18.47
11.40
14.78
9.12
7.39
4.56
8.54
0.61
7.39
0.61
4.75
3.80
1.90
2.22
1.90
799
639.20
319.60
308.42
308.42
86
243.69
5391
75.00
194.95
5216.00
37.50
97.48
3149.86
41.75
70.44
3111.12
37.50
70.44
3111.12
156
124.80
62.40
42.8
42.80
267.2
6977.51
243.20
6520.85
121.60
3802.28
64.17
3650.07
64.17
3644.35
RERC/462/14
Source of Funding:4.81 The Petitioner has furnished the details / information regarding source of
funding for total estimated cost of Rs.9479.51 Crore, as detailed here
under:1. DEBT
a)Loan from PFC
6583.61 Crore
b) Bonds
1000.00 Crore
Total
7583.61 Crore
2. Equity from State Govt.
1896.00 Crore
4.82 The ratio of source of funding between Debt & Equity works out to be
80:20. The Commission hereby provisionally approves the Debt: Equity
ratio for arriving at the amount of debt & equity for provisional capital
cost and tariff of Unit-1 for FY 2014-15. The State Govt., while according
approval for the increase in the cost estimate from Rs. 7783 Crore to Rs.
9479.51 Crore has put a condition that the additional equity will be
provided by the State Govt. taking into consideration the actual cost of
the project to be determined by the RERC. The Commission directs the
Petitioner to submit the details about receipt of actual debt and actual
equity along with all supporting documents in the Petition for approval of
tariff based on actual audited cost as on COD of the Project.
IDC and Financing Charges
4.83 The Petitioner in its Petition has submitted that in the original cost
estimates, there was a provision of Rs. 600.80 Crore on account of IDC
and financing charges. However, the same was revised to Rs 907 Crore
by the Board of Directors in its meeting dated 04.05.2011. The Petitioner
has further increased the estimated expenditure on account of IDC and
financing charges as Rs 2502 Crore in the revised project cost estimates of
Rs.9479.51 Crore.
4.84 As discussed earlier, the Commission asked the Petitioner to submit the
detailed package wise reasons for delay of around 31 months in
achieving COD of Unit-1. Based on the response submitted by the
Petitioner, the Commission has already concluded that the reasons
submitted by the Petitioner are a mix of controllable and uncontrollable
factors.
Page 49 of 70
RERC/462/14
4.85 As per Hon’ble APTEL’s Judgment, excess IDC and overhead costs for
time overrun from scheduled date of commissioning to actual date of
commissioning has to be worked out on prorate basis with respect to total
actual time taken in commissioning of the unit.
4.86 To determine the excess IDC, the Commission asked the Petitioner to
submit the quarter wise actual phasing of expenditure along with the
funding of such expenditure. The Petitioner in response submitted the
quarter wise actual drawal of loan and yearly equity infused in the
project. The Petitioner however did not submit the actual quarter wise
phasing of expenditure and equity infusion. The Commission has derived
quarter wise equity infusion from the annual equity infused in the ratio of
quarterly debt drawal during the year.
4.87 The Commission has assumed the phasing of expenditure as the sum of
quarter wise loan drawals and equity infused as derived above.
4.88 Hon’ble APTEL has ruled the treatment of extra IDC on account of the
delay under three scenarios. In such a case, the extra IDC needs to be
computed considering the impact of the delay in the commissioning of
the Project only (i.e., period of construction under Base Case and in the
actual Case).
4.89 The Commission observes that the purpose of Base Case IDC is to
determine the impact of time overrun on IDC, i.e., to determine the
difference in IDC had the Project had been completed in the stipulated
time, and the actual IDC incurred for the actual time taken for
completion.
4.90 Hence, the Commission has re-computed the Base Case IDC considering
the approved Hard Cost as on COD. As regards the Debt Equity ratio for
computation of Base Case IDC, the Commission has considered 80:20 as
approved by GoR, while according approval to the Project. The
Commission has considered the actual interest rates and proportion of
loan amount drawn as submitted by the Petitioner.
4.91 As regards the delay in the Project due to which the actual IDC has
increased, the Commission has already concluded that the delay was on
account of mix of both controllable and uncontrollable factors and
Page 50 of 70
RERC/462/14
therefore the Commission is of the view that the present case falls under
the category (iii) described in the Hon’ble APTEL’s ruling.
4.92 As there is no enhancement in cost of the contract price of the
equipment since no price variation escalation was permissible, the
impact of time overrun beyond the contractual schedule is only on IDC,
FERV and Taxes & Duties on Offshore supplies.
4.93 Hon’ble APTEL in its Judgment has also ruled that Liquidated Damages
(LD) amount should also be shared equally among the generating
company and the consumer. RVUN further submitted that as of now LD
amounts have not been finalised and the total provisional amount
retained against LD is Rs 158.76 Crore (Rs.109 Crore in INR and 1.07 Crore
USD @ Rs.46/- per USD.). The Commission has provisionally considered the
50% of the provisionally retained LD amount to be reduced in provisional
cost estimate and 50% of the LD amount to be retained by the Petitioner
and has worked out financing charges at 1% of the loan amount. The
Commission directs the Petitioner to get the LD amount finalised with the
approval of the competent authority and submit the same along with the
Petition for determination of the final capital cost based on the actual
audited accounts as on COD of Project.
