BEFORE THE ELECTRICITY REGULATORY COMMISSION GANDHINAGAR PetitionNo.1569 of 2016 In the matter of: Petition for determination of tariff under the provisions of Clause (a) of Sub- section (1) of Section 62 of the Electricity Act, 2003 with respect to renewable source of energy.

Petitioner: Ajanta Energy Private Limited OREVA House, Third Floor, Thaltej Circle, Titanium Square, S.G. Highway, Ahmedabad. Represented by: Advocate Shri Ashish Jha with Shri O. T. Gulati

V/s

Respondent No. 1: Limited Sardar Patel Vidyut Bhavan, Race Course, Vadodara 390 007 Represented by : Shri V. T. Patel and Shri H. H. Patel

Respondent No. 2 : Company Limited Sardar Patel Vidyut Bhavan, Race Course, Vadodara 390 007. Represented by: Nobody was present

Respondent No. 3 : Gujarat Energy Transmission Corporation Limited Sardar Patel Vidyut Bhavan, Race Course, Vadodara 390 007. Represented by : Nobody was present

Respondent No. 4 : Dakshin Gujarat Vij Company Limited Urja Sadan, Nana Varachha Road, Kapodara, Surat 395 006 Represented by: Nobody was present

Respondent No. 5 : Company Limited Visnagar Road, Mehsana-384 001 Represented by: Shri I. G. Katara

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Respondent No. 6 : Company Limited Off Nana Mava Main Road, Laxminagar, Rajkot 360 004. Represented by: Nobody was present

Respondent No. 7 : Limited-Surat Torrent House, Station Road, Surat 395 003. Represented by : Ms. Luna Pal

Respondent No. 8 : Torrent Power Limited Torrent House, Off. Ashram Road, Ahmedabad 380 009. Represented by : Ms. Luna Pal

Respondent No. 9 : Torrent Power Limited-Dahej At & Po. Dahej, Ta: Vagra, Bharuch 392 130. Represented by : Ms. Luna Pal

Respondent No. 10 : Energy & Petrochemical Department Block No. 5, 5th Floor, Sachivalaya, Gandhinagar. Represented by : Nobody was present

Respondent No. 11 : Irrigation Department, Govt. of Gujarat Block No. 9, Second Floor, New Sachivalaya, Sector 10, Gandhinagar. Represented by : Nobody was present

Respondent No. 12 : Kandla Port Trust Limited Port & Customs Building, New Kandla, Kutch. Represented by : Nobody was present

Respondent No. 13 : MPSEZ Utilities Private Limited Adani House, Nr. Mithakhali Circle Navrangpura, Ahmedabad 380 009. Represented by : Shri Gourav Sharma

Respondent No. 14 : Aspen Infrastructure Limited Piparia, Waghodia, Vadodara 391 760. Represented by : Nobody was present

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Respondent No. 15 : Jubilant Infrastructure Private Limited Plot No. 5, Vilayat GIDC, Vagra, Bharuch 390 012. Represented by : Nobody was present

Respondent No. 16 : Utility Users’ Welfare Association Laxmi Ginning Compound, Naroda, Ahmedabad – 382330. Represented by: Nobody was present

CORAM: Shri Anand Kumar, Chairman Shri K. M. Shringarpure, Member Shri P. J. Thakkar, Member

Date: 24/12/2019

ORDER

1. The present petition has been filed by the Petitioner seeking following reliefs:

(a) To admit the present Tariff Petition,

(b) Grant an opportunity of hearing,

(c) To determine the levelised tariff of Rs. 6.10 per unit for 35 years for sale of energy generated

from the Petitioner’s project to the Distribution Licensee of the Gujarat State,

(d) To decide and declare that the Petitioner’s mini/micro hydro power project is governed by

must run status and is exempted from merit order dispatch principle,

(e) To decide and declare that no Cross Subsidy Surcharge is payable on sale of power from the

Petitioner’s project,

(f) To decide and declare that the Petitioner shall pay concessional transmission and wheeling

charges and loss in case of utilization of energy generated from the project for self-

consumption or sell to the third party,

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(g) To decide and declare that if surplus energy available after set-off at consumption place in

case of self-consumption or third party sale, it is considered as deemed sale to the utility in

whose area such consumption took place and utility shall pay the tariff determined by the

Commission,

(h) To decide and declare that the Petitioner’s project is entitled for 12 months’ banking for

energy consumed by it under captive use,

(i) To decide and declare that the transmission licensee or distribution licensee may construct

the transmission/distribution network from the Petitioner’s project to evacuate the power

from the project and cost be borne by such licensee,

(j) To decide and declare that 100% carbon credit and all CDM benefit must be available to the

power producer and not shared with the utilities,

(k) To decide and declare that the utilities who are public entities may sign the Power Purchase

Agreement with the Petitioner and purchase the energy at the tariff determined by the

Commission,

(l) To decide and declare that the project developer/utilities have an option in the PPA to allow

the project developer/purchaser of such energy an option of purchase of power to sell the

power or self-consumption by the project developer on mutual terms agreed between the

parties,

(m) To decide and declare that an option is available to the Petitioner to sign the PPA with

distribution licensee for the time period desired by it and agreed by the utilities for the period

less than 35 years,

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(n) To decide and declare that the energy if any available after set-off and after banking period

at consumption place of the Petitioner or consumer purchasing power under third party sale

is eligible for tariff determined by the Commission in this petition,

(o) To decide and declare that no electricity duty and sales tax be imposed on the electricity

generated and consumption of electricity generated from the Petitioner’s hydropower plant,

(p) To grant any other relief as deemed fit in the interest of justice.

2. The facts narrated in the petition are as follows:

2.1. The Petitioner, incorporated on 21.02.2005, is a hydroelectric power generating company in

Gujarat. The Petitioner has commissioned 4 MW hydro projects - 3 MW at Karjan ,

Rajpipla and 1 MW at Wanakbori, Balasinor.

2.2. The Petitioner had submitted a Detailed Project Report for setting up 12 MW (3 × 4 MW)

hydro project at Dolatpura, downstream of Kadana Dam across River Mahi, Taluka- Kadana,

Dist. Mahisagar, Gujarat under Swiss Challenge Route under Section 10A of the Gujarat

Industrial Development Board Act, 1999. The Petitioner was selected as the successful bidder

in the competitive bidding carried out by the Irrigation Department, Government of Gujarat

and has been allocated the above project. The Petitioner has signed Concession Agreement

with Narmada Water Resources, Water Supply and Kalpsar Department on 16.03.2015 and as

per the said Agreement, the Petitioner is required to pay premium royalty of Rs. 0.91 per unit

to the Department for a period of 35 years.

2.3. As per the Clause 4.2.1 of the Concession Agreement, the Concessioner has right/obligation to

design, engineer, finance, procure, install, commission, operate and maintain the hydro power

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plant either on its own or by such person as may be selected by it. The overall responsibilities

of the project during the entire concession period is of the Concessioner.

2.4. The project proposed by the Petitioner is a Renewable Energy project. The project is having

capacity of 12 MW (3 × 4 MW) hydro power generation. The technology proposed by the

Petitioner for the present project is different from the regular renewable energy technology for

which the Commission has determined the tariff. Moreover, technical parameters pertaining to

the above projects are different and distinct from the technical parameters of the other

renewable projects like wind, solar, biomass and bagasse based projects.

2.5. Section 86(1)(e) of the Electricity Act, 2003 empowers the State Electricity Regulatory

Commission to promote cogeneration and generation of electricity from renewable sources of

energy by providing suitable measures for connectivity with the grid and sale of electricity to

any person and also to specify, for purchase of electricity from such sources, a percentage of

the total consumption of electricity in the area of a distribution licensee.

2.6. Section 6.4 of the Tariff Policy also allows procurement of energy from non-conventional

sources at a preferential tariff to be determined by the appropriate Commission.

2.7. The Commission recognizes these projects as Renewable Energy Sources at Clause 2.1 (p) of

the GERC (Procurement of Energy from Renewable Sources) Regulations, 2010.

2.8. The Central Electricity Regulatory Commission also recognizes these projects as Renewable

Energy Sources at Clause 2 (v) of the CERC (Terms and Condition for Tariff determination

from Renewable Energy Sources) Regulations, 2012. As per Clause 7 of the said Regulations,

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the Commission is to determine the project specific tariff on a case to case basis for the hydro

power project.

2.9. Section 62(1)(a) of the Electricity Act, 2003 states that the Appropriate Commission shall

determine the tariff for supply of electricity by a generating company (including renewable

energy) to a distribution licensee, transmission of electricity, wheeling of electricity and retail

sale of electricity in accordance with the provisions of the Act. While determining the tariff,

the Commission is supposed to be guided by the terms and conditions for tariff determination

framed under Section 61(h), which provides for the promotion of co-generation and generation

of electricity from renewable sources of energy.

2.10. The Commission vide Order dated 14.06.2007 in Petition No. 853 of 2005 determined the

generic tariff for small/mini hydro power projects supplying electricity to the distribution

licensees in the State. The said tariff Order, however, does not state about the technology to be

deployed by the project developer. As the cost structure of power projects differs from project

to project considering the civil works involved in the project as well as geological data of the

project site, the said generic tariff Order is not applicable in the case of the Petitioner. As per

the Concession Agreement with Narmada Water Resources, Water Supply & Kalpsar

Department, the Petitioner is required to construct the mini/micro hydro power project and

carry out its operation and maintenance for a period of 35 years. Therefore, the Petitioner is

required to file the present petition with a prayer to determine the project specific tariff for the

Petitioner’s project.

2.11. The Commission has issued the GERC (Procurement of Energy from Renewable Sources)

Regulations, 2010 and subsequent amendments thereto specifying the Renewable Purchase

Obligation applicable to the obligated entities.

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2.12. An obligation is cast upon the distribution licensees of the State Government and private

distribution licensee operating in the State as well as other obligated entities to fulfill the

Renewable Purchase Obligation by purchase of the Renewable Energy. The obligated entities

are, therefore, required to sign the Power Purchase Agreement with generators as per their

requirements.

2.13. The Petitioner intends to sell the power generated from 12 MW (3 × 4 MW) small/mini

hydropower projects to any of the State Distribution licensee or Private Distribution licensee

at the project specific tariff determined by the Commission. The Petitioner may consume a part

of the generation from 12 MW hydro projects for own consumption, if the State distribution

licensee or private distribution licensee does not procure from the Petitioner and may sale a

part of the energy to the third party under open access. The above aspect also requires

determination of other commercial aspects by the Commission. Therefore, the present petition

has been filed by the Petitioner for determination of the project specific tariff with other

commercial issues involved therein.

2.14. Pursuant to the enactment of the Electricity Act, 2003, a generating company intending to sell

the power including renewable energy to the distribution licensee is required to file a petition

for determination of tariff before the Appropriate Commission. As the Petitioner intends to sell

the power to the distribution licensees of Gujarat, this Commission is the Appropriate

Commission in the present case.

3. The matter was heard on 16.05.2016, 12.08.2016, 15.11.2016, 17.01.2017, 26.04.2017,

07.07.2017, 16.09.2017, 12.01.2018 and 09.02.2018.

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3.1. The petition was admitted by the Commission and the Petitioner was directed vide Daily Order

dated 10.05.2017 to issue a public notice in the Newspapers inviting objections/suggestions on

the petition.

3.2. Since the present petition has been filed by the Petitioner seeking determination of project

specific tariff for its 12 MW (3 × 4 MW) plant, we will now deal with the Petitioner’s

submissions, Respondent/Objectors’ objections/suggestions and the Petitioner’s compliance

and commercial matters hereunder:

3.3. We note that the Petitioner while filing the present petition had considered various parameters

on estimation/projection basis, however, since the Petitioner’s project was on the verge of

completion, complying to the directives of the Commission, the Petitioner furnished various

costs/expenses incurred on actual basis duly certified by a firm of practicing Chartered

Accountants.

3.4. Though the initial claim made by the Petitioner in the petition finds a mention in the subsequent

paras, the objections of the Respondents/Objectors on these earlier figures have not been

stressed upon and only the objections on the claims/expenses revised on actuals basis, as

furnished by the Petitioner along with the Chartered Accountant’s certificate, are narrated and

discussed in detail.

4. Capital Cost:

4.1. Petitioner’s Submission:

The Petitioner had, initially in the petition, proposed the Capital Cost of the project at Rs.

133.43 Crore as follows:

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Sr. Particulars Amount Capital Cost (Rs. Crore) 1 Preliminary Investigation & Establishment 0.25 2 Civil Works 50.86 3 E & M Works 22.66 7.27 4 Gate Works

Land Lease for 35 years 5 1.32 (@ Rs. 63200/Hact. for 5.966 Hact.) Other than Govt. land 6 1.53 (@ Rs. 900000/Hact. for 8.5 Hact. for 2 years) 7 Transmission Line Works 3.80 Protection Works 8 River Water Protection retaining wall 2.50 9 Earth bund works + pitching + earth bund on top level 1.21 10 Permanent Building Works 0.96 11 Other Misc. Works such as Road + Protection bund 0.13 Sub-total 92.49 Contingency and Administrative Charge @ 3 % of 12 2.78 Total Works 13 Tools and Plants 0.98 Establishment & Overall expenses/charge @ 2% of 14 1.85 Total Works 15 Other Misc. Charge/Works @ 0.03% of Total Works 0.28 16 Project Design Consultancy Charge 0.12 17 Interest on Loan 34.39 Consultancy & Supervision Charges @ 0.5% of Total 18 0.46 Works Total Project Cost 133.43

However, subsequently the Petitioner has vide affidavit dated 06.07.2017 submitted a statement of Actual Project Cost incurred duly supported by a certificate of Chartered Accountant as under:

(Rs. in Crore)

Sr. Estimate As On Description No. Cost 15/06/17 1 Preliminary Exp 0.25 3.80 2 Civil Work 50.86 75.36 3 Electro Mechanical Equip. 22.66 14.44 4 Gate Work 7.27 4.64

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Sr. Estimate As On Description No. Cost 15/06/17 5 Land Lease (Note 5) 1.32 0.10 6 Private Land (for 2 years for works) 1.53 7 Transmission Line Works (Note 4) 3.80 2.29 8 Protection Works (Note 1) 3.71 9 Building Works (Note 1) 0.96 10 Other Misc. such as road etc. (Note 1) 0.14 Project Cost- Sub Total –A 92.50 100.63 Other Charges 11 Contingency & Adm. Charges (Note 2) 2.77 12 Tools & Plants (Note 3) 0.98 13 Establishment & overall exp. @ 2% (Note 2) 1.85 14 Other Misc. works @ 0.03% (Note 2) 0.28 15 Project design consultancy Charge (Note 2) 0.20 16 Interest on loan (IDC) (Note 6) 34.39 0.96 17 Consultancy & Supervision Charges @ 0.5% (Note 2) 0.48 Other Charges-Sub-Total B 40.95 0.96 Total Project Cost (A+B) 133.45 101.59

Note: (1). Protection Works/ Building Works and Other Misc. such as Road etc. is the part of Civil Work so it is included in Civil Work. (2). Contingency & Adm. Charges/ Establishment & Overall exp. @ 2 % / Other Misc. works @ 0.03% / Project Design Consultancy Charge / Supervision Charges @ 0.5% is included in Preliminary Exp. (3). Tools and Plants is included in Electro Mechanical Equipments (4). Transmission Line Works include Advance given to GETCO of Rs. 0.68 Crore (5). Land Lease paid for the period 01/04/2016 to 31/10/2016 (6). Interest on IREDA Loan Rs. 0.96 Crore for the period 15/03/2017 to 15/06/2017.