4.94 In light of the foregoing, the Commission allows the cost of time overrun to
be shared equally between the Petitioner and the consumers. The
Commission provisionally approves total IDC and financing charges as on
COD of the Project, as per details given in Table below:Table 6: IDC and Financing Charges provisionally approved (Rs Crore)
Particulars
Actual/Estimated IDC
Base Case IDC
Excess IDC
Excess IDC to be allowed
Total IDC to be allowed
LD Amount retained to be
considered
Total IDC to be allowed
Financing Charges to be allowed
Total IDC and Financing Charges to
be allowed provisionally
Page 51 of 70
A
B
C=A-B
D = 50% of
C
E = B +D
F
G = E-F
H
I=G+H
Amount
2445.00
869.48
1576.42
788.21
1656.79
79.38
1577.41
57.00
1634.41
RERC/462/14
4.95 The Commission has further provisionally allocated IDC and financing
charges Rs. 857.72 Crore to Unit -1 in the proportion of total hard cost
considered by the Commission for Unit-1 with respect to total hard cost
and duly adjusting the same of Unit-1 COD achieved much before Unit - 2
COD.
4.96 The Commission however directs that in order to assess the actual base
case IDC, and cost of time overrun on IDC, the Petitioner should submit
the following information along with the Petition for final determination of
capital cost.
1) Actual quarter wise phasing of capital expenditure incurred till COD of
the Complete Project
2) Actual quarter wise funding of capital expenditure incurred till COD of
the Complete Project. The Petitioner should submit the desired
information separately for debt funding and equity infused.
3) Detailed computations of revised estimated IDC of Rs 850 Crore with
phasing of expenditure.
4.97 The Commission accordingly provisionally approves the following capital
cost of the project and Capital Cost as on COD of Unit-1.
Table 7: Provisionally Approved Capital Cost for the Project and as on
COD of Unit-1(Rs Crore)
Particular
s
Hard
Cost
IDC and
Financing
Charges
Total Cost
Total
Project
Cost
as
submitted
by RVUN
6977.51
2502.00
9479.51
Total
Project
Cost
Unit-1
Provisionally
(Allocated
approved by the Cost)
Commission
6520.85
3802.28
1634.41
8155.26
857.72
4660.00
Cost
Claimed
as
on
COD
of
Unit-1
3650.07
Provisionally
Approved
Cost as on
COD of Unit1
3644.35
1432.82
857.72
5082.89
4502.07
4.98 The Commission has further allocated the total cost of Unit-1 as
provisionally approved to class wise assets for the purpose of computing
depreciation in the proportion of asset class wise cost as percentage of
total cost submitted by the Petitioner. Accordingly, the asset class wise
Capital Cost provisionally considered by the Commission is given in Table
below:
Page 52 of 70
RERC/462/14
Table 8: Asset wise Break up Capital Cost of KaTPP Unit-1 as on COD of
Unit-1(Rs. Crore)
Particulars
Claimed
Land and Rights
Building and Civil Works
Hydraulic Works
Other Civil Works
Plant and Machinery
Lines and Cable Network
Vehicles
Furniture and Fixtures
Office Equipment
Capital Spares
Total Cost Capitalised
10.39
763.93
83.25
565.33
3644.43
4.32
0.10
0.68
0.12
10.33
5082.89
Provisionally
Approved
9.20
676.64
73.74
500.73
3227.98
3.83
0.09
0.60
0.10
9.15
4502.07
4.99 The Commission also directs the Petitioner to clarify the admissibility of
“Mega power project Status” for availing the benefit of exemption in
Excise duty & Custom Duty as per Mega power policy of the Ministry of
Power, Govt. of India along with efforts made by the Petitioner for
obtaining the same. The Petitioner should also furnish the photo copies of
the relevant correspondence.
4.100
The Commission also directs the Petitioner to submit the comparison of
the
total and package wise capital cost with the similar size projects
executed by other Generating Companies in the country in support of
the capital cost claimed by the Petitioner.
Page 53 of 70
RERC/462/14
SECTION 5
Determination of ARR and provisional Tariff for FY 2014-15 (From the COD to
31.03.15) in respect of Unit-1 of KaTPP-(2x600MW)
Annual Fixed Charges:5.1 Regulation 43(3) of RERC Tariff Regulations, 2014 stipulates that the Annual
Fixed Charges comprise of the following elements:
(i) Operation and Maintenance (O&M) Expenses
(ii) Interest on Term Loans and Finance Charges
(iii) Depreciation
(iv) Interest on Working Capital (IoWC)
(v) Return on Equity
(vi) Less: Non-tariff Income
5.2 As already discussed, the Petitioner filed additional submissions dated
10.10.2014 claiming RoE and Tax thereon. The Petitioner further revised its
claims against Interest and finance charges, Depreciation, Interest on
Working capital, Insurance charges and accordingly revised its claim for
ARR for FY 2014-15.
5.3 Each of these elements has been dealt with in the following paragraphs.
Operation and Maintenance Expenses
Petitioner’s Submission
5.4 RVUN submitted that the Operation & Maintenance Expenses for FY 201415 have been computed on the basis of norms prescribed under
Regulation 47 of RERC Tariff Regulations, 2014.
5.5 Accordingly, RVUN has claimed the O&M Expenses of Rs. 78.31 Crore for
FY 2014-15 i.e. from COD to 31.03.2015 (329 days)
Commission’s Analysis
5.6 The Commission has verified RVUN’s computations of O&M expenses and
found the same to be in accordance with the norms prescribed under
Regulation 47 of RERC Tariff Regulations, 2014 and accordingly, same has
been approved by the Commission.
5.7 The O&M expenses as approved by the Commission for FY 2014-15 have
been provided in the table below:
Page 54 of 70
RERC/462/14
Table 9: O&M Expenses Approved for FY 2014-15 (Rs. Crore)
Particular
Operation & Maintenance Expenses
As claimed in
Petition
78.31
Provisionally approved
by the Commission
78.31
Interest on Term Loans & Finance Charges
Petitioner’s Submission
5.8 RVUN in its petition for ARR and provisional Tariff for FY 2014-15 (329 days)
has estimated interest on term loans and finance charges of Rs. 506.27
Crore. RVUN however, in its additional submission dated 10.10.2014
revised its claim as Rs 468.71 Crore.
Commission’s Analysis:
5.9
RVUN in its petition has submitted the computation of interest on term
loans for FY 2014-15 considering the average rate of interest. As per
Regulation 21 (5) of RERC Tariff Regulations, 2014, the rate of interest to be
considered is weighted average rate of interest calculated on the basis
of the actual loan portfolio at the beginning of each year for the
generating
company.
In
accordance
with
this
Regulation,
the
Commission vide its data gaps asked RVUN to submit the details of the
actual loan and rate of interest thereon with the supporting computations
/ documents
5.10 The Commission observed that RVUN has not submitted the details of
actual interest on term loans and computations of weighted average
rate of interest for FY 2014-15. The Petitioner while computing the charges
for Interest on term loans, has considered the rate of interest @ 13% P.A.
The Commission, for computing interest on Term loans has provisionally
considered the rate of interest @ 13% P.A., as claimed by the Petitioner.
The Commission will consider the weighted average rate of interest
calculated on the basis of the actual loan portfolio at the beginning of FY
2014-15 while carrying out the truing up for FY 2014-15.
5.11 The interest charges on term loans approved by the Commission for FY
2014-15 have been provided in the table below.
Page 55 of 70
RERC/462/14
Table 10: Interest on Term Loans and Finance Charges as approved by the
Commission for FY 2014-15 (Rs. Crore)
Particular
As claimed in
Petition
Interest on term Loans and Finance Charges
468.71
Provisionally
approved by the
Commission
415.72
Depreciation
Petitioner’s Submission
5.12 RVUN submitted that the depreciation for FY 2014-15 has been computed
on the basis of norms prescribed under Regulation 22 of RERC Tariff
Regulations, 2014.
5.13 RVUN in its Petition has computed depreciation of Rs. 247.29 Crore on the
basis of the Capital Cost as on COD, i.e. on May 07, 2014. RVUN, however,
in its additional submission dated 10.10.2014 revised its claim as Rs. 217.97
Crore.
Commission’s Analysis
5.14 The Commission, for computing depreciation has considered provisionally
approved capital cost of Unit -1. The Commission has considered asset
class wise rates of depreciation in accordance with the RERC Tariff
Regulations, 2014.
5.15 Accordingly, the depreciation approved by the Commission for FY 201415 is as shown in the Table below:
Table 11: Depreciation approved for FY 2014-15 (Rs. Crore)
Particular
Depreciation
As
claimed
Petition
217.97
in
Provisionally approved by
the Commission
193.06
Interest on Working Capital
Petitioner’s Submission
5.16 RVUN submitted that the requirement for working capital loan has been
computed as per norms prescribed under Regulation 27 of RERC Tariff
Regulations, 2014 and the rate of interest on Working Capital Loan has
been taken equal to 250 basis points higher than the average Base Rate
of State Bank of India prevalent during first six months of the previous year.
Page 56 of 70
RERC/462/14
5.17 Accordingly, the Petitioner has claimed the interest on working capital
loans as Rs. 37.33 Crore for FY 2014-15 (329 days). RVUN however, in its
additional submission dated 10.10.2014 revised its claim as Rs. 39.37 Crore.
Further, RVUN subsequently revised the fuel cost and GCV which has
resulted in increase in Interest on Working Capital to Rs. 43.49 Crore.