The Petitioner vide Affidavit dated 19.12.2017 & 20.01.2018 submitted following details:

Balance kept as Actual Payment retention money; Sr. Project Cost Description effected so to be paid after No. Incurred As far successful test run On 01/12/17 and performance 1 Preliminary Exp 4.43 4.43 0.00 2 Civil Work 79.12 71.97 7.15 3 Electro Mechanical Equip. 16.76 15.40 1.36 4 Gate Work 5.98 5.72 0.26 5 Land Lease (Note 1) 0.11 0.11 0.00 6 Transmission Line Works (Note 2) 2.29 2.29 0.00 7 Interest on loan (IDC) (Note 3) 2.70 2.70 0.00

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Balance kept as Actual Payment retention money; Sr. Project Cost Description effected so to be paid after No. Incurred As far successful test run On 01/12/17 and performance Total Project Cost Incurred as on 111.40 102.62 8.78 01/12/2017

Note: (1). Land Lease paid up to 31/10/2018 (2). Transmission Line Works include Advance Given to GETCO of Rs. 0.68 Crore (3). Interest on IREDA Loan Rs. 2.70 Crore up to 01/12/2017

The Petitioner made following submission along with the Affidavit dated 7.02.2018: Amount Amount Sources of Funds As Application of Funds As on Rs. Rs. on 18.01.2018 18.01.2018 In Crore in Crore Share Capital 20.00 Preliminary Expenses 4.43 Civil Work 79.13 Secured Loan (IREDA) 40.00 Electro Mechanical Equip. 16.76 Gate Work 5.98 Unsecured Loans 45.45 Land Lease 0.11 Transmission Line Works 1.61 Advance For Transmission Line Given Sundry Creditors 0.68 to GETCO For Capital Goods 8.77 Interest on Term Loan (IDC) 2.70 Sub Total Cost Incurred For Statutory Liabilities 0.01 111.40 Dolatpura SHP Ongoing Operative Expenses (Including Security Deposit 0.01 Interest On Term Loan) from 02/12/17 0.37 to 18/01/18 Cash and Bank Balance 0.63

Furniture & Fixtures (**) 0.00 Vehicles (**) 0.07 Investment (**) 0.51 Deposits (**) 1.26 Total 114.24 Total 114.24 (**) These items are not pertaining to Dolatpura SHP

The Petitioner made following submission along with the letter dated 18.07.2018 Amount Amount Sources of Funds As Application of Funds As on Rs. Rs. on 30.06.2018 30.06.2018 in Crore in Crore Share Capital-Equity 20.000 Preliminary/ Pre-Operative Expenses 4.987

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Amount Amount Sources of Funds As Application of Funds As on Rs. Rs. on 30.06.2018 30.06.2018 in Crore in Crore Share Capital- 50.000 Civil Work & Foundation of P&M 79.390 Preference Total Paid-up Share 70.000 Electro Mechanical Equip. 16.767 Capital Gate Work 6.018 Profit And Loss -0.815 Land Lease 0.113 (Period from 01/04/18 Transmission Line Works 1.710 to 30/06/18) Advance For Transmission Line Given 0.697 to GETCO Secured Loan (IREDA) 40.000 Interest on Term Loan (IDC) NB(1) 4.213 Sub Total Cost Incurred For 113.895 Dolatpura SHP Unsecured Loans 8.530 Trade Receivable 0.477 Cash and Bank Balance 0.969 Sundry Creditors Advance & Prepaid Expenses 0.143 For Capital Goods 4.065 TDS/GST 0.012 For Capital Expenditure 0.046 Vehicles (**) 0.071 Statutory Liabilities 0.016 Furniture & Fixtures (**) 0.017 Investment (**) 0.010 Security Deposit 0.014 Deposits (**) 6.261 Total 121.856 Total 121.856 (**) These items are not pertaining to the Dolatpura SHP NB(1) IDC @ 12.05% as per sanctioned terms of IREDA paid during construction period of the project.

4.2. Respondents’ Submission:

Submissions of the Respondents on the Capital Cost claimed by the Petitioner are as follows:

For the sake of convenience, the submissions/objections of the Respondents on the Capital Cost

of the project are categorised under the following heads:

4.2.1. High Capital Cost & major deviations from Detailed Project Report (DPR):

(i). The Petitioner has claimed the project specific tariff of Rs. 6.10/kWh as against the

generic tariff of Rs. 3.29/kWh (with AD benefits) and Rs. 3.64/kWh (without AD

benefits) determined by the Commission through Order No. 5 of 2016 dated 14.12.2016

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applicable for Small Hydel projects having capacity between 5-25 MW without any

supporting documents in relation to their claim towards cost and operative parameters

for claiming such higher tariff.

(ii). The Capital Cost proposed in the petition - Rs. 133.43 Crore i.e. Rs. 11.11 Crore/MW

is much higher than capital cost of Rs. 7.48 Crore per MW approved by the Commission

in the Generic Tariff Order No. 5 of 2016 dated 14.12.2016. The Petitioner has not

given any basis/justification for such higher capital cost.

(iii). Though it is stated in the petition that tenders have been invited for each project related

work separately such as procurement of plant and machineries, civil works etc., no such

details are provided along with the petition. Instead, the Capital Cost has been

considered based on budgetary offers received from particular agencies/suppliers. The

Petitioner has not submitted any details in respect of negotiation undertaken with the

suppliers on the offer given by them. The Petitioner is required to demonstrate before

the Commission that the project cost proposed by them is the most economical and

competitive. Mere budgetary offer given by particular suppliers cannot be a basis for

determination of capital cost of the project, more particularly when the Petitioner has

proposed much higher capital cost.

(iv). The element wise capital cost break-up reveals that the Petitioner has considered higher

other miscellaneous expenses towards contingency provisions, consultancy charges,

interest during construction, establishment and supervision charges etc. constituting

44% of total capital cost with an intention to get higher tariff.

(v). There is wide mismatch in quantum of civil work stated in the petition and mentioned

in the approved DPR. The provisional balance sheet submitted by the Petitioner cannot

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be relied upon as the same is not certified by the Chartered Accountant and captures the

status as on 31.03.2017 only.

(vi). As per the approved DPR, the project cost is estimated to be Rs. 96.32 Crore for 12

MW SHP project. Further, as per the communication with MNRE through letter dated

07.07.2015, the project cost is also stated to be Rs. 96.32 Crore and estimated tariff of

Rs. 2.74/unit. However, the Petitioner has claimed project cost of Rs. 133.43 Crore with

almost three times higher tariff of Rs. 6.10/unit.

(vii). No explanation is given for such high variation in the project cost and tariff in

comparison to cost and tariff estimated in the approved DPR. Such variation in the

project cost is unusual for the project having shorter gestation period of about 18

months.

(viii). The actual project cost as per the price of EPC contracts awarded to various agencies

for construction and execution works is Rs. 66.39 Crore as against Rs. 133.43 Crore

claimed by the Petitioner.

(ix). Reliance placed by the Petitioner on the Report of Alternate Hydro Energy Centre and

EPC contracts awarded by SSNNL to justify the project cost of the Petitioner is

misplaced and without any merit. In the Generic Tariff Order dated 14.12.2016, the

Commission had analyzed, deliberated and discussed in detail the said report of

Alternate Hydro Energy Centre and EPC contracts awarded by SSNNL for SHP

projects at various locations in the State of Gujarat and thereafter arrived at generic

project cost of Rs. 7.48 Crore/MW (5-25 MW).

(x). On one hand the Petitioner is distinguishing its case from the Capital Cost and tariff

determined by the Commission in the Generic Tariff Order dated 14.12.2016 and on

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the other hand the Petitioner is seeking reference to the aspects deliberated and

discussed in the generic order to justify the capital cost of their project, namely the

report of AHEC and EPC cost of SHP projects of SSNNL.

(xi). The Petitioner has referred four SHP projects of SSNNL viz. (i) Saurashtra Branch

Canal, (ii) Kutchh Branch Canal, (iii) Miyagam Branch Cananl and (iv) Vadodara

Branch Canal. The comparative statement of capital cost, CUF and resultant tariff for

these projects vis-a-vis generic tariff determined by the Commission and Petitioner’s

project is as under:

Capital Cost (Rs. Project CUF (%) Tariff (Rs./unit) Crore/MW) Saurashtra Branch Canal 9.13 35.98 1.874 Kutchch Branch Canal 9.49 33.30 2.974 Miyagam Branch Canal 11.83 33.79 4.27 Vadodara Branch Canal 16.01 31.80 5.05 GERC Order dated 3.64 (w/o AD) 7.48 42.00 14.12.2016 (5-25 MW) 3.29 (with AD) Petitioner’s project 11.12 42.5 6.10

Major Deviation from DPR/Higher Capital Cost:

(i). The Petitioner has not complied with the directive given by the Commission vide Order

dated 14.02.2018. The Petitioner has not justified and has not given full particulars in

order to ascertain reasonability of the civil cost claimed by the Petitioner, even though

specific query was raised by the Commission in regard to claim of higher capital/civil

cost.

(ii). Instead of giving detailed justification and reasons for unprecedented increase in civil

cost (108%) the Petitioner is repeatedly and casually stating that the higher civil cost is

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on account of higher quantum of excavation work and hard rock. These statements have

not been substantiated and are baseless and without any merit.

(iii). As per the details submitted by the Petitioner, the amount of more than Rs. 1 Crore has

been paid to the experts/professionals for working of detailed design of the project. It

is expected that the experts/professionals would have considered all site related

conditions including soil testing, quantum of excavation work involved while

undertaking detailed design of the project. Therefore, it is not justified on the part of

the Petitioner to claim that the adverse physical condition was not considered while

designing the project. Design of any Hydro project involves various testing such as

soil/bore test etc. to ascertain the quantum of civil works. Only after such test is carried

out, detailed design of the project is to be prepared. In the present case, the Petitioner

has not produced the results of soil/bore test etc. which was considered as a base while

designing the project and detailed justification as to why there is abnormal variation in

the actual work as against work estimated based on soil/bore test etc.

(iv). As per the comparative statement submitted by the Petitioner there is a huge variation

in civil work mainly in power house construction work. It is difficult to comprehend

that the Petitioner has incurred Rs. 40 Cr. for construction of power house building as

against DPR cost of Rs. 11 Cr. Similarly, it is also difficult to comprehend that there is

a variation to the tune of 2544 % in the scope of work for the Columns & Beams (i.e.

quantum of 1132 cubic meter to 29928.09 cubic meters). Such abnormal and

unexplained variation creates doubt on the veracity and genuineness of the civil cost

claimed by the Petitioner. Therefore, this is a fit case for the requirement of site

verification and scrutiny/audit by the independent third party experts. Many of the items

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for which huge excess work is claimed are not directly related to adverse geological

site as being claimed by the Petitioner to justify the same.

(v). The Commission may direct the Petitioner:

(a) To submit details and copy of soil/bore test report etc. based on which project design

was prepared by the experts.

(b) Action taken/correspondence with the experts/agency involved in designing of the

project for such huge and further design preparation.

(c) Details and copy of modified design of the project prepared based on actual physical

condition of the site.

(d) Time period/stage of construction during which the Petitioner came to know about

the adverse site condition and consequently preparation of modified design.

(e) Item wise quantum of different civil work as stated in DPR, Tendered and actual

work done, reasons for increase in work quantum.

(f) Cost of civil works item wise estimated in DPR, stated in Tenders, and actual cost

incurred, reasons for increase in cost of the work,

(g) Details of capital financial assistance sought from MNRE with documents and

status.

(vi). The representative of the Petitioner during the course of hearing on 09.02.2018 fairly

admitted that in any type of Hydro Project, the maximum variation in civil cost could

be up to 50% whereas in the present case, the variation in the civil cost is unusually

high i.e. higher by 108%.

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(vii). In view of the unusual, unexpected and unexplained claim made by the Petitioner in

regard to the Capital Cost and other parameters of the project, the Commission may not

grant tariff for the project higher than the generic tariff determined by the Commission

vide Order dated 14.12.2016.

4.2.2. Civil Works:

(i). The Petitioner had claimed the expenses towards Civil Works at Rs. 50.86 Crore

whereas as per the approved DPR the Civil Works expenses is estimated at Rs. 46.3

Crore and as per the EPC contract awarded to M/s SCC Infrastructure, the Civil Works

cost is Rs. 37.88 Crore whereas the cost of civil construction work as per CA certificate

is Rs. 75.36 Crore as on 15.6.2017 including civil cost towards project works/building

works and other misc. works such as road etc. as part of civil work.

(ii). No explanation is given by the Petitioner for huge variation in Civil Construction works

estimated in the DPR and as certified by the CA. The terms of civil works EPC contract

awarded to M/s SCC Infrastructure include all types of civil construction works for the

SHP project.

(iii). No explanation or any kind of justification has been given by the Petitioner as to why

the cost of Civil Construction Works certified by CA is almost double the cost of EPC

contract awarded to M/s SCC Infrastructure which includes execution of all types of

civil construction works for SHP project.

(iv). The Petitioner has not produced any details in regard to the payments made to the EPC

contractor supported by Bank Statement though it was specifically sought by the

Respondent.

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4.2.3. E&M Works:

(i). MoU dated 27.05.2014 with M/s HPP Energy (I) Pvt. Ltd. for E&M Works states the

cost of Rs. 19.45 Crore for design, engineering, manufacturing, supply, transportation,

erection and commissioning of complete Electro-Mechanical equipments including

power project switchyard as against the claim of Rs. 22.66 Crore and Rs. 14.4 Crore as

per the Chartered Accountant’s certificate as on 15.06.2017 which indicates that the

cost as per the EPC contract has not been incurred.

(ii). For the Electro Mechanical Works of Rs. 16.76 Crore, the Petitioner be directed to

provide the details of payments made towards invoices amount of Rs. 16.76 Crore

supported by Bank Statement.

4.2.4. Gate Works:

(i). The Petitioner has not submitted the details in relation to invitation of tender for

awarding the Gate work.

(ii). The Petitioner has claimed Rs. 7.27 Crore towards works for gates and hoist trash rack

etc. and in support of the same, the Petitioner submitted only a letter dated 17.11.2015

awarding EPC contract to M/s Gayatri Construction, Ahmedabad for Design,

Fabrication, Supply, Erection, Testing & Commissioning.

(iii). It has also been submitted that the work of column structure and roof structure were not

awarded in tender of Gate works and were awarded later on. However, it is also not

clear as to what constitutes the column structure and roof structure since the work of

column and roof structure is also included in EPC contracts awarded for Civil Works.

Moreover, there is no explanation as to why the work of column and roof structure was

Page | 20

not included at the time of awarding the contract for gate works and whether such work

is now executed or yet to be executed.

(iv). As per the letter of M/s Gayatri Construction, the price for Gate works is Rs. 5.61 Crore

however, the Petitioner has claimed Rs. 7.27 Crore as a part of the capital cost for gates

works etc. Further as per the CA certificate, the expenses towards gate works is Rs.

4.64 Crore as on 15.6.2017 which is in fact less than the EPC contract price.

(v). The Petitioner is also misleading the Commission by stating that the Gate works

involved in Dolatpura SHP project is 1050 MT. As per the EPC contract awarded to

M/s Gayatri Construction, the gate work involved in the project is 447 MT and not 1050

MT.

(vi). For 447 MT of Gate Works with Rs. 5.61 Crore expenses, the price of Fabricated Steel

works out to Rs. 125.5 per kg, which is considerably high.

(vii). Petitioner revised the claim for Gate Works to Rs. 5.98 Crore vide subsequent CA

certificate without any supporting documents. The Petitioner be directed to submit the

details of payments made towards invoices amount of Rs. 5.98 Crore supported by Bank

Statement.

4.2.5. Transmission Line:

(i). The Petitioner had in the petition claimed transmission line and bays cost at Rs. 3.80

Crore on estimated basis against which as per the CA certificate, the same is certified

as Rs. 2.29 Crore

Page | 21

(ii). The normative transmission cost of 66 kV D/C line is around Rs. 25 lakh/km and cost

of 66 kV bay is around Rs. 35 lakh/bay. Therefore, the cost of 5.5 km D/C transmission

line along with two numbers of 66 kV bays would not be more than Rs. 2.10 Crore

(iii). The Petitioner has also not submitted any details in relation to the tendering process for

awarding contracts for erection of transmission lines and bays as well as any

information in relation to payment made to the contractor supported by bank statements

towards erection of transmission lines & bays.

4.2.6. Interest During Construction:

(i). The Petitioner had, in the petition, claimed IDC of Rs. 34.39 Crore, whereas as per CA

certificate, IDC amount is Rs. 0.96 Crore as on 15.6.2017. Majority works of the project

has been completed and based on that CA has certified IDC of Rs. 0.96 Crore on actual

basis. Any increase in IDC due to delay in completion of project may not be considered

as a part of capital cost.

(ii). The Petitioner revised the IDC claim vide subsequent CA certificate to Rs. 2.70 Crore.

In order to examine the claim towards IDC of Rs. 2.70 Crore, the Petitioner be asked to

submit supporting documents in terms of (i) copy of project appraisal report submitted

to Financial Institutions, (ii) Copy of loan agreement, (iii) Details of project milestones

viz-a-viz actual progress of the project, (iv) Details of milestone wise loan disbursement

along with bank statement in support of the same, (v) Details of amount and time to

time equity infusion in the project as considered in the project appraisal report along

with relevant supporting documents and bank statement and (vi) Details of payment of

interest to Financial Institutions along with supporting bank statement.

Page | 22

4.2.7. Increase in Cost due to Delay/Time Overrun:

(i). The Petitioner has vaguely stated that there is no delay (time overrun) in completion of

the project. As per the DPR, the gestation period of the project was 18-24 Months. The

Petitioner has initiated the project related activities since May, 2014. Earlier, the

Petitioner had claimed the likely commissioning date as June, 2017. Accordingly, there

is delay (time overrun) in commissioning of the project leading to cost overrun, which

is not eligible as pass through.

(ii). The Commission may ask the Petitioner to submit the information/analysis and

quantification of increase in capital cost due to delay in completion of project i.e. due

to time overrun as this increase in cost cannot be considered.

4.2.8. Preliminary & Pre-Operative Cost:

(i). The Petitioner had claimed Rs. 0.25 Crore towards preliminary expenditure. As per the

CA certificate submitted vide affidavit dated 24.07.2017, the preliminary expense of

Rs. 3.80 Crore is certified on normative basis @ 2.53 % of the project cost which

includes Contingency and Admin Charges/establishment & overall expenses @ 2%,

other misc. works @ 0.03 %, project design consultancy charge/supervision charges @

0.05%. The certificate issued by the CA is meant to verify the actual expenditure; when

the certificate itself is based on normative basis, there can be no reliance on such

certificate.

(ii). The Petitioner has not submitted any documents/details in relation to actual cost

towards the preliminary expenses even though specific information was sought by the

Respondent, instead the Petitioner has been making claim on normative basis and

making different claims in different documents.

Page | 23

(iii). For the revised claim of Preliminary & Preoperative Expenses of Rs. 4.43 Crore except

an item wise summary statement, no other documents are provided in support of these

expenses. Therefore, in order to undertake prudence check, item wise supporting

documents and details of payment made thereof along with the bank statement may be

submitted at least in relation to the major cost items say in case where the amount

involved is more than Rs. 3 lakh.

4.2.9. Contingency Charges:

(i). The Petitioner has claimed Rs. 2.77 Crore towards contingency charges on the basis of

the works manual of Central Public Works Department, GoI. As per the CA certificate,

Contingency & Adm. Charges and overall expenditure charges is estimated at 2% of

the project cost. The capital cost for project specific tariff, particularly contingency

charges cannot be based on estimate but actual cost incurred subject to prudence check.

The Petitioner has not shown any actual expenditure.

(ii). The contingency charge is provided to mitigate escalation mainly due to Foreign

Exchange Rate Variation (FERV) on imported plant and machineries. In the present

case, the Petitioner has proposed indigenous plant and machineries, hence, the issue of

FERV does not arise. Also the project envisaged has a very short gestation period of 18

moths and risk of unforeseen price escalation is very low. In these circumstances, there

is no valid justification and reasons to claim any contingency charges.

4.2.10. Lease amount:

(i). The Petitioner has claimed a sum of Rs. 1.325 Crore payable to GSECL as lease rent

for 35 years as a part of Capital Cost of the project. However, as per the CA certificate

the land lease amount is Rs.0.11 Crore

Page | 24

(ii). The Petitioner has not submitted any document in terms of lease agreement though it

was specifically sought by the Respondent.

(iii). As per the understanding of the Respondent and averments made by the Petitioner, the

lease rent is payable to GSECL on yearly basis for 35 years and therefore, it is not

prudent to aggregate the same and claim as a part of capital cost and seek servicing of

the same through debt and equity. The Commission may direct the Petitioner to submit

a copy of the land lease agreement and in case the lease rent is payable on annual basis,

the same may not be considered as a part of the capital cost.

(iv). The Petitioner has also not submitted any details/information in relation to payment

made towards rental for non-government land for two years for work against the claim

of Rs. 1.53 Crore As per the CA certificate, the amount towards rental for private land

is nil. Therefore, the Commission may not allow the cost of Rs. 1.53 Crore in the

absence of credible supporting documents and proper justification.

4.2.11. Rebate (25%) on Civil Cost of M/s SCC Infrastructure:

(i). As per the EPC contract with M/s SCC Infrastructure awarded by the Petitioner, M/s

SCC Infrastructure had agreed for allowing 25% rebate on quoted amount of Rs. 50.51

Crore, thus, the final contract amount is Rs. 37.88 Crore However, in the copies of

invoices raised by M/s SCC Infrastructure towards execution of Civil Works for the

project, there is no reference to 25 % rebate agreed by SCC. In case 25% rebate is

considered on the amount of Rs. 71.97 Crore, the net amount works out to Rs. 53.97

Crore Therefore, the Commission may undertake prudence check of the claims made

by the Petitioner and in any case civil works cost may not be allowed in excess of

contract value of Rs. 37.88 Crore

Page | 25

(ii). As per the contract, the civil works cost was Rs. 50.51 Crore and after considering

discount of 25% offered by M/s SCC the net civil works cost was Rs. 37.88 Crore

However, perusal of invoice of SCC as submitted by the Petitioner shows no reference

of any kind in regard to allowing of 25% discount. When confronted about the rebate,

the Petitioner stated that the actual civil cost was Rs. 103.48 Crore and after factoring

25% discount, the net civil cost is Rs. 77.61 Crore This type of submission shows that

though there is no mention in invoices, the invoice amounts of SCC is net of 25%

discount is baseless, illogical and cannot be accepted at all.

4.2.12. Others:

(i). The Petitioner is not eligible to claim the project cost on estimation basis for

determination of the project specific tariff when the project execution works is almost

completed and actual details of the project cost are available with the Petitioner. The

Petitioner is required to provide actual information and the Commission has to consider

the same after prudence check.

(ii). As per the Bank Statements submitted by the Petitioner, it reveals that the promoters

are depositing fund on particular dates and on the same date or within few days, funds

are withdrawn by the other individual/promoters. This has been casting aspersion on

the cost and expenses claimed by the Petitioner. Hence, the Commission may undertake

prudence check on the quantum of work involved, claim of cost and expenses etc. and

allow the capital cost in a reasonable manner so that the burden on the end consumer

can be minimized.

(iii). The Petitioner has claimed Rs. 3.71 Crore towards protection works, Rs.0.96 Crore

towards building works and Rs.0.14 Crore towards roads and other misc. works,

Page | 26

aggregating to Rs. 4.81 Crore The aforesaid works of protection works, building works

and other misc. works such as road etc. is a part of civil works EPC contract of Rs.

37.88 Crore awarded to M/s SCC Infrastructure Pvt. Ltd., therefore, the claim of the

Petitioner towards the same under a separate and independent head is unjustified and

without any merit.

(iv). The Petitioner has considered a provision of Rs.0.984 Crore towards Tools and Plants.

As per the CA certificate, expenses towards tools and plants has been considered as part

of E & M works. The MoU with HPP Energy dated 27.5.2017 states about the

mandatory supply of spares and tools. Therefore, there is no requirement to claim

expenses towards the same separately which is also in line with the CA certificate. The

Petitioner is seeking double counting to inflate the capital cost and claim higher tariff.

(v). The Petitioner has claimed Rs. 2.78 Crore towards Misc. Heads- (establishment &

overall charges @ 2%, other misc. charges @ 0.03%, project design consultancy

charges, consultancy and supervision charges @ 0.5%) which constitutes to 3% of the

project cost. The Petitioner has submitted a letter of award to M/s Hydrotech Consultant

amounting to Rs. 0.3 Crore for availing the services for detailed design and engineering

for SHP project. Other than this, nothing has been submitted by the Petitioner in support

of their claim though it was sought by the Respondent. Such expenses have been

claimed by the Petitioner without any basis or justification and claimed with a malafide

intention to get higher tariff at the cost of general body of consumers.

(vi). Petitioner be asked to provide Project appraisal report submitted to the financial

institution for getting financial closure and parameters envisaged under the same and

the deviations, if any, along with reasons.

Page | 27

(vii). Further, the Petitioner has not provided any information/details in relation to

procurement of reinforcement steel and payments made thereof.

4.3. Petitioner’s Compliance:

4.3.1. Capital Cost:

(i). The Petitioner has invited tenders for major work components like civil works, electro-

mechanical works for completion of 12 MW hydro power plants. The Petitioner had

issued tender notices which were published in reputed newspapers. The works were

awarded to the lowest bidder after due process of justification, negotiations etc. All

these details have been filed by the Petitioner.

(ii). Regarding the dimensions of work at Dolatpura SHP site, the magnitude of the actual

work done at the site is (a) excavation in the over burden 7,86,007 CM, (b) excavation

in the Soft Rock – 32,464 CM, (c) excavation in the Hard Rock-2,86,829 CM, (d) Total

concrete work - 57,919 CM, (e) Total Reinforcement Work- 4718 MT and (f) Total

Gate work- 1050 MT.

(iii). For the sake of comparison of the project dimension, at the Sardar Sarovar Project, the

total weight of radial gates - 30 Nos. is approx. 13000 MT. The Sardar Sarovar Project

is a mega project of the Country and in comparison, with that at Dolatpura SHP, the

quantity of Gate Work is 1050 MT.

(iv). The Commission in Order No. 5 of 2016 dated 14.12.2016 considered the project cost

of Rs. 7.48 Crore per MW. The project cost of SHP varies from State to State, region

to region, project to project and depends on the topography of the project site. In the

State of Gujarat, natural sites for small hydro power projects are limited and costs are

high. Sardar Sarovar Narmada Nigam Limited has initiated the work of constructing

Page | 28

SHP on its various canals, through EPC projects recently and through the funds of

Nigam. The details of these projects are as under:

(A) SHP on Saurashtra Branch Canal- Three locations- Date of work awarded- 27.08.2014, Total Capacity – 45 MW, Capital Cost- Rs. 411.13 Crore and Capital Cost/MW- Rs. 9.13 Crore/MW

(B) SHP on Kutchch Branch Canal- Three locations- Date of work awarded- 27.08.2014, Total Capacity- 23.31 MW, Capital Cost- Rs. 221.14 Crore and Capital Cost/MW- Rs. 9.49 Crore/MW

(C) SHP on Miyagam Branch Canal- Six locations- Date of work awarded- 07.10.2014, Total Capacity- 12 MW, Capital Cost- Rs. 141.99 Crore and Capital Cost/MW- Rs. 11.83 Crore/MW

(D) SHP on Vadodara Branch Canal- Six locations- Date of work awarded- 03.12.2015, Total Capacity-5.15 MW, Capital Cost- Rs. 82.50 Crore and Capital Cost/MW- Rs. 16.01 Crore/MW

From the above details, it can be observed that the capital cost/MW for the projects

undertaken by SSNNL varies from Rs. 9.13 Crore/MW to Rs. 16.01 Crore/MW with an

average cost of Rs. 11.615 Crore/MW. These are not the normative costs or assumed

estimates, but are the project costs at which the works have been awarded and in progress.

(v). Alternate Hydro Energy Centre, IIT Roorkee is the premier institute for hydro power

in India. The AHEC has published a report on “Benchmarking Costs for Small and

Large Hydro Power Projects” in August, 2015.

(vi). While preparing the report, actual project cost data of 167 small hydro and 69 large

hydro power stations, from 18 States, constructed between 2005 and 2015 has been

studied and analyzed. While studying and analyzing, mathematical modeling has been

Page | 29

used for two series viz. 2005-15 and 2010-15. The findings of the study, for capital cost

of the projects are as follows:

Cost in Rs. Crore/MW Series 2005-15 Series 2010-15 SHP LHP SHP LHP 2005 5.30 5.14 - - 2010 7.76 6.95 7.45 6.70 2015 10.20 8.76 10.50 9.00

AHEC in its report has also worked out the cost of different components as follows:

S.N. Cost Component SHP LHP 1 Civil Works 49% 56% 2 E & M Works 29% 21% 3 T & D Works 4.8% 6.3%

(vii). The above details, project cost estimates and actual expenditure incurred by the

Petitioner, beyond any doubt establish the claim and bona fide of the Petitioner

regarding project capital cost.

(viii). Tenders for civil works were invited by the Petitioner on 27.3.2015 which were

published in Divyabhasker and Financial Express. In Financial Express, the notice was

published in Kolkata, Ahmedabad, Vadodara and New Delhi edition. Thus, wide

publicity was given to the tender notice. Following bids were received for civil works:

Quoted Price Sr. No. Bidder / Company (in Rs. Crore) 1 MHS Infratech Private Limited, Ahmedabad 52.15 2 Swastic Builder Co. Upleta, Gujarat 64.77 3 Poonam Construction Co., Pune 74.08 4 Raviraj Enterprise, Upleta, Gujarat 204.45 5 SCC Infrastructure Pvt. Ltd., Ahmedabad 37.88

(ix). As SCC Infrastructure Pvt. Ltd. was having all the requisite qualification and

experience to undertake the work and their quoted price was competitive, the work was

awarded to M/s SCC Infrastructure Pvt. Ltd. Page | 30

(x). The tenders for Electro-Mechanical works were invited on 27.3.2015, which were also

published in Divyabhasker and Financial Express. In Financial Express, the notice was

published in Kolkata, Ahmedabad, Vadodara and Delhi editions. Thus, wide publicity

was given to the tender notice. Following bids were received for E & M works:

Quoted Price Sr. No. Bidder / Company (in Rs. Crore) 1 Gogoal Hydro Power Pvt. Ltd., Haridwar, Uttarakhand 20.30 2 Shahabad Engineers Pvt. Ltd., Dehri, Rohtas 21.88 3 Mecamidi HPP India Pvt. Ltd., Noida, Delhi 19.45

(xi). As M/s Mecamidi HPP India Pvt. Ltd. was having all the required experience and

qualification to undertake the work of horizontal Pit Kaplan turbine and had quoted

competitive price, the work was awarded to M/s Mecamidi HPP India Private Limited.

Huge Deviation in Capital Cost from DPR/High Capital Cost:

(i). As to the deviation from DPR and tender cost, it may be noted that the work was initially

awarded on the basis of preliminary drawings. However, during the actual execution of

work, there has been significant increase in quantities of work, on account of actual

geological conditions and actual designs. Variation in the work quantities is a normal

phenomenon in civil hydro works. Accordingly, the final bills and Bank Statements

have been submitted for the actual quantities of work and payment made thereof.

(ii). The project has not been completed and commissioned so far, therefore, the payments

done and investment made so far have not been fully capitalized and the same is shown

in fixed assets as per standard commercial terminology. The works have not been

awarded on EPC basis but awarded as per standard PWD methodology B-2 work

agreement, wherein variation in quantities of work is paid at the tendered rate.

Page | 31

(iii). There has been significant increase in quantities of work on account of actual geological

conditions, and actual designs accordingly. Variations in quantity are normal

phenomenon in civil hydro works and the actual expenditure incurred has been certified

by CA. The CA certificate does not mention the total cost of the project until the

commissioning of the project.

(iv). The total cost of Rs. 133.43 Crore for calculation of tariff includes various components

like capital cost of work, interest, miscellaneous, contingencies etc. The works are not

awarded on EPC basis but on standard B-2 agreement where increase in quantities of

work has taken place on account of actual geological conditions and actual drawings.

It is also necessary to make payment based on the actual work as per the contract.

(v). The capital cost of SSNNL and the tariff shown is not worked out or decided by the

Commission. The Respondent has not provided the details of tariff, how it is worked

out, what are the different parameters of tariff, whether the tariff is determined as per

the Commission’s method for tariff calculation etc., whether the project has been

receiving any subsidy or required to pay the royalty or not. In the absence of these, it is

not possible for the Petitioner to comment on it.

(vi). The Petitioner has never contended that the Petitioner has incurred capital cost of Rs.

133.43 Crore for 12 MW SHP. The Petitioner has submitted that the total cost of the

project when completed is likely to be Rs. 133.43 Crore and the CA certificate certifies

actual expenditure of Rs. 101.59 Crore incurred as on 15.6.2017.

(vii). As it is a prevailing practice in the industry that the DPR is a project estimate and it

could not be treated as a final cost not only for the Petitioner’s project but as far as any

Page | 32

project is concerned. It is envisaged by the project developer that the likely expenses

and costs during the project completion shall take place.

(viii). At the time of DPR preparation, protection works on river side and building works were

not planned in detail and hence provision in normative way was done in the estimates.

While doing civil works at site, protection works have been carried out through the

agency of works. Protection works are essential at the site to protect the plant at the

time of high flood, and therefore, this provision is made. Similarly, buildings have to

be constructed at the site for the operation and maintenance staff, once the civil and

electro-mechanical works are completed. This provision has been made based on

normative estimates.

(ix). In compliance to the Commission’s directive vide Daily Order dated 14.02.2018, the

Petitioner provided the item-wise details for increase in the cost of civil work in

following table vide affidavit dated 19.02.2018:

(Amount in Rs. Lakh) Net variance Net variance Sr. As per As per Item Actual in DPR & in Tender & No. DPR Tender Actual Cost Actual Cost 1 Power Channel 769.99 583.65 1546.80 776.81 963.14 2 Intake Pool 100.97 100.32 370.30 269.33 269.98 3 Intake Structure 895.34 701.22 2.04 -893.30 -699.18 4 Power House 1484.76 1166.47 4049.69 2564.93 2883.23 5 Tailrace Pool 262.85 254.34 751.46 488.60 497.12 6 Tailrace Channel 1115.92 982.26 884.58 -231.34 -97.68 7 Tailrace Protection 0.00 0.00 156.79 156.79 156.79 8 Total Before Taxes 4629.84 3788.27 7761.65 3131.81 3973.39 9 Total Taxes 0.00 0.00 445.05 445.05 445.05 10 Total after taxes. 4629.84 3788.27 8206.70 3576.86 4418.44

The Petitioner also submitted the details of item-wise civil work quantity as per DPR,

as per tender and actual quantity as per final bill. Moreover, the item-wise rate as per

Page | 33

DPR and as per tender after 25% rebate are also submitted vide aforesaid affidavit dated

19.02.2018.