Commission’s Analysis
5.18 Regulation 27(2) of the RERC Tariff Regulations, 2014 specify that the rate
of interest on working capital to be computed shall be on normative basis
and shall be 250 basis points higher from SBI base rate prevalent during
first six months of the year previous to the relevant year. Accordingly, for
working out interest on working capital, weighted rate of interest has
been considered as per rates during the first six months of the previous
year. The same works out to 12.20% p.a. which has been used for
calculating interest on working capital.
5.19 Further, the Commission has worked out the working capital requirement
in accordance with Regulation 27 of the RERC Tariff Regulations, 2014. The
interest on working capital as approved by the Commission for FY 2014-15
(329 days) has been provided in the table below.
Table 12: Interest on Working Capital approved for FY 2014-15 (Rs. Crore)
Particular
Interest on Working Capital
As
claimed
Petition
43.49
in
Provisionally approved by
the Commission
39.10
Recovery of ARR & Tariff Petition Fees
Petitioner’s Submission
5.20 The Commission vide Order dated March 10, 2008 had allowed to pass
through the fees levied for filing up of ARR & Tariff Petition, as expenses in
the ARR. Accordingly, RVUN has claimed the fee of Rs. 0.30 Crore for FY
2014-15.
Commission’s Analysis:
5.21 The Commission has approved the recovery of ARR and Tariff Petition fees
as claimed by RVUN for FY 2014-15, as shown in Table below:
Page 57 of 70
RERC/462/14
Table 13: Recovery of ARR & Tariff Petition Fees approved for FY 2014-15 (Rs.
Crore)
Particular
As claimed in
Petition
Provisionally approved
by the Commission
Recovery of ARR & Tariff Petition Fees
0.30
0.30
Corporate Social Responsibility (CSR) Activity
Petitioner’s Submission
5.22 The Corporate Social Responsibility Policy of RVUN was approved by State
Government vide Energy Department letter No. F.16 (4) Energy/2009
dated 20.5.2011. In this regard, RVUN has estimated an amount of Rs. 0.20
Crore (0.25% of O&M expenses) for KaTPP Unit -1 for FY 2014-15.
Commission’s Analysis
5.23 The Commission is of the view that the CSR activities are an initiative of
RVUN and have to be carried out from their internal funds and cannot be
allowed to be passed in tariff. In this regard, the Commission vide its Order
dated 06.06.2013 for determination of ARR and Tariff for RVUN for FY 201213 had observed as under:
“Commission’s Analysis:
8.29 CSR activities are an initiative of RVUN and have to be carried out
from their internal funds and cannot be allowed to be passed
through ARR.”
5.24 The Commission observes that the Hon’ble APTEL in its Judgment dated
28.11.2013 in the matter of APPEAL No. 104, 105 and 106 of 2012 in the
case of the Tata Power Company Limited (Generation, Transmission and
Distribution) and Maharashtra Electricity Regulatory State Commission has
also observed that Corporate Social Responsibility is the responsibility of
the company. The relevant extract of the Judgment is reproduced below:
“63. In reply to above submissions, the learned Counsel for the State
Commission submits the following:
(a) The expenses towards community welfare/Corporate Social
Responsibility (CSR) cannot be passed on to the consumers, since it
is the social obligation of the corporate entity and the same
cannot be passed on to the consumers. The Appellant is free to
undertake such activities by funding the same from its returns,
based on how it desires to utilize its profits/returns from the business.
...
(c) The State Commission has never discussed CSR expenses as part of
A&G expenses in its previous Orders and has never knowingly
Page 58 of 70
RERC/462/14
allowed this expense to be recovered as a part of the ARR. Merely
because the State Commission has not raised a query in this
regards, does not mean that the State Commission can never raise
queries in this regard and take a considered view on the matter in
future orders.
...
64. We have carefully considered the said submissions on the issue.
65. At the outset, it shall be mentioned that the Community Social
Responsibility is the responsibility of the Company. The contention of
the Appellant that the State Commission had approved these
expenses in the ARR petition and that therefore, it cannot change
during true up exercise is not tenable.
66. In fact, the State Commission is duty bound to apply prudency check
while truing up otherwise no purpose would be served in truing up.
67. On going through the impugned order on this point as well as the
submissions made by the learned Counsel for the State Commission,
it is clear that the conclusion on this point arrived at by the State
Commission is valid and the reasons for such conclusions are
justified.”
5.25 In view of the above discussions, the Commission has decided not to
allow any expenses on account of Corporate Social Responsibility for FY
2014-15.
Insurance Charges
Petitioner’s Submission
5.26 RVUN has claimed insurance charges as per norms defined under
Regulation 25 of RERC Tariff regulation 2014 which allows actual insurance
charges by the generating company, subject to a ceiling of 0.2% of
average Net Fixed Assets for the year. Accordingly, RVUN has claimed the
insurance charges of Rs. 10.86 Crore for FY 2014-15 for KaTPP Unit -1. RVUN
however, in its additional submission dated 10.10.2014 revised its claim as
Rs. 9.95 Crore.