(x). The Petitioner submitted that the tenders for civil work for Dolatpura SHP were invited

in April, 2015 when the detailed engineering designs for structural components were

not ready. Similarly, various levels for soft rock and hard rock were assumed in the

estimates based on the drill hole data available for left retaining wall of Dolatpura weir.

Accordingly, in the estimates for civil works, various concrete quantities, reinforcement

steel, were provided on rough estimates. However, during the course of work, excess

has occurred mainly in following three items:

(a). Excavation in hard rock, due to the fact that hard rock was encountered at a very

high level, resulting into excess in quantity of excavation in hard rock.

(b). Concrete for various structural components. Based on actual and detailed

engineering designs, the quantity of concrete exceeded over the estimated

quantities of concrete.

(c). Reinforcement for various structural components. Based on actual and detailed

engineering designs, the quantity of reinforcement exceeded over the estimated

quantities of reinforcement.

(xi). There are no fixed norms for permissible excess in the quantities for civil and hydro

infrastructure works. On the contrary, these are normal phenomenon that is project

specific and site specific and beyond control.

(xii). The Petitioner has already submitted the Schedule of quantities as per DPR, Schedule

of quantities as per bid documents, Schedule of quantities as per final bills, Copy of

Page | 34

DPR, Bank Statements for all the payments made for different work components, item-

wise comparison for all items of civil work and reasons for excess cost for hydro power

project.

(xiii). The final and actual cost of Dolatpura SHP works out to Rs. 116.71 Crores (i.e. Project

Cost of Rs. 111.40 Crore + Rs. 5.31 Crore for Buildings & Vehicles etc.), which

ultimately works out to Rs. 9.73 Crore per MW. This cost is on actual basis and not

based on any hypothesis. The Petitioner has already requested the Commission to

consider the actual cost instead of the cost submitted in the petition which was on the

basis of estimation/projections.

(xiv). The actual cost of Rs. 9.73 Crore per MW for Dolatpura SHP is well within the actual

cost of SHP occurring in Gujarat as on toady in the case of Sardar Sarovar Narmada

Nigam’s Canal based Hydro projects as already pointed out.

4.3.2. Civil Works:

(i). For the civil works awarded to M/s SCC Infrastructure Private Limited, the details of

tenders for civil works have been submitted. The work order for civil works has also

been submitted. As the work has been completed recently, the final bill copies have

also been submitted.

(ii). M/s SCC Infrastructure Private Limited has raised bills totaling to Rs. 82.07 Crore, for

the complete civil works and payments of Rs.74.92 Crore have been made, for which a

Statement showing reference to respective entries of Bank Statement has also been

filed. The remaining amount of Rs. 7.15 Crore has been held as retention money for

performance testing, which shall be released on successful commissioning of the

project.

Page | 35

4.3.3. E & M Works: (i). The details of tenders for electro-mechanical works have been submitted. The details

of payment made for electro mechanical works along with Bank Statements have also

been filed.

(ii). Since the work has been completed recently and testing and commissioning is yet to be

done, out of the total bill amount of Rs. 16.76 Crore raised by the Agency, payment for

Rs. 15.40 Crore has been made and Rs. 1.36 Crore has been retained, which will be

released after successful commissioning.

4.3.4. Gate Works: (i). A provision of Rs. 7.27 Crore in the petition was made for the major components such

as (i) upstream service gate and emergency gates with appropriate hoisting system

including trash rack, (ii) downstream gates with hoisting system, (iii) column structure

from ground level of 96 meter up to 106 meter and roof structures sheet purlins and

sheets.

(ii). The tenders for gate works were invited through quotations and the comparative

statement along with bids has been filed.

(iii). The details of Gate works, the details of tenders, work order copy and copies of final

bills are filed. The final bill for the total work has been raised for Rs. 5.98 Crore out of

which Rs. 5.72 Crore has been paid and Rs. 0.26 Crore has been retained which shall

be released on successful commissioning. The details of the payment for Rs. 5.72 Crore

along with Bank Statement has been filed.

Page | 36

4.3.5. Transmission line Works:

(i). The evacuation-line up to Mowasa sub-station has been laid by the Petitioner at its own

cost. The Petitioner has deposited a total sum of Rs. 67,70,340/- with GETCO on

20.2.2016 towards estimation, supervision and service charges. The Petitioner awarded

the work of laying evacuation line of 5.5 km. upto GETCO S/S including feeder bay of

GETCO sub-station to M/s OM Power Transmission Limited on 9.12.2015 for Rs.3.15

Crore

(ii). The details of payment for the transmission line works amounting to Rs. 2.29 Crore

along with Bank Statements have been filed.

4.3.6. Interest During Construction:

The interest demand raised by IREDA during the construction period has been submitted along

with the details of payment of interest with supporting Bank Statements.

4.3.7. Increase in Cost due to Delay/Time Overrun: (i). There is no cost overrun in the project cost.

(ii). As to the allegation of delay, the project completion is dependent upon various factors

like availability of material, compliance from Government, Statutory Rules and

Regulations adherence etc. hence, delay is observed in almost all the projects which

may also be observed in GETCO’s projects, distribution licensee’s projects and

GSECL’s projects. The delay in Petitioner’s case has been a nominal delay. Earlier it

was expected that the project will be commissioned by the end of June, 2017, however,

due to some inadvertent complications, it was not possible to complete the project by

end of June, 2017. Delay is not on account of inefficiency but nominal delays are usual

phenomenon in such kind of civil and hydro projects.

Page | 37

(iii). The Petitioner reiterates there is no delay-time overrun in the completion of the project.

The DPR provided the gestation period of the project as 18-24 months. The Petitioner

had initiated the preliminary project activities in May, 2014. However, the land on left

bank of the Dolatpura weir was given on lease by GSECL on 20.10.2015. Similarly,

the permission to start the work was given by the Water Resources Dept. (Irrigation

Department) vide letter dated 29.10.2015. Thereafter, the project work on the ground

was started in Oct., 2015. Hence, there has been no delay or time overrun, resulting in

the excess project cost.

4.3.8. Preliminary and Pre-Operative Expenses:

The Preliminary and Pre-Operative Expenses amounts to Rs. 4.43 Crore and the summary

details for these expenses have been submitted on 12.01.2018. The statement of the Preliminary

and Preoperative expenses showing therein the reference of respective entries and Bank

Statements have been provided.

4.3.9. Land Lease: (i). The lease rental payable to GSECL for a sum of Rs. 1.32 Crore for 35 years is a fact

and therefore the said amount is treated as a capital cost of the project.

(ii). The nearby land of the hydro project site to the tune of 8.5 hectares has been taken on

rental basis for a period of three years for the storage and placement of construction

material and equipment to carry out construction activity at site. Although, these lands

were taken on rental basis from a large number of farmers on temporary basis for

temporary purpose, the Commission may take an appropriate consideration in this

regard.

Page | 38

(iii). The land on the left bank of Dolatpura weir given on lease by Gujarat State Electricity

Corporation Limited on 20.10.2015 and the copy of the lease deed has been filed on the

records.

4.3.10. Rebate of 25% for Civil Cost (SCC Infrastructure Limited): (i). SCC Infrastructure Private Limited has offered a rebate of 25%. Accordingly, the final

cost of civil works is net off rebate. The final bill showing 25% rebate has been filed.

(ii). The final bill of civil works has already been submitted along with the bill showing the

rebate of 25%. Bank Statements for all the payments made towards civil works have

already been submitted.

4.3.11. Others: (i). The commissioning of the hydro project varies from site to site and accurate

justification of the project expenses and allied cost as demanded by the Respondent

cannot be provided until the completion of the project. However, the Petitioner had

anticipated likely expenditure i.e. establishment and overall charges @ 2%, other misc.

charges @0.03%, project design consultancy charges, supervision charges @ 0.5% etc.

Since the actual expenses incurred are already reflected in the documents provided, the

Commission is requested to consider the actual project cost incurred for determination

of project specific tariff.

(ii). As regards, credit and debit entries of similar amount reflected in the Bank Statement

on the same day or within few days, the Petitioner submits as follows:

(a). The Petitioner had convened the extra ordinary General Meeting of

Shareholders of the company on 3.11.2015 wherein a Resolution was passed to

increase the Authorized Share Capital from Rs. 10 lakh to Rs. 20 Crore

Page | 39

(b). Accordingly, the process of building up of Paid up Capital was started. As a part

of this exercise, some portion of unsecured loan amounting to Rs. 2,34,10,000/-

was converted into Share Capital.

These are only the accounting entries and there is no resultant outflow/withdrawal of funds.

Hence, there is no question of casting aspersion on the cost and expenses claimed by the

Petitioner as per the apprehension expressed by the Respondent.

4.4. Commission’s Analysis:

4.4.1. We have considered the submissions of the Petitioner and objections of the Respondents on

high Capital Cost, deviation from the DPR & Tender Costs, Civil Cost, E&M cost etc. As

all these issues are intertwined, we decide to deal with them together.

4.4.2. The Petitioner had initially submitted the Capital Cost of the project as Rs. 133.43 Crore.

However, this amount was, admittedly, based upon various projections and estimations by

the Petitioner. Since the Petitioner’s project was on the verge of completion, upon direction

to furnish the actual expenses/cost incurred towards the project, the Petitioner vide affidavit

dated 06.07.2017 furnished a certificate of M/s Finava & Company, Chartered Accountants

certifying the project cost of Rs. 101.59 Crore incurred up to 15.06.2017.

4.4.3. During the proceedings, the Petitioner vide affidavit dated 19.12.2017 submitted the details

of item-wise expenditure of Rs. 111.40 Crore incurred up to 01.12.2017, payments made

there against and balance amount kept in retention account to be released after successful

test run and performance. The Petitioner vide affidavit dated 07.02.2018 filed another

certificate dated 06.02.2018 of M/s Finava & Company, Chartered Accountants, certifying

the application of funds of Rs. 114.24 Crore as on 18.01.2018 including the total cost

incurred for Dolatpura SHP of Rs. 111.40. Crore and corresponding sources of funds

Page | 40

totalling to Rs. 114.24 Crore. Further, the Petitioner vide letter dated 18.07.2018 also

furnished a certificate dated 17.07.2018 of M/s Finava & Company, Chartered Accountants

certifying the total cost incurred of Rs. 121.856 Crore including the Project cost of Rs.

113.895 Crore as on 30.06.2018.

4.4.4. The Respondents have contested the aforesaid Capital Cost on various grounds and have

challenged the various supporting documents of the Capital Cost as well as non-submission

of various requisite documents as recorded in foregoing paras.

4.4.5. We note that the details of various major contracts awarded by the Petitioner for the project

as submitted by the Petitioner, are as follows:

Total Cost Total Cost Actual Cost for the for the Quoted incurred Head Head Sr. Work Head Awarded to Rate (Rs. Crore) (Rs. Crore) (Rs. Crore) (Rs. Crore) (as on (as on (as on 18.01.2018) 18.01.2018) 30.06.2018) M/s SCC Infrastructure 1. Civil Works 37.88 82.06 79.13 79.390 Private Limited Electro & M/s Mecamidi HPP 2 Mechanical 19.45 16.50 16.76 16.767 India Private Limited Works M/s Gayatri 3. Gate Works 5.61 5.98 5.98 6.018 Construction Transmission M/s OM Power 4 3.15 1.61 2.29 2.407 line Works Transmission Limited

4.4.6. We note that out of the above major heads of Capital Cost, the Civil Works and E &M works

were awarded by the Petitioner by inviting tenders which were published on 27.03.2015 in

two Newspapers viz. Divyabhasker (Gujarati) and Financial Express (English). In response

to the above tenders, the Petitioner received 5 bids for Civil Works and 3 bids for E&M

works. Out of the above 5 bids for Civil Works, M/s SCC Infrastructure Private Limited

was selected based on the lowest quoted price and having all the requisite qualification and

experience to undertake the work. Similarly for E M works, M/s Mecamidi HPP India

Page | 41

Private Limited was selected based on the lowest quoted price amongst the three bids and

considering their experience and qualification to undertake the works of Horizontal Pit

Kaplan Turbine. However, the Gate Works had been allotted by inviting the quotations and

comparing the bids. The Petitioner has filed the quotations of M/s Gayatri Construction and

M/s K. L Engineering Works for the Gate Works along with the work schedules and based

on the comparative statement prepared by the Petitioner, the work was awarded to M/s

Gayatri Constructions for total contract price of Rs. 5.61 Crore For Transmission line works,

the works was allotted to M/s OM Power Transmission Private Limited for Rs. 3.15 Crore,

admittedly, without tendering/competitive bidding basis. In addition, the Petitioner has paid

Rs. 0.677 Crore to GETCO towards estimation, supervision and service charges.

4.4.7. We also note that the in compliance to the contentions of the Respondents to substantiate

the details of costs/expenses incurred with the invoices along with the payments made, the

Petitioner has furnished the invoices for Civil Works, Electro-Mechanical Works, Gates

Works and Transmission lines works.

4.4.8. We observe that the Petitioner has furnished the invoices for Civil Works totalling to amount

of Rs. 82.12 Crore out of which the invoices of M/s SCC Infrastructures Private Limited

total up to Rs. 82.06 Crore and the rest are the invoices of other Civil works. The Petitioner

has also submitted that an amount of Rs. 3 Crore has been received from the Insurance

Company towards damages to project works due to flood on 21.08.2016. As to the proof of

the payments, we note that out of the aforesaid amount, the Petitioner has submitted the

details of payment to the tune of Rs. 71.96 Crore net of deduction of Rs. 3 Crore towards

receipt from the Insurance Company and has submitted that Rs. 7.15 Crore is yet to be paid

towards the Civil Works. We also note that payments worth Rs. 74.96 Crore and deduction

Page | 42

of Rs. 3.00 Crore have been supported by the Bank Statements whereas transactions worth

Rs. 43,526/- have been made through Cash on Hand as claimed by the Petitioner.

4.4.9. Similarly, for cost of E&M Works, we note that the Petitioner has furnished the invoices of

Rs. 16.76 Crore out of which, invoices of M/s Mecamidi HPP India Private Limited amount

to Rs. 16.50 Crore and the rest (Rs. 0.25 Crore) are of M/s Safex Engineers, M/s Bright

Electric Agencies, M/s Shree Vadaliya Trading Co and M/s Energy Machines Pvt. Ltd.

As to the proof of payment, we note that the Petitioner has submitted the details of payment

of Rs. 15.40 Crore supported by the Bank Statements, whereas Rs. 1.36 Crore, as submitted

by the Petitioner, is yet to be paid.

4.4.10. For Gate Works, the Petitioner has furnished the invoices totalling to Rs 5.98 Crore of M/s

Gayatri Construction and has also furnished the proof of payment totalling to Rs. 5.72 Crore

The Petitioner has also submitted that the amount of Rs. 0.25 Crore is yet to be paid.

4.4.11. For the Transmission Works, the Petitioner has furnished the invoices of Rs. 2.28 Crore

inclusive of Rs. 0.67 Crore paid to GETCO towards supervision charges. For the proof of

payments, the Petitioner has submitted the details of Bank transactions of Rs. 2.28 Crore

4.4.12. As regards the Civil Cost, we note that the Respondents have objected the Civil Cost being

comparatively higher considering the size of the project. The Respondents have also

objected to the exorbitant increase in Civil cost from what is considered in the Detailed

Project Report as well as the amount stated in the EPC contract given to M/s SCC

Infrastructure Private Limited. The Respondents have also contested the justification given

by the Petitioner towards such increase as well as non-compliance of the directive of the

Commission vide Daily Order dated 14.2.2018.

Page | 43

4.4.13. In this regard, we note that the Petitioner has submitted that the work was awarded on the

basis of preliminary drawings, but during actual execution of work, there has been

significant increase in quantities on account of actual geological conditions and actual

designs. Further, the work had been awarded not on EPC basis but standard PWD

methodology B-2 work arrangement, where any variation in quantities of work is paid at

tendered rate. When the Petitioner invited the tenders for civil works, the detailed

engineering designs for structural components were not ready. Also various levels for soft

rock and hard rock were assumed in the estimates based on the drill-holes data available for

left retaining wall of Dolatpura weir and accordingly, in the estimates for civil works,

various concrete quantities, reinforcement steel were provided on estimation basis. The

excess has occurred mainly on three items:

(i) Excavation in hard rock, due to the fact that hard rock was encountered at a very high

level, resulting into excess in quantity of excavation in hard rock.

(ii) Concrete for various structural components. Based on the actual and detailed

engineering designs, the quantity of concrete exceeded over the estimated quantities

of concrete.

(iii) Reinforcement for various structural components. Based on the actual and detailed

engineering designs, the quantity of reinforcement exceeded over the estimated

quantities of reinforcement.

4.4.14. We also note that the requirement of the Commission was to provide details for increase in

the cost of civil works in a specific format. The Petitioner has, vide affidavit dated

19.02.2018 filed a statement showing item-wise comparison of quantity & cost of civil

works between DPR, Tender and the actuals, a gist of Total Cost is reproduced below:

Page | 44

Net Variance Net Variance between DPR Total Cost Actual Cost between Tender Total Cost as & Actual Cost as per as per Final & Actual Cost in Sr. Head per DPR in price (+) Tender Bill price (+) Excess/ (Rs.) Excess/ (-) (Rs.) (Rs.) (-) Saving Saving (Rs.) (Rs.) 1 Power Channel 76998800 58365332 154679656 77680856 96314323 2 Intake Pool 10097270 10032314 37029987 26932717 26997673 3 Intake Structure 89534120 70122047 204000 -89330120 -69918047 4 Power House 148475940 116646578 404969150 256493210 288322572 5 Tailrace Pool 26285463 25434119 75145759 48860296 49711640 6 Tailrace Channel 111592200 98226143 88458026 -23134174 -9768116 Tailrace 7 0 0 15678698 15678698 15678698 Protection Total Before 9 462983793 378826533 776165276 313181483 397338743 Taxes 10 Total Taxes 0 0 44504851 44504851 44504851 11 Total after taxes. 462983793 378826533 820670127 357686334 441843594

However, we also note that rather than giving reasons for item-wise variance, the Petitioner

has furnished the reasons for overall variance as noted above.

4.4.15. We also note that for justifying the Capital Cost of the Project, the Petitioner has drawn

comparison with the other Canal based SHPs awarded by Sardar Sarovar Narmada Nigam

Limited. The Petitioner has submitted the per MW Capital Cost of Canal based SHPs of

SSNNL viz. Saurashtra Branch Canal is Rs. 9.13 Crore/MW, Kutchh Branch Canal is Rs.

9.49 Crore/MW, Miyagam Branch Canal is Rs. 11.83 Crore/MW and Vadodara Branch

Canal is Rs. 16.01 Crore/MW.

4.4.16. Reference to the Report ‘Benchmarking Costs for Small and Large Hydro Power Projects’

prepared by Alternate Hydro Energy Centre, IIT-Roorkee has also been made by the

Petitioner, submitting that for the year 2015, the Capital Cost projected in the Report for

SHP is Rs. 10.50 Crore/MW.

Page | 45

4.4.17. The Petitioner has also cited the huge magnitude of works involved in the Project i.e. (i)

Excavation in the over burden – 7,86,007 CM, (ii) Excavation in Soft Rock – 32, 464 CM,

(iii) Excavation in the Hard Rock – 2,86,829 CM, (iv) Total Concrete Work- 57,919 CM (v)

Total Reinforcement Work – 4,718 MT (vi) Total Gate Work- 1050 MT to justify the Capital

Cost of the project.

4.4.18. The Petitioner submitted that there are no fixed norms for permissible excess in the cost in

case of Hydro Power Projects and that the increase in cost for such projects is a normal

phenomenon depending on the project and site. The final cost of the project as certified by

the Chartered Account (CA) is Rs. 111.40 Crore and additional ancillary cost of Rs. 5.31

Crore prayed by the Petitioner, which makes the total project cost as Rs.116.71 Crore i.e.

Rs. 9.73 Crore per MW is well within the actual cost of SHPs commissioned in the State by

SSNNL projects. However, as per the CA certificate dated 17.07.2018, if the project cost of

Rs. 113.895 Crore incurred for Dolatpura SHP is considered along with the additional

ancillary cost of Rs. 5.31 Crore, the total project cost works out to Rs. 119.205 Crore i.e.

Rs. 9.93 Crore/MW

4.4.19. We also note that the Petitioner has furnished the invoices of Civil Works to the tune of Rs.

82.12 Crore and the Bank Statements for payment of Rs. 71.96 Crore net of insurance claim

receipt of Rs. 3 Crore, stating that an amount of Rs. 7.15 Cr. is yet to be paid. Furthermore,

this claim has also been corroborated by a certificate of Chartered Accountant stating that

an amount of Rs. 79.13 Crore (i.e. 70 % of the project cost of Rs.111.40 Crore) has been

incurred towards Civil Works.

However, subsequently, the Petitioner vide letter dated 18.07.2018 has furnished another

CA certificate dated 17.07.2018, wherein the expenses incurred for the Dolatpura SHP as

Page | 46

on 30.6.2018 is mentioned as Rs. 113.895 Crore and the expenditure on Civil Work &

Foundation of P&M as Rs. 79.390 Crore.

We note that as per the affidavit filed by the Petitioner, the Petitioner’s Plant achieved the

Commercial Operation Date (COD) on 16.03.2018. Since, the expenses incurred towards

the Project at Rs 111.40 Crore and towards the Civil Work & Foundation of P&M at Rs.

79.13 Crore as stated in the CA certificate dated 06.02.2018 was as on 18.01.2018, it appears

that the Petitioner may have incurred the additional expenses towards various heads after

18.01.2018. However, we note that these additional expenses incurred as certified by the

CA (certificate dated 17.07.2018) is not supported by any invoices or proof of payments by

the Petitioner. Since the said expenditure is certified to be as on 30.06.2018, considering the

fact the project was commissioned on 16.03.2018 and that no supporting documents for

expenditure incurred during the period from 18.01.2018 to 30.06.2018 are submitted by the

Petitioner, the Commission has decided not to consider the additional expenditure incurred

during the period from 18.01.2018 to 30.06.2018.

4.4.20. As regards the E&M claim of the Petitioner, we note that the initial objections of the

Respondents were mismatch in the expenses indicated in the petition and that of the CA

certificate. However, since the Petitioner has already requested the Commission to consider

the actual cost incurred as supported by the CA certificate, this objection would not sustain.

Further, the Respondents also sought the details of the invoices and payments made. In this

regard, as observed above, the Petitioner has filed the invoices for E&M works to the tune

of Rs. 16.76 Crore and bank statements for the payment of Rs. 15.40 Crore in support of his

claim and stated that the balance amount of Rs. 1.36 Crore is to be paid after successful test

run and the performance of the plant. This has also been corroborated by the CA certificate

as referred above.

Page | 47

Subsequently, the Petitioner vide CA certificate dated 17.07.2018 claimed the E&M

expenses of Rs. 16.767 Crore incurred upto 30.06.2018. However, since the Petitioner has

not supported his claim for incremental expenditure of Rs. 0.007 Crore nor did he confirm

that the said incremental expenditure was incurred during the period from 18.01.2018 (i.e.

CA certificate date) to 16.03.2018 (i.e. the date of commissioning of the project), the

Commission has decided not to consider the same.

4.4.21. For the Gate Works, the Respondents have objected that no details as to invitation of tenders

have been provided, that the amount claimed in the petition is less than the Quotation of

Contractor, that there is a difference in the amount as per CA certificates and that the

Petitioner is misleading by stating that the Gate work involved was 1050 MT.

4.4.22. In this regard, we note that the Petitioner had in the petition claimed Rs. 7.27 Crore, as

provision for major components such as (i) upstream service gate and emergency gates with

appropriate hoisting systems including trash rack, (ii) downstream gate with hoisting system

and (iii) column structure from ground level of 96 meter upto 106 meter and roof structure,

which was on estimated basis. However, the Petitioner, subsequently, has claimed the

expenditure of Rs. 5.98 Crore – out of which Rs. 5.72 Crore has been paid and Rs. 0.26

Crore is to be paid on successful commissioning- and supported the claim with a certificate

of Chartered Accountants. The Petitioner has also furnished the invoices as well as the Bank

Statements as proof towards payment against these invoices.

4.4.23. The Gate Work has been awarded by inviting quotation and comparison of the bids of M/s

Gayatri Construction and M/s K. L. Engineering Works. Further, as to the difference

between the quotation amount and actual amount for the Gate Works, the Petitioner has

justified the same stating that the work of column structure along with the roof structure was

awarded later on which was not a part of the original tender. The Petitioner has also

Page | 48

submitted that in the work of the fabrication and erection of vertical gates for hydro projects,

the weight of gates is one major component, but it also includes other components like hoist

system, gantry, hoist platform etc. and that the total weight involved in the works is 1050

MT.

Further, the Petitioner vide CA certificate dated 17.07.2018 claimed the expenses of Rs.

6.018 Crore incurred towards Gate Works as on 30.06.2018, an increase of Rs. 0.038 Crore

over the expenditure incurred upto 18.1.2018.

We note that these additional expenses are neither supported by any invoices nor any proof

of payments by the Petitioner to substantiate that the said expenditure was incurred prior to

the date of commissioning. Accordingly, the Commission decides not consider such

incremental expenditure claim beyond 18.01.2018.

4.4.24. For the transmission line works the Petitioner has claimed an expenditure of Rs. 2.29 Crore

including advance payment of Rs. 0.68 Crore to GETCO towards supervision charges.

4.4.25. The Respondents objected that the Petitioner had initially claimed Rs. 3.80 Crore in the

petition. The Respondents submitted that the cost of line in the Petitioner’s case would not

be more than Rs. 2.10 Crore The Respondents have, upon furnishing the actual cost towards

transmission line works certified by CA, sought the details as to the tendering process for

awarding the contracts and payments made supported by bank statements.

4.4.26. In this regard, we note that the Petitioner was required to erect 66 kV D/C line from the

generating station to 66 kV Mowasa S/s. The Petitioner had awarded the work of laying of

evacuation line to M/s OM Power Transmission Limited on 09.12.2015 for Rs. 3.15 Crore.

However, the actual expenditure as on 18.01.2018 towards the transmission/evacuation line

Page | 49

as per CA Certificate filed along with affidavit dated 07.02.2018 is Rs. 2.29 Crore including

Rs. 0.68 Crore towards the supervision charges paid to GETCO. We also observe that the

Petitioner has filed the invoices in support of this claim as well as the bank statements for

payments made thereof.

However, the Petitioner vide CA certificate dated 17.07.2018 has claimed the expenses of

Rs. 2.407 Crore towards the transmission line works including the advance given to GETCO

(Rs. 1.710 Crore towards transmission line works and Rs. 0.697 Crore towards advance

given to GETCO), an increase of Rs. 0.117 Crore. We note that the aforesaid additional

expenditure is neither supported by the invoices nor the bank statement for payment thereof.

The Petitioner has also failed to substantiate that this additional expenditure was incurred

prior to the date of commissioning. The Commission, therefore decides, not to consider the

incremental expenditure of Rs. 0.117 Crore.

4.4.27. As regards the Interest During Construction, we note that the Petitioner had in the petition

claimed the IDC as Rs. 34.39 Crore on the basis of provisions/estimations. However, the

Petitioner, subsequently revised the claim of IDC on actual basis to Rs. 2.70 Crore. In this

regard, we note that the Respondents have sought the details such as (i) copy of loan

agreement, (ii) details of project milestones viz-a-viz actual progress of the project, (iii)

details of milestone wise loan disbursement along with bank statements, (iv) equity infusion,

(v) details of payment of interest to financial institutions with supporting documents, etc.

The Petitioner submitted that it has already submitted a copy of Sanction Letter dated

06.06.2016 for Term Loan of Rs. 45 Crore from IREDA. The Petitioner also submitted that

it has filed the interest demands raised by IREDA and the Bank Statements as proof for

payment of such interest.

Page | 50

4.4.28. We observe that the IDC amount claimed by the Petitioner i.e. Rs. 2.70 Crore, around 2.42%

of the total Project cost, appears to be reasonable compared to the industry standards.

Moreover, the expenses are corroborated by demand notes of IREDA and bank statement

as proof of payment.

We further observe that the Petitioner vide CA certificate dated 17.07.2018 revised the IDC

claim to Rs. 4.213 Crore, an increase of Rs. 1.513 Crore.

We note that the Petitioner has only filed IREDA Interest Demand upto 31.12.2017.

However, for the period subsequent to that, the Petitioner has not filed any Interest Demand

and proof of payment of Interest to IREDA. The aforesaid claim of IDC of Rs. 2.70 Crore

is only upto 18.01.2018 against the project commissioning date of 16.03.2018. Since the

Petitioner would have incurred additional expenses under this head prior to the date of

commissioning, but the same is not substantiated with any documentary evidence, the

Commission has decided not to consider the incremental claim of Rs. 1.513 Crore as per the

CA Certificate dated 17.07.2018 and approves the IDC claim of Rs. 2.70 Crore

4.4.29. The Respondents also raised the issue of the cost over-run due to delay in completion of the

project. The Respondents have sought quantification of increase in Capital Cost due to

delay attributable to the Petitioner in completion of project as this increase cannot be a part

of the project cost. The Respondents have submitted that as per the DPR the project was to

be completed within 18-24 months and since the Petitioner had initiated the project related

activities by May, 2014, there appears to be a delay on the part of the Petitioner in

operationalization of the project.

Page | 51

4.4.30. Per contra, the Petitioner submitted that there is no delay/time-overrun in the completion of

the project as the permission to start the work was given by the Water Resources Department

vide letter dated 29.10.2015 and the project work on the ground was started in October,

2015.

4.4.31. We have noted the submissions made by the parties on this aspect. We note that the

Petitioner has submitted that the land on the left bank was given on lease by GSECL on

20.10.2015 and the permission to start the work was given by the Water Resources

Department (Irrigation Department) vide letter dated 29.10.2015. It is necessary to refer the

said letter as reproduced below:

“

…..

Narmada Water Resources, Water Supply Kalpsar Department Executive Engineer KD-1/ABTC/Kadana/Dolatpura/SHP/4426/2015 Date: 29/10/2015

…

Sub:- Starting execution of Installation of small hydropower station at Dolatpura weir.

…..

Sir,

In connection to the subject and references mentioned above, you are permitted to start

execution of installation of 12 MW SHP at Dolatpura weir, subject to the condition that all

remarks/points raised in past and raised during execution/operation of SHP by CDO, GIDB,

GSECL and / or any other concern agencies/departments, will be complied to the

satisfaction of Grantor.

…..”

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It is apparent from the above that the permission to initiate the work relating to the project

was given to the Petitioner only on 29.10.2015. The Petitioner submitted that the land was

given by GSECL only on 20.10.2015. Though, the correspondence relating to handing over

the land on lease is not on the record, but the Petitioner has filed a copy of the lease deed

for the Government land executed between GSECL and Narmada, Water Resources, Water

Supply and Kalpsar Department, Government of Gujarat dated 26.10.2015. Thus, it appears

that it was possible for the Petitioner to initiate the work related to project only thereafter.

The time limit envisaged in the DPR for completion of the project is 18-24 months and

accordingly, the period of 24 months completes on 29.10.2017 from the date on which the

permission to start the work was given. As per the affidavit dated 20.03.2018 filed by the

Petitioner, the project achieved the Commercial Operation on 16.03.2018, which amounts

to approx. 4.5 months’ delay against the construction period envisaged in the DPR. Further,

the Petitioner has submitted that there is no cost overrun due to delay in completion of the

project as the costs payable to the contractors are as per the tendered costs. Thus, we do not

find any merit in the objections of the Respondents on this count.

4.4.32. As to the Preliminary and Pre-Operative Cost Expenses, the Petitioner has claimed Rs. 4.43

Crore. The Petitioner has submitted a summary of these expenses along with the Bank

Statements as a proof of payment.

4.4.33. The Respondents have alleged that in order to undertake prudence check, item wise

supporting documents and details of payment made with the bank statement be submitted at

least in relation to the major cost items where the amount involved is more than Rs. 3 lakhs.

4.4.34. We note that the Petitioner has furnished the summary of various expenses forming part of

the Preliminary and Pre-Operative Expenses as well as Bank Statements as proof of payment

Page | 53

to substantiate the claim. We note that out of total Preliminary and Pre-Operative Expenses

claim of Rs. 4.43 Crore transactions amounting to Rs. 3.37 Crore are supported by the Bank

Statements whereas transactions amounting to Rs. 1.05 Crore (24%) are Cash payments.

Further, the major contributing heads are Office Salary (24.64%), Processing Charges

(11.68%), Insurance Expense (11.47%), Professional Fees – Projects (8.76%) and Labour

Charges (6.32%).

4.4.35. We also note that the Petitioner has subsequently revised the Preliminary/Pre-Operative

Expenses claim to Rs. 4.987 Crore as on 30.06.2018, an increase of Rs. 0.557 Crore along

with a certificate of Chartered Accountants. As noted above, the Petitioner has only

furnished the summary of Preliminary and Pre-Operative Expenses amounting to Rs. 4.43

Crore along with the proof of payment. The Petitioner has not furnished any supporting

documents for incremental expenditure of Rs. 0.557 Crore However, since the amount of

Rs. 4.43 Crore was as on 18.01.2018 i.e. prior to the commissioning of the Petitioner’s Plant,

it appears that the Petitioner may have incurred additional expenses under this head prior to

the commissioning of the plant. But it is also a fact that the Petitioner has not submitted any

documents to substantiate that the said incremental expenditure was incurred prior to the

date of commissioning. Under the circumstances, the Commission decides not to consider

the incremental expenses claim of Rs. 0.557 Crore

4.4.36. The Petitioner had claimed Rs. 2.77 Crore towards Contingency Charges in the petition on

estimation/projection basis, which had been objected by the Respondents stating that it

cannot be based on the estimates. Since the Petitioner has subsequently not claimed this

amount separately as such expenses get merged with regular heads of expenditure, the

Commission decides not to approve such preliminary claim which no longer sustained in

subsequent submissions.