Commission’s Analysis
5.27 Regulation 25 of RERC Tariff Regulations, 2014 stipulates as follows.
“Actual insurance expenses incurred by the generating company or
licensee shall be allowed separately, subject to a ceiling of 0.2% of average
Net Fixed Assets for the year.”
5.28 The Commission accordingly asked Petitioner the actual amount paid
towards insurance charges. The Petitioner in its response submitted that it
has not actually incurred such expenses however it has made a provision
against insurance charges. Since as per regulation only actual expense is
admissible hence the Commission has not considered the same. The
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RERC/462/14
Commission will consider the actual insurance charges (if any) while
carrying out the truing up for FY 2014-15.
Return on Equity (RoE)
Petitioner’s Submission
5.29 RVUN vide its additional submission dated 10.10.2014 submitted that RVUN
has decided to claim ROE at the rate of 15.50% in accordance with RERC
Tariff Regulations, 2014. RVUN has accordingly claimed an amount of Rs.
157.57 Crore on account of RoE.
5.30 The Petitioner has also submitted that it had earlier not claimed any RoE
as there were no directions from the State Government in this regard and
since GoR has now issued a letter dated 14.08.2014 for implementation of
the modified budget announcements for FY 2014-15, it is claiming RoE @
15.50%.
Commission’s Analysis
5.31 The Commission observes that the Petitioner has claimed RoE for the
entire year as against 329 days of operation. The Commission further
observes that subsequent to the letter dated 14.08.2014, GoR issued
another letter dated 18.03.2015 to RVUN. In this letter, GoR with reference
to Budget announcement no. 32 of modified budget of FY 2014-15,
directed RVUN to claim RoE @ 5% in FY 2015-16, 10% in FY 2016-17 and
15.50% in FY 2017-18 without mentioning any RoE to be claimed for FY
2014-15.
5.32 The Commission is, therefore, of the view that the basis on which RVUN
has claimed RoE has now been modified by the GoR and therefore, the
Commission has not considered any RoE for FY 2014-15.
Tax on Return on Equity
Petitioner’s Submission
5.33 RVUN has claimed the tax on RoE of Rs. 41.78 Crore for FY 2014-15. RVUN
has however not submitted the basis for computation Tax on RoE.
Commission’s Analysis
5.34 As discussed above, the Commission is not allowing any RoE for FY 201415 and therefore no tax on RoE is being allowed for FY 2014-15.
Page 60 of 70
RERC/462/14
Non-Tariff Income
Petitioner’s submission
5.35 RVUN submitted that the main heads of accounts of “Non-Tariff Income”
are Sale of scrap, Interest on FD/Staff loans and Miscellaneous Receipts
(rebates), etc. Accordingly, RVUN has estimated the “Non-Tariff Income”
of Rs. 2.10 Crore for the Period FY-2014-15 (329 days).
Commission’s Analysis
5.36 The
Commission
vide
its
data
gaps
letter
no.
RVUN/CE
(PPMC&IT.)/F.D.1462 DATED 29.9.2014 asked RVUN to submit the detailed
break-up of the ”Non-Tariff Income”, as claimed in the ARR and Tariff
petition for FY 2014-15. The Commission has examined RVUN’s submission
and has approved provisionally the same for computing the Annual Fixed
Charges for FY 2014-15 as shown in the table below:
Table 14: Non-Tariff Income approved for FY 2014-15 (Rs. Crore)
Particular
Non-Tariff Income
As claimed in
Petition
2.10
Provisionally approved by
the Commission
2.10
Provisional Annual Fixed Charges for FY 2014-15
5.37 Based on the above analysis, the provisionally approved Fixed Charges of
the Kalisindh Thermal Power Station-Unit -1 (600 MW) for FY 2014-15 (329
days) allowed are as under:
Table 15: Provisional Annual Fixed Charges for FY 2014-15 for 329 days
(Rs. Crore)
KaTPP Unit1 (600 MW)
As per Petition
Provisionally
approved by the
Commission
Depreciation
217.97
193.06
Interest on term Loans and Finance Charges
468.71
415.72
Interest on Working Capital
43.49*
39.10
Operation & Maintenance Expenses
78.31
78.31
RoE
157.57
0.00
Tax on RoE
41.78
0.00
Recovery of ARR & Tariff Petition Fees
0.30
0.30
Particulars
Page 61 of 70
RERC/462/14
KaTPP Unit1 (600 MW)
As per Petition
Provisionally
approved by the
Commission
Corporate Social Responsibility Activity
0.20
0.00
Insurance Expenses
9.95
0.00
Gross Fixed Charges
1018.28
726.50
2.10
2.10
1016.18
724.40
Particulars
Less: Non-Tariff Income
Net Fixed Cost (i.e. Capacity Charges)
*Based on revised fuel cost submitted by RVUN
Determination of provisional Variable Charges for FY 2014-15
Petitioner’s submission
5.38 RVUN has considered SHR of Unit-1 as 2320.63 kCal/kWh. The PLF and
Auxiliary
consumption
has
been
considered
as
83%
and
5.25%
respectively. RVUN further submitted that the coal for Unit -1 is being
procured from Parsa East and Kante Basan coal blocks through a Joint
Venture company of RVUN and M/S Adani Enterprises Ltd. Ministry of coal
vide letter dated 19/25.06.2007 has allocated Parsa East and Kente Basan
coal blocks to RVUN under Govt. Company dispensation route for
Kalisindh phase-I (Unit-1&2) and CTPP- Stage-1- Phase-2 (2x250MW).
5.39 RVUN submitted that the State Government vide Letter dated 23.10.2006
issued “No objection certificate” for issuance of Letter of Intent (LOI) to
the selected Joint Venture Partner for Mining of coal and supply of coal
to above mentioned power stations of the Petitioner. Further, RVUNL has
signed “Coal Mining and Delivery Agreement (CMDA) on July 16, 2008
and amendment dated September 22, 2010 with Parsa Kente Collieries
Limited (PKCL).
5.40 Further, RVUN has considered the GCV of 10000.00 kCal/litre for HFO and
10000.00 kCal/litre for LDO. It has considered the prices of oil as Rs.
47091/kL for HFO and Rs. 67254/KL for LDO for FY 2014-15.
5.41 RVUN further submitted that any variation in the cost of generation due to
change of Qty. /quality of coal will be adjusted as per ”Fuel Price
Adjustment” clause, prescribed by the Commission in the regulations. In
case of any variation in price before the finalization of tariff order, RVUN
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RERC/462/14
has requested the Commission to consider the change in tariff
accordingly.
5.42 Further, RVUN in its Petition has considered average GCV and price of
domestic coal as per agreement i.e. 4500 kCal/kg and Rs. 3384.56/MT
respectively.
Commission’s Analysis
5.43 The Commission has approved Variable Charges for the FY 2014-15 on the
basis of following.
(a) The Commission has considered PLF of 83% as per the RERC Tariff
Regulations, 2014.
(b) The Commission with regards to Station Heat Rate (SHR) asked the
Petitioner to submit the basis of the SHR claimed by the Petitioner. The
Petitioner submitted the Guaranteed Design Heat Rate for the station
as 2220.7 kCal/kWh and also provided necessary documents to
substantiate the Guaranteed Design Heat Rate claimed by it. The
Commission has considered the Guaranteed Design Heat Rate as
claimed by the Petitioner and in accordance with RERC Tariff
Regulations, 2014, has considered 4.50% over and above Guaranteed
Design Heat Rate as the SHR, which works out to be 2320.63 kCal/kWh.
(c) With regard to Auxiliary Consumption, the Petitioner has claimed the
same @ 5.25% of the gross generation, which is in accordance with
the RERC Tariff Regulations, 2014. Further the Petitioner has claimed
secondary fuel oil consumption as 0.50 ml/kWh which is also in
accordance with the regulations.
(d) With regards to cost of coal to be considered, Regulation 11(8) of the
RERC Tariff Regulations, 2014 stipulates as follows:
“a) Any person who owns or is allotted captive mine or is given land use
rights for mining for fuel supply to thermal power plant, may petition to
the Commission for determination of fuel transfer price at mine mouth if it
is not determinable by the Government or Government approved
mechanism or by fuel regulator. The petition shall contain salient features
of the project along with approved mining plan and other requisite
information e.g. annual mining capacity, mine reserve, period of
availability of fuel, washing/ beneficiation plan, financial package,
performance parameters, reference price levels, amortization of initial
costs, etc.”
Page 63 of 70
RERC/462/14
(e) With regards to coal cost submitted as Rs 3384.56/MT, various
stakeholders have raised issues regarding mechanism for approval of
coal price.
(f) RVUN was asked to submit the mechanism adopted by it for
determination of price of coal. In response RVUN submitted that the
mechanism followed for discovery of price of coal was approved by
the Government of Rajasthan. RVUN further submitted that Expression
of Interest was invited through wide publicity by publishing the notice
in the newspapers for selection of JV partner for captive coal mining
for Parsa East and Kante Basan coal blocks, in response to which 13
bidders submitted their bids. On the basis of technical qualification
and price bids M/s Sun Flag Iron and Steel Company was selected as
the successful bidder. RVUN further submitted that the selected bidder
did not take up the work and hence its EMD of Rs 1 Crore was
forfeited.
(g) RVUN further submitted that Sub-Committee on Project Purchases of
RVUN, in its meeting dated 20.12.2005, recommended to invite fresh
open tenders for selection of JV partner. RVUN further submitted that
three participants submitted their offers and based on their technical
capability and financial bids M/s Adani Exports Ltd. (Subsequently
name changed to Adani Enterprises Ltd.) was adjudged as successful
bidder.