Page | 54

4.4.37. As regards the Land Lease, the Petitioner had claimed the amount of Rs. 1.32 Crore (i.e. Rs.

63,200 per Hectare × 5.966 Hectare × 35 Years) towards the Government land and Rs. 1.53

Crore (i.e. Rs. 9,00,000 per Hectare × 8.5 Hectare × 2 Years) for private land. However, as

per the CA certificate furnished by the Petitioner, land lease expenses on actual basis are Rs

0.11 Crore till 18.01.2018 and there appears no expenses incurred towards private land.

4.4.38. The Respondents have submitted that the Petitioner has not submitted a copy of lease deed

and in case the rent is payable on annual basis, the same may not be considered as a part of

capital cost.

4.4.39. In response, the Petitioner filed a copy of the Land Lease Agreement executed between

GSECL and Narmada Water Resources, Water Supply and Kalpsar Department,

Government of Gujarat dated 26.10.2015, which records that land admeasuring 5.9679

Hectares (Ha.) is given on lease by GSECL to Narmada Water Resources for a period of 35

years at yearly rent of Rs. 63,200/Hectare, which in turn as per Clause 8.2 and Schedule 5

of the Concession Agreement is to be paid by the Petitioner.

4.4.40. The Petitioner has vide letter dated 18.07.2018 submitted a certificate of Chartered

Accountants which indicates expenditure of Rs. 0.113 Crore incurred upto 30.06.2018

towards Land Lease. However, considering the fact that the project was commissioned on

16.03.2018, the Lease Rent paid/payable upto the date of commissioning only is required to

be capitalized and the Lease Rent for the balance period is to be considered as a part of the

O&M cost. Accordingly, the Commission approves the expenditure towards Lease Rent for

the period of 2.5 years starting from 26.10.2015 to 16.03.2018 @ Rs. 63,200 for 5.966

hectares of land amounting to Rs. 0.09 Crore. Balance Lease Rent of Rs. 1.23 Crore for the

project life of 35 years is a revenue expenditure and is to be passed on in the tariff on year

Page | 55

to year basis, which works out to Rs. 0.035 Crore per annum for 12 MW and Rs. 0.292 lakh

per MW.

4.4.41. We also note that the Respondents have contended that the Petitioner was entitled to a rebate

of 25% on Civil Works cost from M/s SCC Infrastructure Private Limited, which has not

been factored in by the Petitioner. However, the Petitioner has submitted that the

expenditure on Civil Works as certified by the CA is net of 25% rebate given by M/s SCC

Infrastructure Private Limited. In support of this, the Petitioner has furnished a copy of final

invoice showing the effect of rebate of 25% in the total bill. We have noted the submissions

made by the parties and perused the supporting documents produced by the Petitioner. It is

observed that the rebate of 25% appears to have been factored into the amount claimed by

the Petitioner towards Civil Works. Thus, the contention of the Respondents on this aspect

is not acceptable and the same is rejected.

Other submissions of the Respondents

We note that the Petitioner had claimed various other components such as Establishment &

Overall expenses, Other Misc. Charges, Tools and Plants, Protection Works etc. on

estimation/projection basis. However, as recorded above, since the Petitioner filed a

statement of actual costs incurred towards the project duly certified by CA M/s Finava &

Company requesting the Commission to consider the project cost on actual basis,

consideration of the above components in the Capital Cost, therefore, does not arise.

We also note that the Petitioner has sought an additional expense of Rs. 5.31 Crore towards

Infrastructural Works namely, Residences, Quarters, Offices, Compound Wall, and

Vehicles in the Capital Cost of the Project. The Petitioner has also attached a certificate

issued by Himat O Kundarya, Consulting Engineer substantiating detailed information of

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post project infrastructural work justifying the relevant work cost. However, we note that

the aforesaid expenses are not the actual expenses incurred as per the CA certificate

furnished by the Petitioner and are claimed on estimation/projection basis supported by a

certificate of consultant engineer which cannot be considered as basis for approval of the

same as a part of the project cost. Under the circumstances and also looking to the nature of

expenses, we do not find it appropriate to include this expenditure in the Capital Cost.

4.4.42. The Respondents have objected to substantial increase in the cost of the project more

particularly the cost of Civil Works. Though the Petitioner has filed the supporting

documents to substantiate the expenditure and the payments made against various items of

Civil Works, the fact remains that there has been an increase of 171% against the cost

projected in DPR and an increase of 209% considering the tender cost. In the overall project

cost, the Civil Works cost is the major element which has resulted into the total cost

increasing substantially and the same cannot be ignored.

In order to validate the expenditure incurred by the Petitioner, the Commission availed the

services of Alternate Hydro Energy Centre, Indian Institute of Technology, Roorkee

(AHEC, IIT-Roorkee). The representative of AHEC, IIT-Roorkee visited the project site

on 17.12.2018 and held discussions with the officials of the Petitioner. The representative

also held discussion with the Commission. Pursuant to the site visit and discussions, AHEC

sought various details and documents from the Commission as well as the Petitioner, which

was duly complied by the Petitioner and the Commission. AHEC, IIT-Roorkee submitted

their report vide letter dated 15.01.2019 for vetting of capital cost of the Petitioner’s

Dolatpura Small Hydro Project. Based on their detailed examination of various documents

they have given the recommended cost in their Report as reproduced below:

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“…………….

9.0 RECOMMENDED COST

Based on the review of DPR, Construction Drawings and Expenditure statements given by AEPL in its submissions to GERC, the recommended cost of the project has been shown in the Table below with remarks: Table 1: Recommended Cost for Dolatpura SHP

DPR Actual AHEC Sl. Particulars Estimated expenditure / recommended Remarks No. Cost Actual Cost cost Preliminary and 1 pre-operative 3.25 4.99 4.99 expenses 2 Civil Works Vertical wall should have been reduced only up to the full supply level plus three board instead of constructing additional 2.1 Power Channel 7.7 15.47 11.55 height by 3.5 m. This should have resulted in lesser size and thickness substantially. A 25% cost would have been reduced. 2.2 Intake Pool 1.01 3.70 3.70 2.3 Intake Structure 8.95 0.02 0.02 Should have been reduced by (a) 11% due to excessive length provided for power house due to bad selection of location of control room and space 2.4 Power House 14.85 40.50 34.63 between stop log and gate (b) 2.5% due to pit type of turbine instead of tubular causing higher excavation by 3.5 m in a length of 14 m, and (c) 1% on account of extra filling of concrete by 4.05 in a height of

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DPR Actual AHEC Sl. Particulars Estimated expenditure / recommended Remarks No. Cost Actual Cost cost 31.5m and extra layers of center reinforcement of raft in power house. The tailrace pool has been provided with an exceptionally mild slope of 1:10 which should have 2.5 Tail Race Pool 2.63 7.51 3.75 been anywhere between 1:4 to 1:6. A length of 77.1 m would have been reduced to 50% and hence related 50% cost. In view of reduced tailrace pool, a length of additional 38 m length 2.6 Tail Race Channel 11.16 8.85 10.25 would have been constructed for tail race channel. Hydro Mechanical 2.7 7.50 6.02 6.02 Works

2.8 Protection works 1.50 1.57 1.57

2.9 Tax 4.45 4.45 Sub total 55.30 88.09 75.94 Electromechanical 3 23.50 16.77 16.77 works Transmission 4 6.00 2.41 2.41 works 5 Land Lease cost 0.00 0.11 0.11 Interest during 6 0.00 4.21 4.21 construction It seems that this Establishment, expenditure have been audits, tools and built in the respective 7 8.28 0.09 0.09 plants, component of works as the contingency same has not been shown as expenditure.

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DPR Actual AHEC Sl. Particulars Estimated expenditure / recommended Remarks No. Cost Actual Cost cost

Total 96.33 116.67 104.52

Based on data, details, information provided by AEPL and analysis carried out, it is recommended that a sum of Rs. 104.52 crore may be considered the cost of project.

Further AEPL may be asked:

(a) To provide safe excess and ventilation in the machine hall (b) To provide basic convenience to the workers (c) To provide mechanical cleaning of trash rakes (d) To protect the tail race channel embankment ……………”

It can be observed from the above that against the estimated cost of Rs. 96.33 Crore and

actual expenditure of Rs. 116.67 Crore, AHEC, IIT-Roorkee has recommended the project

cost of Rs. 104.52 Crore. The deductions have been made against Power Channel (Rs. 3.92

Crore), Power House (Rs. 5.87 Crore) and Tail Race Pool (Rs. 3.76 Crore). However, in

respect of Tail Race Channel as against actual expenditure of Rs. 8.85 Crore, they have

recommended expenditure of Rs. 10.25 Crore (increase of Rs. 1.40 Crore). It is apparent

from their remarks against various heads of expenditure that the aforesaid deductions and

increase in expenditure is based on their past experience of execution of hydro projects

rather than checking the quantities substantiated in the documents filed under the petition

and confirming the same. In its report AHEC has given its views as to how the project could

have been executed in principle and as per standards. The Commission is of the view that

in any hydro project, the geological challenges at site may differ from project to project and

therefore, actual work carried out at the site should not be ignored for arriving the actual

project cost. We, also understand that after completion of the project including the civil,

mechanical and electrical works, it will be quite difficult exercise to verify the bill of

quantity with actual execution. Now the matter before us is to allow the total capital cost of

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a small hydro project after taking into consideration the actual cost, its prudence check, the

normative standards of similar projects and the final figures arrived at in the expert AHEC

report and our findings should not vary to a large extent. We, therefore, decide the project

cost after doing the prudence check as under:

Amount Sr. Approved by the Head No. Commission (Rs. Crore) 1 Preliminary & Pre-Operative Expenses 4.43 2 Civil Works 79.13 3 E & M Works 16.76 4 Gate Works 5.98 5 Transmission Line Works 2.29 6 Interest During Construction 2.70 7 Land Lease# 0.09 8 Sub- Total Cost Incurred for Dolatpura SHP 111.38 Ongoing Operative Expenses (Including Interest on Term 9 - Loan) from 02.12.2017 to 18.1.2018 10 Trade Receivable - 11 Cash and Bank Balance - 12 Advance & Prepaid Expenses - 13 TDS/GST - 14 Furniture & Fixture (**) - 15 Vehicles (**) - 16 Investment (**) - 17 Deposits (**) - Total 111.38 (**) These items are not pertaining to Dolatpura SHP

# lease rent paid upto COD is considered as a part of Capital Cost and amount thereafter for per MW basis of Rs 29,177 per annum per MW is considered as revenue expenses.

5. Capacity Utilization Factor (CUF):

5.1. Petitioner’s Submission:

The Petitioner has proposed Capacity Utilization Factor of 42.5% as per the Concession

Agreement signed between the Petitioner and Irrigation Department, Government of

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Gujarat. The Petitioner also proposed that for the first year, CUF may be considered as 35%

as initially some time is required for stabilization of the plant operation. Thus, the Petitioner

has proposed to consider the CUF at 35% for the first year and 42.5% from the second year

onwards.

5.2. Respondent’s Submission:

5.2.1. Though the Petitioner’s project is having better CUF of 42.5% compared to SSNNL

projects, the corresponding tariff claimed by the Petitioner is much higher. In fact, compared

to Miyagam Branch Canal and Vadodara Branch Canal, the Capital cost is lower and the

CUF is higher for the Petitioner’s project and yet the tariff claimed by the Petitioner is much

higher.

5.2.2. The Petitioner has considered 35% PLF during the first year and 42.5% from the second

year onwards without disclosing the historical data of monthly/yearly water flow and water

head though it was specifically sought by the Respondent for undertaking prudence check

on the adequacy of CUF considered by the Petitioner. However, no such details are provided

by the Petitioner even though sought for. There is no logic and justification to consider lower

CUF during first year of operation.

5.2.3. Water released from Kadana Hydro Project of GSECL is stored at Dolatpura weir. Further

water is released from Dolatpura weir for Wanakbori , irrigation requirement

and water requirement of Vadodara city. The water release for above purposes is to be

diverted and to be utilized by the Petitioner’s project for power generation. The water release

from the Kadana dam is about 440 mcft during 24 hours of day whereas the water

requirement of 4 MW × 3 Nos. of units of the Petitioner’s project is 572 mcft for 24 hours

generation. Therefore, the water release from the Dolatpura weir is sufficient to run atleast

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2 units of the project on continuous basis. Accordingly, CUF of the Petitioner’s project may

not be less than 50% in any event.

5.2.4. GSECL’s Kadana Hydro Plant is already running on the same dam, hence the details of its

CUF may be called for and also the cost related parameters may also be vetted by GSECL.

5.3. Petitioner’s Compliance:

5.3.1. Doltapura SHP is located at approximately 16 km downstream of Kadana Dam. The water

releases made from Kadana Dam for irrigation, requirements of Wanakbori project, pass

through the Dolatpura weir and is utilized for power generation. For working out the

capacity utilization factor (CUF), the actual water release data of Kadana dam from the year

1991 to 2007 has been studied and analyzed and based on the analysis, the CUF of 42.5%

has been arrived. The Water Resources Department is the premier department for hydrology

and hydro power in the State of Gujarat. The study done for working out CUF had been

submitted in the preliminary report as well as the DPR, which after due scrutiny of Central

Designs Organization, has been approved by the Water Resources Department. CUF cannot

be assessed or worked out in normative way by working out the volume release from any

dam as has been mentioned by the Respondent, GUVNL. For working out CUF, the actual

release data over a longer period of more than 10 years has been studied and analyzed. The

hydrological data of Water Resources Department regarding Kadana project has been duly

examined by the Central Designs Organization of the Water Resources Department, while

approving the DPR. The Water Resources Department, after the due technical scrutiny

invited the tenders for Dolatpura SHP under GID Act, 1999, Swiss Challenge Route

Method. The Water Resources Department vide their letter dated 7.6.2011 and 25.5.2011

technically approved the project proposal.

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5.3.2. In the first year of the project commissioning, 35% of CUF has been considered for the

reason that during the first year of commissioning, the project may have some teething

problems and snags which is observed in various projects like biomass and other projects as

well.

5.4. Commission’s Analysis

5.4.1. The Commission has considered rival contentions on Capacity Utilisation Factor (CUF) as

stated above.

5.4.2. We note the Petitioner’s contention that the CUF of the plant may be considered as 35% for

1st year of operation and 42.5% for the remaining life of the project from 2nd year onwards.

Opposing the contention of the Petitioner, the Respondent has submitted that the Petitioner

has not disclosed any historical data of monthly/yearly water flow and water head, though

it was specifically sought by the Respondent to undertake prudence check on the adequacy

of CUF considered by the Petitioner and that there is no logic to consider CUF at 35% for

1st year of operation. Moreover, it is contended that the water release from Kadana Dam is

about 440 mcft during 24 hours of day, whereas water requirement for Petitioner’s project

is 572 mcft for 24 hours generation which is adequate enough to run two units of the

Petitioner’s plant on continuous basis and thus, CUF may not be less than 50% in any event.

5.4.3. The Petitioner has contended that Dolatpura Weir is about 16 km downstream of Kadana

Dam. The water release from Kadana Dam is utilised, primarily for irrigation and for

generation purposes at Wanakbori Power Station. It is also submitted that the actual water

release from Kadana Dam from the year 1991 to 2007 has been studied and analysed and

based on the said analysis only the CUF of 42.5% has been arrived at.

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5.4.4. Since there is disagreement with regard to CUF at 35% for the 1st year and 42.5% from the

2nd year onwards with the Respondent contesting that the same may not be less than 50%, it

is necessary to verify the details submitted by the parties.

5.4.5. The Petitioner has submitted that it has studied the water release from the Kadana Dam for

the period from 1991 to 2007. We note that as per the “Detailed Project Report for Dolatpura

SHP ( 3 x 4 MW)" dated April 2015, the CUF of 42.58% has been arrived at in the DPR

based on the study and analysis of the Monthly and Annual Generation for FRL- 81.5 m for

randomly selected years 1991, 1992, 1995, 1997, 1998, 2003, 2005, 2006 and 2007. We

further note that in the aforesaid DPR under Chapter titled ‘Project at a Glance’, the Plant

Load Factor is stated as 42.58% at Sr. No. 7. The said CUF of 42.58% is considering Energy

Generation (Annual Average Energy) of 44.76 million units for 12 MW (3 x 4 MW)

capacity. We note that at para 6.7 of Chapter-6 of the DPR titled ‘Power Studies’, the Annual

Average Energy is computed based on nine years data and the same is stated as 44.76 million

units which is reproduced below:

“……. 6.7 Energy Generation 6.7.1. Annual Average Energy The energy output is computed sequentially for Month. The method accounts for the forebay elevation, variations in the tail water levels, head losses in the water conductor system, operating head range of the turbines, useful discharge for power generation through the turbine and the efficiency variation. Based on the discharges available the number of units required to operate is also decided and the efficiencies are adjusted accordingly. The average annual generation based on 9 years data, with 3 x 4000 kW Horizontal Pit Type Full Kaplan coupled with a Horizontal Synchronous generator is 44.76 million units gross. The table in annexure 1 summarizes the monthly generation, the annual generation and the average generation for the 9 years period. …………”

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It can be observed that the average annual generation is worked out after accounting for and adjustments on account of different aspects like forebay elevation, variations in the tail water levels, head losses in the water conductor system, operating head range of the turbines, useful discharge for power generation through the turbine and the efficiency variations.

Further, based on the discharges available as per 9 years data the CUF has been derived at

42.58%. Moreover, as per the Petitioner’s submission, the study done for working out CUF had been submitted in the preliminary report as well as the DPR, which after due scrutiny of Central Designs Organization, has been approved by the Water Resources Department.

We note that when the Central Design Organisation scrutinized the Preliminary Report as well as the DPR, for the Water Resources Department, prior to approval, the CUF approved therein seems to be authentic and valid. We further note that the Water Resource

Department, Government of Gujarat after due technical scrutiny had invited the bids for

Dolatpura SHP under Swiss Challenge Route under the Gujarat Infrastructure Development

Act, 1999. Water Resources Department vide letters dated 7.06.2011 and 25.05.2011 approved the project proposal. The said letters are reproduced below:

“… NO. PRC/6110/1033/46/K Government of Gujarat, Narmada, Water Resources, Water Supply & Kalpsar Department, Sachivalaya, Gandhinagar Date: 07/6/2011 To, The Superintending Engineer, 7 JUN 2011 Kadana Project Circle, Diwada Colony,

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Subject: Setting up small hydro power Station on Dolatpura. MEMO: With reference to your letter No. Kadana/Dolatpura hydro/422/2011 dated : 29/4/11 on the subject mentioned above the proposal for approval of the Draft bid documents for setting up small hydro power station amounting to Rs. 56.13 crores (Rupees fifty six crores thirteen lacks only) on Dolatpura weir as per GID act 10 (on swiss challenge route) is hereby approved by the Chief Engineer (C.G) & Additional Secretary, Narmada Water Resources, Water Supply & Kalpsar Department, Sachivalay, Gandhinagar. …….”

“… NO.KPC/6110/1033/46/K Government of Gujarat, Narmada, Water Resources, Water Supply & Kalpsar Department, Sachivalaya, Gandhinagar. Date : /5/11 25/5/2011. To. Managing Director, Gujarat Infrastructure Development Board, Udyog Bhavan, Sector:- 11, Gandhinagar.

Sub: Dolatpura Small Hydro Power Scheme Installed Capacity 12 MW Ref: Your Letter No. GIDB/SEK/57/EC-2011-61 Dated : 16-3-11

It was decided in the 57th Executive Committee (CE) meeting of Gujarat Infrastructures Development Board (GIDB) hold on 19-2-2011 to accord in principle approvel for the proposals to set up small hydro power generation stations at Dolatpura weir d/s of kadana project by Ajanta Energy Pvt. Ltd. under section 10 of GID Act and instructed department to initiate the process of firming up the concession agreement. …”

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5.4.6. We further note that the Respondent has submitted that the water release from Kadana Dam

is about 440 mcft during 24 hours and the 4 MW x 3 units of the plant for 24 hours generation

require 572 mcft water. We note that the generation of electricity from hydro power projects

is dependent on the water head and corresponding quantum of release from the dam. Merely

release of water quantum is not sufficient to generate the electricity, but requisite head is

also required to generate the electricity. Therefore, in the absence of any data indicating the

release of water quantum and corresponding head for different days and months of the year

from the Kadana Dam/Dolatpura Weir, the Respondent is not justified to claim that the

release of 440 mcft quantum of water is sufficient for 24 hours generation from two units of

the Petitioner’s plant. Moreover, the release of higher quantum of water but lack of sufficient

head does not give the optimum or designed generation. Hence, the contention of the

Respondent GUVNL in this regard is not acceptable and the same is rejected.

We further note that the Petitioner has prayed to consider the CUF at 35% due to the teething

problem during the first year of operation after commissioning of the plant and thereafter

from second year onwards the CUF of 42.5% is prayed. However, as noted above as per the

“Detailed Project Report for Dolatpura SHP ( 3 x 4 MW)" dated April 2015, the CUF of

42.58% has been arrived at in the DPR based on the study and analysis of the Monthly and

Annual Generation for FRL- 81.5 m for randomly selected years 1991, 1992, 1995, 1997,

1998, 2003, 2005, 2006 and 2007. The average annual generation in Chapter-6 titled ‘Power

Studies’ of the DPR is worked out after considering various parameters including discharge

& duration curve as per hydrological data, head, levels, power duration curve, optimization

of installed capacity, selection of turbine, unit capacity, number of units, generator rating

etc. and duly accounting for adjustments on account of different aspects like forebay

elevation, variations in the tail water levels, head losses in the water conductor system,

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operating head range of the turbines, useful discharge for power generation through the

turbine and the efficiency variations. Moreover, the study done for working out CUF had

been submitted in the preliminary report as well as the DPR, which after due scrutiny of

Central Designs Organization, has been approved by the Water Resources Department.

Therefore, the submission of Petitioner is not tenable and not accepted. We therefore, decide

to approve the CUF of 42.58% from the first year itself for 35 years duration.

6. Auxiliary Consumption:

6.1. Petitioner’s Submission:

The Petitioner has requested the Commission to consider the auxiliary consumption at 2%

of the gross energy generated from the project, as the Petitioner’s plant includes various

auxiliaries, which operate the power plant and these auxiliaries require energy during the

period when power plant is in operation.

6.2. Respondent’s Submission:

The Petitioner has proposed normative auxiliary consumption of 2% of the gross energy

generated from the project without giving any details or explanation for claiming auxiliary

consumption of 2% as compared to 1% allowed by the Commission in Generic Order.

The auxiliary consumption may not be allowed more than 1% in line with the auxiliary

consumption approved by the Commission in the Generic Tariff Order dated 14.12.2016 for

Small Hydro Projects.

6.3. Petitioner’s Compliance:

The power generated by the project is being utilized for various equipments at the plant such

as diesel pump, lighting at the control room, 24×7 power supply to switchyard and power

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station for which there is no separate provision made to supply electricity. Hence, the

auxiliary consumption of 2% is justified.

6.4. Commission’s Analysis:

6.4.1. The Petitioner has considered the auxiliary consumption at 2% of the gross generation which

is objected by the Respondents stating that the same may be considered as 1% in line with

the Generic Tariff Order dated 14.12.2016.

6.4.2. We note that the Petitioner has submitted that the power generated by the project is utilised

in the various equipments such as diesel pump, lighting of control room, switchyard etc.

Hence, the Commission may consider the auxiliary consumption @ 2%. We note that the

auxiliaries in the Small Hydro Power Plant are less and the consumption by such auxiliaries

is also less. Further, the lighting in the control room and other places of the plants as stated

by the Petitioner is also low.

6.4.3. The Commission, while passing the Generic Tariff Order for Small, Mini and Micro Hydel

(SMMH) project, vide Order No. 5 of 2016 dated 14.12.2016, has also considered the

auxiliary consumption as 1% of gross generation.

6.4.4. The Commission has also, while determining the project specific tariff for Mini Hydel

Project of M/s Tarini Infrastructure Limited vide Order dated 07.05.2018 in Petition No.

1024 of 2010 and IA No. 8 of 2016 filed therein, considered the auxiliary consumption at

1% of gross generation. The relevant portion of the Generic Order of the Commission as

well as the Order dated 07.05.2018 in the case of M/s Tarini Infrastructure Limited are

reproduced below:

Order dated 14.12.2016

“…

Page | 70 d. Auxiliary Consumption The Commission in its discussion paper has proposed auxiliary consumption equal to 1% of gross generation for SHP tariff determination purpose.

Suggestions of the Objectors No suggestions were received from the stakeholders on auxiliary consumption.

Commission’s Decision The Commission decides to retain the auxiliary consumption at 1% of gross generation for tariff determination of small, mini and micro hydro power projects.

…”

Order dated 07.05.2018

“…

18. Auxiliary Consumption

18.1. The Petitioner has considered the auxiliary consumption as 1% of the gross generation in the consolidated petition as per Annexure P-1 & P-2. The same is not objected by the Respondents. Further, the Commission in the generic order No. 5 of 2016 dated 14.12.2016 also considered the auxiliary consumption as 1% of gross generation.

18.2 As there is not much auxiliary load requirement in a SHP plant, the Commission accordingly considers the auxiliary consumption as 1% of gross energy generation.

…”

As the Petitioner was one of the Objectors when the Generic Tariff Order was decided by the Commission and that he did not object to 1% Auxiliary Consumption, and considering the fact that there is not much auxiliary load requirement in SHP, we decide the Auxiliary

Consumption of the Petitioner’s plant as 1% of gross generation to maintain uniformity across these Orders.

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7. O & M Cost & Escalation:

7.1. Petitioner’s Submission:

7.1.1. The Petitioner has proposed the O&M cost as Rs. 27.8 lakh per MW consisting of:

(i) Administrative expenses, (ii) Insurance, (iii) Maintenance of the equipments, (iv)

Maintenance spares etc.

7.1.2. The escalation on O&M Expenses is proposed @ 5.72 % p.a. from second year onwards

from the commissioning of the project

7.1.3. However, the Petitioner has requested the Commission to consider the O&M cost @ 3 % of

the Capital Cost with escalation @ 5.72 % p.a.

7.2. Respondent’s Submission:

The Respondents have submitted that the Petitioner be asked to furnish details of Operation

& Maintenance expenses along with supporting documents.

7.3. Commission’s Analysis:

7.3.1. We note that the Petitioner has proposed the O&M expenses for the first year of operation

at Rs. 27.8 Lakh/MW against the proposed project cost of Rs. 11.12 Crore/MW (Rs. 133.43

Crore total project cost), which is approximately 2.5% of the per MW project cost. However,

the Petitioner requested the Commission to allow the O&M expenses @ 3% of the project

cost.

7.3.2. The Petitioner has also submitted that the O&M Expenses consists of: (1) Administration

and General Expenses, (2) Repair and Maintenance Charges, (3) Maintenance Spares and

Maintenance Cost on year to year basis.

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7.3.3. However, we note that in the Generic Tariff Order No. 5 of 2016 dated 14.12.2016 the

Commission has decided O&M Charges as under:

“ 2.4.2 Operational and Financial Parameters

(b) Operations & Maintenance Charges

…

Commission’s Decision:

The Commission has examined the O&M costs of SHP project considered by CERC and SERCs of other States in the tariff orders for SHP. The O&M charges specified by the CERC as well as other SERCs are in the range of 2.6% to 3.6% of capital cost depending on the capacity of SHP plant. Hence, the Commission decides the O&M charges as 3.3 % of capital cost for SHP projects up to 5 MW capacity and 2.5% of capital cost for SHP projects of 5 MW to 25 MW capacity. The O&M charges as fixed above shall be escalated @ 5.72% per annum from second year onwards.”

Considering the above decision of the Commission in the Generic Tariff Order dated

14.12.2016, the Commission decides to allow Operation & Maintenance expenses (O&M)

for the Petitioner’s plant @ 2.5% of the Capital Cost with escalation @ 5.72% every year

from the second year onwards.

8. Debt : Equity Ratio and Return on Equity:

8.1. Petitioner’s Submission:

The Petitioner has proposed debt-equity ratio of 70:30 and Return on Equity (RoE) @ 14%

for determination of tariff.

8.2. Respondent’s Submission:

(i). The Petitioner has considered the normative equity of 30% for setting up of the plant.

However, the Petitioner has not submitted any details in relation to actual equity

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deployment in the project along with equity infusion plan though specifically sought

by the Respondent. As per the un-certified provisional balance sheet submitted, by the

Petitioner, the equity infusion works out to 23% as against the normative equity of

30%. As per the MYT Regulations, the actual equity deployed or 30% whichever is

lower is to be considered for determination of tariff.

(ii). The Petitioner has not provided the complete information/details of infusion of

required funds in the project and its utilization.

8.3. Petitioner’s Compliance:

The Petitioner has complied with the Tariff Regulations of the Commission with 30%

capital deployed by the Petitioner which is from its own funding as well as managing funds

from other sources and 70% funding is through the term loan, secured loan and applying

from the government schemes under the MNRE to reach the target of 100% project cost. As

the Petitioner has deployed higher equity from its own funds, the same does not qualify for

return on equity. The equity deployed above 30% be considered as debt as per the

Commission’s Regulations.

8.4. Commission’s Analysis:

8.4.1. Regulation 33 of the GERC (MYT) Regulations, 2016 provides as under:

“……… 33. Debt-equity ratio For the purpose of determination of tariff, debt-equity ratio as on the date of commercial operation in case of a new generating station, transmission or distribution line or substation commissioned or capacity expanded on or after 1.4.2016 shall be 70:30 of the amount of capital cost approved by the Commission under Regulation 34, after prudence check:

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Provided that where actual equity employed is more than 30% of capital cost approved by the Commission, the amount of equity for the purpose of tariff shall be limited to 30% and the balance amount shall be considered as loan:

Provided further that where actual equity employed is less than 30% of capital cost approved by the Commission, the actual equity shall be considered, and the balance amount in excess of 70% normative loan shall also be considered as loan:

………”

As per the above provision of the MYT Regulations, the Commission shall allow the debt

equity ratio of 70:30. In case the actual equity deployed is more than 30% of the Capital

Cost, the equity in excess of 30% shall be considered as loan and if the actual equity

deployed is less than 30%, the actual equity shall be considered and balance shall be

considered as loan.

8.4.2. The Respondent submitted that as per the un-audited provisional balance sheet submitted

by the Petitioner for FY 2016-17, it appears that the equity share capital of the Petitioner is

Rs. 20 Crore which works out to around 23% as against the normative equity of 30%

considered by the Petitioner. In contrast, the Petitioner submitted that the Petitioner and its

promoters have deployed equity higher than 30% from their own funding as well as

managing funds from other sources. Hence, the Commission may consider the equity as

30% as per its Regulations and remaining amount may be considered as loan.

8.4.3. The Commission noted that as per the un-audited provisional balance sheet of FY 2016-17,

the Share Capital is Rs. 20. Crore, Long-Term Borrowing (IREDA Term Loan) is Rs. 30

Crore, Short-Term Borrowings (Unsecured loan payable on demand from

Shareholders/Promoters) is Rs. 27.63 Crore, Trade Payables and Other Current Liabilities

are Rs. 6.16 Crore and Rs. 0.75 Crore respectively. Further, as per the CA certificate of M/s

Finava & Company dated 06.02.2018, furnished by the Petitioner indicating the Sources and

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Applications of Funds as on 18.01.2018, the Total Cost incurred for Dolatpura SHP is Rs.

111.4 Crore, wherein the Share Capital is of Rs 20 Crore, Secured Loan (IREDA) of Rs 40

Crore and Unsecured Loans of Rs. 45.45 Crore have been certified by the CA to have been

deployed by the Petitioner.

8.4.4. However, as per the subsequent CA certificate dated 17.07.2018 furnished by the Petitioner

vide letter dated 18.07.2018, it has been certified by CA that the Share Capital – Equity is

Rs. 20.00 Crore and Share Capital – Preference is Rs. 50.00 Crore and thus, the Total Paid-

up Share Capital is Rs. 70.00 Crore

8.4.5. We note that in terms of equity capital infused by the Petitioner, there appears change in

position between the two CA certificates dated 06.02.2018 and 17.07.2018 furnished by the

Petitioner. As per the CA certificate dated 06.02.2018 as well as the Provisional Balance

Sheet furnished by the Petitioner, the Equity Capital infused by the Petitioner was only Rs.

20.00 Crore, whereas Secured Loan (IREDA) was Rs. 40 Crore and Unsecured Loan from

the Promoters was Rs. 45.45 Crore. However, as per the CA certificate dated 17.07.2018,

the Equity Share Capital is Rs. 20 Crore and Preference Share Capital is Rs. 50 Crore, thus,

the total Share Capital infused by the Petitioner works out to Rs. 70. Crore. It is apparent

from these two CA certificates that a major portion of Unsecured Loans from the Promoters

of Rs. 45.45 Crore as on 18.01.2018 was converted into Preference Share Capital of Rs. 50

Crore as on 30.06.2018 with some additional infusion of funds as the Unsecured Loans are

reduced to Rs. 8.53 Crore and Preference Share Capital at Rs. 50 Crore came into existence.

However, the Petitioner has not submitted any documents such as Board Resolution for

conversion of loan into equity to substantiate that such equity infusion happened before

16.03.2018 i.e. the date of commissioning of the project. Moreover, as stated earlier, the

Commission has not accepted the Petitioner’s claim for incremental expenditure incurred

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during the period from 18.01.2018 to 30.06.2018 in the absence of any documents to

substantiate that the same was incurred prior to the date of commissioning of the project.