(h) RVUN submitted that Board of Directors of RVUN before issuing Letter
of Award to the successful bidder decided to refer the case to Govt.
of Rajasthan for seeking their ‘No objection’. Accordingly, the CMD of
RVUN vide his letter dated 18.10.2006 sought approval / No objection
from Government of Rajasthan, wherein the whole case including
quoted price was apprised in detail. RVUN submitted the copy of the
letter along with its submissions. RVUN further submitted that the
Secretary(Energy), Govt. of Rajasthan vide his letter dated 23.10.2006
conveyed ‘No objection’ of the Govt. of Rajasthan for issuance of LoI
to the selected JV Partner for captive coal mining for Parsa East and
Kante Basan coal blocks. RVUN submitted a copy of the letter with its
response. RVUN submitted that accordingly letter of intent dated
23.10.2006 was issued to M/s Adani Exports Limited. Subsequently, the
Joint Venture Company M/s Parsa Kente Collieries Limited has been
Page 64 of 70
RERC/462/14
formed to undertake the work of mining for the said coal blocks and
arranging for transportation and delivery of coal to RVUN’s thermal
power stations.
(i) The Petitioner has also submitted a copy of Coal Mining and Delivery
Agreement executed on 16th July 2008 between RVUN and Parsa
Kente Collieries Limited. The Commission observed that as per the
provisions of Coal Mining and Delivery Agreement, the base prices of
coal for grades A to C is specified as certain percentage to the SECL
notified price. For other coal grades, the base price is specified in the
agreement and the agreement specifies the ceiling price linked to
the published price of pithead F Grade coal. The agreement also
provides that the price of coal shall always be lower than the relevant
CIL price and at no stage the same shall exceed the relevant CIL
price.
(j) The Commission has gone through the submission of RVUN and various
correspondences in this regard including the Coal Mining and Delivery
Agreement and is of the view that the price of coal in the said case
has been determined through competitive bidding in accordance
with government approved mechanism and the mechanism of coal
price has been approved by the Government. The Commission is
therefore of the view that the coal price as per the provisions of Coal
Mining and Delivery Agreement can be considered as price
determined through Government approved mechanism and there is
no need for the Petitioner to file a separate Petition with the
Commission for the transfer price of coal. The Commission has
accordingly considered the coal price as per the provisions of Coal
Mining and Delivery Agreement.
(k) RVUN was further asked to submit the basis of the cost of coal
submitted along with the component wise computation / justification
as per the Coal Mining and Delivery Agreement. The Petitioner in its
response dated 19.02.2015 submitted the cost of coal on the basis of
the coal received in the month of May and June 2014 as Rs. 3578/MT
with GCV as 4500 kCal/kg (ADB basis). The Petitioner however in its
reply dated 24.04.2015 submitted that the GCV of 4500 kCal/kg as
provided earlier was on ADB basis and the actual average GCV for
the period April 2014 to January 2015 is 4358 kCal/kWh on as received
basis. RVUN further submitted that the price of coal that was earlier
Page 65 of 70
RERC/462/14
submitted as Rs 3584/MT for the month of May 2014 didn’t include
some expenses that were due to be paid and submitted revised
format F5.1 for the month of October 2014 to December 2014 stating
that the cost of coal for the month of October was Rs. 3949.66/kg. The
cost of coal and consumption as submitted by RVUN is as shown in
the table below.
Table 16: Cost and Consumption of Coal as submitted by RVUN
Particulars
Units
Quantity
of
Coal
Consumed
MT
Landed Cost of Coal
Rs./MT
Oct-14
1,07,576.40
3,949.66
Nov-14
2,11,277.42
4,011.25
Dec-14
1,54,034.49
4,032.64
(l) The Commission at this stage has provisionally considered the
weighted average cost of coal for the month of October to
December 2014 as submitted by the Petitioner which works out to be
Rs. 4004.21/MT. The Commission directs the Petitioner to submit the
actual coal price in accordance with the provisions of Coal Mining
and Delivery Agreement at the time of truing up along with the
detailed justification of the component wise actual coal price
claimed vis-à-vis the provisions of the CMDA. The Commission shall
carry out the final prudence check of the individual component wise
coal cost while determining the final tariff of both the Units of KaTPP.
(m) As regard the GCV, the Commission has provisionally considered the
GCV as submitted by RVUN.
5.44 The variable charges provisionally determined by the Commission for FY
2014-15 are as under:
Table 17: Provisionally Approved Variable Charges for FY 2014-15 (Rs. Crore)
Particulars
Unit
Installed Capacity
Availability
Plant Load Factor
Gross Generation
Auxiliary Consumption
Auxiliary Consumption
Net Generation
MW
%
%
MU
%
MU
MU
Page 66 of 70
KaTPP-Unit-1 (600 MW)
RVUN(Based on
Revised
Provisionally
Submissions)
Allowed
600
600
83%
83%
83%
83%
3932.21
3932.21
5.25%
5.25%
206.44
206.44
3725.77
3725.77
RERC/462/14
Particulars
Unit
Station Heat Rate
Gross Calorific Value
Fuel - (Indigenous Coal)
Fuel 2 (HFO)
Fuel 3 (LDO)
Specific Fuel Consumption
Fuel - (Indigenous Coal)
Fuel 2 (HFO)
Fuel 3 (LDO)
Landed Fuel Price per unit
Fuel - (Indigenous Coal)
Fuel 2 (HFO)
Fuel 3 (LDO)
Total Fuel Cost
Fuel - (Indigenous Coal)
Fuel 2 (HFO)
Fuel 3 (LDO)
Total Cost
Cost of Generation per Unit Energy Charge per Unit (ex-bus)
kCal/kWh
KaTPP-Unit-1 (600 MW)
RVUN(Based on
Revised
Provisionally
Submissions)
Allowed
2320.632
2320.632
kCal/Kg
kCal/Ltr.
kCal/Ltr.
4358.00
10000.00
10000.00
4358.00
10000.00
10000.00
Kg/kWh
ml/kWh
ml/kWh
0.53
0.45
0.05
0.53
0.45
0.05
4004.21
47091.00
67254.00
4004.21
47091.00
67254.00
836.63
8.33
1.32
846.29
2.152
2.271
836.63
8.33
1.32
846.29
2.152
2.271
Rs/MT
Rs/KL
Rs/KL
Rs Crore
Rs Crore
Rs Crore
Rs Crore
Rs/Unit
Rs/Unit
5.45 The Commission accordingly provisionally approves the tariff for FY 201415 for Unit-1 as follows.
Table 18: Tariff for FY 2014-15 (Rs. Crore)
Particulars
Fixed Charges (for 329 days) – Rs Crore
Fixed Charge – Rs/kWh (Energy Sent out)
Variable Charge – Rs/kWh (Energy Sent
out)
Total Tariff – Rs/kWh (Energy Sent Out)
As claimed by
the Petitioner
1012.06
2.727
2.271
Provisionally
Approved
724.40
1.944
2.271
4.999
4.216
5.46 The copy of this Order may be sent to the Petitioner, Respondents,
Objectors, CEA and Government of Rajasthan.
(Raghuvendra Singh)
Member (T)
Page 67 of 70
(Vinod Pandya)
Member (F)
(Vishvanath Hiremath)
Chairman
RERC/462/14
Annexure-1
ABBREVIATIONS
Act
APR
APTEL
ARR
BHEL
BoD
BoP
BTG
CEA
CMDA
COD
CSR
DPR
Discoms
EPC
ETC
FERV
FY
GCV
GFA
GoR
GT
HFO
IDC
KaTPP
kCal
kL
kW
kWh
LD
LDO
LOA
MOE&F
MoM
MT
MU
MW
MYT
O&M
PLF
PPA
PV
RERC
Page 68 of 70
Electricity Act, 2003
Annual Performance Review
Appellate Tribunal for Electricity
Aggregate Revenue Requirement
Bharat Heavy Electricals Ltd.
Board of Directors
Balance of Plant
Boiler, Turbine & Generator
Central Electricity Authority
Coal Mining and Development Agreement
Commercial Operation Date
Corporate Social Responsibility
Detailed Project Report
Distribution Companies
Engineering Procurement and Construction
Erection Testing & Commissioning
Foreign Exchange Rate Variation
Financial Year
Gross Calorific Value
Gross Fixed Assets
Government of Rajasthan
Generator Transformer
High Furnace Oil
Interest during Construction
Kalisindh Thermal Power Station
kilo calorie
kilo litre
kilo Watt
kilo Watt hour
Liquidated Damages
Light Diesel Oil
Letter of Award
Ministry of Environment, Forest and Climate Change
Minutes of Meeting
Metric Ton
Million Units
Mega Watt
Multi Year Tariff
Operation & Maintenance
Plant Load Factor
Power Purchase Agreement
Price Variation
Rajasthan Electricity Regulatory Commission
RERC/462/14
ROE
SBI
SCM
SECL
SHR
TPS
Page 69 of 70
Return on Equity
State Bank of India
Standard cubic meter
South Eastern CoalFields Limited
Station Heat Rate
Thermal Power Station
RERC/462/14
Annexure-2
Section/ Para/
Annexure
Particulars
Section 1
General
1
Section 2
Summary of filing, Annual Performance
Review and Tariff determination process
3
Section 3
Section 4
Section 5
Annexure 1
Annexure 2
Page 70 of 70
Summary of objections/ comments/
suggestions received from stakeholders
and RVUN’s response on the ARR and Tariff
Petition for FY 2014-15 and True up of ARR
for FY 2011-12
Capital Cost of Kalisindh Thermal Power
Station-Unit -1 (600 MW)
Determination of ARR and Tariff for KaTPP
Unit -1 (1x600 MW) for FY 2014-15 (329
days)
Abbreviations
Index
Page
No.
5
23
55
70
72
RERC/462/14