Under the circumstances, the Commission decides to approve equity of Rs. 20 Crores for

the project as per the CA certificate submitted by the Petitioner vide affidavit dated

07.02.2018.

8.4.6. Considering the Capital Cost of Rs. 111.38 Crore approved, in para 4 above, the Equity @

30% works out to Rs. 33.41 Crore, but since the Petitioner has deployed equity of Rs. 20

Crore as stated above, he is entitled to receive Return on Equity @ 14% on the said amount

of Rs. 20 Crore only.

9. Interest on Term Loan:

9.1. Petitioner’s Submission:

The Petitioner has considered interest on loan @ 13.5% for long term debt. The Petitioner

has submitted that the said interest rate is considered based on the prevailing SBI Base Rate

and adding 300 basis point thereon in line with the CERC’s Regulations.

9.2. Respondent’s Submission:

9.2.1. The Petitioner had earlier proposed the normative interest rate of 13.5% in line with CERC

Regulations. The Petitioner, subsequently, has submitted a copy of the sanction letter of

IREDA dated 06.06.2016 for sanction of loan of Rs. 45 Crore, however, the said letter is

incomplete and without annexures. Based on the above letter, the Petitioner has now stated

that the interest for the loan from IREDA is @ 11.5%/12.05%. No further information is

provided by the Petitioner and it is also not clear why different rates have been mentioned

by the Petitioner.

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9.2.2. The Petitioner has deliberately avoided to submit loan details/information in terms of loan

agreement, project appraisal report, details of disbursement schedule and actual

disbursement etc. The Petitioner be directed to submit the above details for undertaking

prudence check.

9.2.3. The Commission has benchmarked the financial parameters based on the respective

provisions of the Multi Year Tariff Regulations. The GERC (MYT) Regulations provide

that the interest on term loan shall be allowed at a rate equal to the State Bank Base rate plus

200 basis points. The Commission may undertake the prudence check and approve the

interest at the lower of actual rate of interest applicable to the Petitioner project or rate of

interest as per the MYT Regulations.

9.3. Petitioner’s Compliance:

9.3.1. The Petitioner has acquired a term loan of Rs. 45 Crore from IREDA and interest payable

thereon is 12.05% during the construction of the Project and 11.5% during the operation

period. In addition, the Petitioner has claimed that he has incurred various actual costs as

enumerated below totaling to Rs. 83,33,183/-, which may also be considered by the

Commission:

(Rupees) (a) Insurance erection policy- 16,67,223 (b) Processing Fees 51,75,000 (c) Loan Document Expenses 8,00,960 (d) Charges to CA for loan appraisal 6,90,000 Total 83,33,183

9.3.2. The Petitioner has submitted that a term-loan of Rs. 45 Crore has been sanctioned by IREDA

on 06.06.2016. The demand notes raised by IREDA for interest have also been submitted.

The details for payment of interest made along with Bank Statement are also filed.

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9.4. Commission’s Analysis

9.4.1. The Petitioner had initially proposed the interest on loan @ 13.5%. However, during the

proceedings, the Petitioner has submitted that it has been sanctioned a term loan of Rs. 45

Crores from IREDA and interest thereon is payable @ 11.5% during operation of the project

and @ 12.05% during construction period of the project. The Petitioner has also incurred

actual expenditure of Rs. 83,33,183/- on various heads relating to raising of finance and

insurance other than interest on aforesaid loan.

9.4.2. In contrast the Respondents submitted that the Petitioner has submitted incomplete sanction

letter of IREDA dated 06.06.2016 as the annexures to the said letter are not filed. The

Petitioner has also not submitted loan details, disbursement schedule, loan agreement, actual

disbursement etc. The MYT Regulations notified by the Commission provide that the

interest on loan shall be allowed at a rate equal to State Bank Base Rate plus 200 basis

points. The Commission, after a prudence check, may allow the interest on loan lower of

actual rate applicable or the rate as per the MYT Regulations.

9.4.3. We note that the Petitioner has submitted a copy letter dated 06.06.2016 from IREDA for

sanction of term loan. Being relevant in the matter it is necessary to refer to the same which

is reproduced below:

“………… 221/3175/SHP/2016/IREDA Dated: 06.06.2016 M/s. AJANTA ENERGY PRIVATE LIMITED Ajanta-Oreva House, 3rd Floor, Thaltej Cross Road, S.G Highway, Ahmedabad Gujarat-380054

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Sub: Sanction of Term Loan of Rs. 4500 Lakhs to M/s. AJANTA ENERGY PRIVATE LIMITED, for your 12.00 MW (3×4000 KW) Dolatpura SHEP to be set up at , Kadana, District Mahisagar of Gujarat (Project No. 2219)

Dear Sir, Please refer to your loan application and subsequent correspondence & discussions, your representative(s) had with us, regarding term loan towards setting up 12.00 MW (3×4000 KW) Dolatpura SHEP at Kadana, District Mahisagar of Gujarat (Project No. 2219). The application has been considered and Indian Renewable Energy Development Agency Ltd. (IREDA) is agreeable to provide to your Organization, as Borrower, Term Loan of RS. 4500 Lakhs (Forty Five Crores Only).

2. The sanctioned loan is subject to following: i) Terms and conditions as detailed in Annexure-1. ii) Formalities to be complied with for execution of loan documents as detailed in Annexure-II. iii) The steps/formalities required to be complied with and or documents required to be submitted for the securities stipulated as detailed in Annexure-III. iv) Terms and Conditions governing release of first instalment of loan as detailed in Annexure-IV. v) Sample Standard Legal Documentation formats are available on IREDA website ( ) for your reference. However, the same will be modified as applicable and as per the present guidelines of IREDA.

3. Please note that this communication should not in any way be construed as giving rise to any binding obligation on the part of IREDA, unless the borrower communicates to IREDA, within 30 days from the date of receipt of this letter that the terms and conditions set out herein are acceptable and unless the Loan Agreement and other documents relating to the above loan are executed by the borrower within the prescribed period, the loan sanction shall be considered withdrawn automatically without any further reference and obligation on the part of IREDA.

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4. The execution of Loan Agreement and other documents is scheduled for Jul 5th, 2016.

In case you wish to sign the documents earlier, you are welcome to do so with prior intimation. This is, however, subject to submission of documents as detailed in the letter. ……….…”

As per the aforesaid letter, the Petitioner has been sanctioned a loan of Rs. 45 Crores by

IREDA. However, no rate of interest is mentioned in the copy of the sanction letter

submitted by the Petitioner. As per the submissions of the Petitioner the interest payable by

the Petitioner is @ 12.05% during construction of the project and @11.5% during operation

of the project.

9.4.4. As the Commission is deciding upon the interest on loan, it is necessary to refer the GERC

(MYT) Regulations 2016. The relevant Regulation is reproduced below:

“…

38.5 The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee:

Provided that at the time of truing up, the weighted average rate of interest calculated on the basis of the actual loan portfolio during the year applicable to the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee shall be considered as the rate of interest:

Provided further that if there is no actual loan for a particular year but normative loan is still outstanding, the last available weighted average rate of interest for the actual loan shall be considered:

Provided also that if the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee, as the case may be, does not have actual loan, then the weighted average rate of interest of the other business of the Generating Company or the

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Transmission Licensee or SLDC or the Distribution Licensee regulated by the Commission shall be considered:

Provided also that if the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee, as the case may be, does not have actual loan, and the other business of the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee regulated by the Commission also does not have actual loan, then the weighted average rate of interest of the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee as a whole shall be considered:

Provided also that if the Generating Company or the Transmission Licensee or SLDC or the Distribution Licensee as a whole does not have actual loan, then the Bank Rate plus 200 basis points shall be considered as the rate of interest for the purpose of allowing the interest on the normative loan.

As per aforesaid Regulation, the interest on loan shall be at SBI Base Rate plus 200 basis points in the absence of actual loan. However, the Petitioner has been sanctioned a loan of

Rs. 45 Crore by IREDA and has claimed that the interest rate during the operation period is payable @ 11.5 % and during construction of the project, interest is payable @ 12.05%. As the project is already commissioned on 16.03.2018, the interest on loan during the construction period is considered as a part of Interest During Construction (IDC) and accordingly, an amount of Rs. 2.70 Crore as per the CA certificate submitted vide affidavit dated 07.02.2018 is approved in the project cost. As regards the rate of interest during operation period, though the Petitioner has claimed the same @ 11.50%, it is observed that the Petitioner vide letter dated 12.11.2018 informed about downward revision in the rate of interest from 11.55% to 11.05% by IREDA consequent upon upgrading of CRISIL rating and accordingly, enclosed a copy of Demand Notice dated 25.09.2018 from IREDA to substantiate its claim. Accordingly, we decide the rate of interest on loan for the Petitioner’s plant at 11.05%.

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9.4.5. As to the loan repayment period, there are no details available on record, hence, the

Commission considers the loan repayment period as 10 years in line with the Generic Tariff

Order No. 5 of 2016 dated 14.12.2016.

9.4.6. We further note the Petitioner’s submission that it has incurred an amount of Rs. 83,33,183/-

towards (i) Insurance Erection Policy, (ii) Processing fees, (iii) Loan document expenses,

(iv) Charges to CA etc. Since no supporting documents such as insurance premium payment

receipt, demand note of processing fees & document supporting payment thereof, payment

made towards preparation of loan documents & registration thereof and invoice of the

Chartered Accountant & payment thereof etc. have been filed by the Petitioner, we do not

consider it appropriate to allow these expenses in the absence of supporting documents.

10. Depreciation:

10.1. Petitioner’s Submission:

The Petitioner has considered salvage value as 10% and remaining 90% of the asset value

has been depreciated during the life of the project. The Petitioner has proposed to consider

depreciation @ 6% for the first 10 years and the balance of 30% of the project cost to be

depreciated over the next remaining life of the project on equal basis.

10.2. Respondent’s Submission:

The Respondents have not offered any comment on this issue.

10.3. Commission’s Analysis

We note that the Petitioner has claimed depreciation upto 90% of the project cost

considering 10% as the salvage value. Further, the Petitioner has claimed deprecation on

straight line method. The Respondents have not made any submissions in this regard.

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The Commission notes that the GERC (Multi Year Tariff) Regulations, 2016 specify that

depreciation should be calculated based on Straight Line Method. The aforesaid Regulations

further lay down that asset is to be depreciated up to 90% of its initial value (considering

residual value as 10% of its initial value) over the entire life of the asset. To facilitate the

principal loan repayment, the Commission decides to consider the depreciation rate as 7%

per annum during the loan repayment period i.e. first 10 years; and for the period beyond

loan tenure period, the depreciation is allowed at the rate of 0.80% per annum from 11th to

35th year for the purpose of tariff determination.

11. Taxes:

11.1. Petitioner’s Submission:

The Petitioner has proposed to consider the tax payable on Return on Equity with MAT @

21.34% for initial 10 years and Corporate Tax @ 34.61% for the remaining life of the

project.

Respondent’s Submission:

The Respondents have not offered any comment on this issue.

11.2. Commission’s Analysis

The Commission notes that the notified rate of MAT for FY 2017-18 i.e. the year in which

the Petitioner’s Plant was commissioned is 21.342% whereas the Corporate tax rate is

34.608%. Hence, we decide to allow MAT @ 21.342% for initial 10 years and Corporate

Tax @ 34.608% for the balance life of the project.

12. Discount Rate:

12.1. Commission’s Analysis:

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Considering the Debt : Equity Ratio, Return on Equity and Taxes allowed by the

Commission, the Weighted Average Cost of Capital/Discounting Factor works out to

8.79%.

13. Working Capital & Interest on Working Capital:

13.1. Petitioner’s Submission:

The Petitioner has proposed the following components for computation of working capital:

(i) Operation and Maintenance Expenses for 1 month

(ii) Stocks of maintenance spares for 1 month

(iii) Receivables equivalent to 2 months’ charges for sale of electricity calculated

(iv) Maintenance and spares calculated @ 1% of the capital cost.

For computation of Interest on Working Capital, the Petitioner has proposed the interest @

13.5% i.e. 1% higher than rate of interest on debt as the working capital loan carries higher

rate of interest being short-term in nature.

13.2. Respondent’s Submission:

The Petitioner has considered the normative requirement of Working Capital and considered

the interest rate on working capital @ 13.5% which is higher than the interest rate considered

in the Generic Tariff Order. The Commission may look into the same and allow the interest

rate on working capital lower of actual rate of interest or rate of interest considered in the

generic tariff order.

13.3. Petitioner’s Compliance:

13.3.1. The hydro power project of the Petitioner is a special kind of project which needs huge

amount of working capital until commissioning of the project. Therefore, higher interest as

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a part of the project cost needs to be taken into consideration while determining the project

specific tariff. The interest on working capital is higher as the period is short and it depends

on the financial strength of the company.

13.3.2. Interest on Working Capital is envisaged as per the prevailing market rate, hence, the

Commission may consider the same at SBI base rate plus 300 points thereon.

13.4. Commission’s Analysis

13.4.1. The Petitioner has claimed the Interest on Working Capital @ 13.50% requesting the

Commission to allow Interest on Working Capital at a higher rate than the rate of interest

on term loan. The Petitioner has also requested the Commission to allow the Interest on

Working Capital at SBI Base Rate plus 300 points thereon. The Respondent has submitted

that the Interest on Working Capital demanded by the Petitioner is higher than the interest

rate of 11.40% considered by the Commission in the Generic Tariff Order No. 5 of 2016.

The Commission may allow the Interest on Working Capital at lower of actual rate of

interest or rate of interest considered in the Generic Tariff Order.

13.4.2. We note that there are no details of the working capital loan, if any, obtained by the

Petitioner from any financial institution.

13.4.3. In the absence of any documentary evidence on record with regard to interest on working

capital, the Commission decides to allow the same on the basis of its Generic Tariff Order

for Small, Mini and Micro Hydro Power Project dated 14.12.2016.

In this regard, we note that the Commission in its Generic Tariff Order for Small, Mini and

Micro Hydro Power Project dated 14.12.2016, has on the aspect of Working Capital and

Interest on Working Capital observed as follows:

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“…

h. Working Capital and Interest Rate on Working Capital

The Commission in its discussion paper had considered the components of working capital

as follows:

1) O&M expenses for one month.

2) Receivables of one month charges for sale of electricity.

The Commission had proposed the interest on working capital equal to the SBI base rate

plus 250 basis points i.e. 11.80% for the purpose of tariff determination for new control

period starting from the date of order.

…

Commission’s Decision

As per GERC (Multi Year Tariff) Regulations, 2016, interest on working capital shall be allowed

at a rate equal to the SBI Base Rate (MCLR) plus 250 basis points. Further the Commission

noted that the working capital requirement by the project developer would be generally on short

term basis which can be managed at lower rate. In view of above, the Commission decides the

interest on working capital as 11.40% for determination of tariff for small, mini and micro hydro

projects for the control period of this order.

Thus, the Commission while approving the Interest on Working Capital in the aforesaid

Generic Order allowed it at the same rate as that of Interest on Loan. Adopting the similar

philosophy in the present case, we decide to allow the Interest on Working Capital @

11.05% in line with the current interest rate scenario.

13.4.4. As far as the constituents of the working capital is concerned, we note that the Commission

in its Generic Tariff Order No. 5 of 2016 dated 14.12.2016, has considered the following

constituents for the Working Capital:

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(i) Operation and Maintenance expenses for one (1) month;

(ii) Receivables of one month charges for sale of electricity.

Hence, in line of the above Order, in the present case also, the Commission allows the

aforesaid constituents only in the Working Capital.

14. Royalty:

14.1. Petitioner’s Submission:

As per the Concession Agreement, the Petitioner is required to pay the Royalty @ Rs. 0.91

per unit to the Irrigation Department, which may considered and allowed as a part of the

tariff receivable by the Petitioner.

14.2. Respondent’s Submission:

Royalty fees quoted by the Petitioner was the commercial decision of the Petitioner and in

fact the Petitioner quoted higher royalty to get the project awarded in its favour. Therefore,

the cost of the same may not be included in the tariff. Otherwise, the developers of project

would quote any amount of royalty fees as the same is going to be pass through in the tariff,

burdening the consumers.

14.3. Petitioner’s Compliance:

14.3.1. The Petitioner has to pay royalty fees @ Rs. 0.91 per unit as per the Concession Agreement

to Water Resource Department, Govt. of Gujarat. The royalty fee is a major component of

the recurring input cost of the SHP. Hence, this should be considered as an input cost, while

determining the project specific tariff of Dolatpura SHP.

14.3.2. The Commission vide its Daily Order dated 17.11.2016 advised the Petitioner to approach

the State Government for waiver of royalty so as to benefit the consumers of the State. In

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this regard, various representations were made to the State Govt. by the Petitioner for getting

the royalty waiver. However, as on date the royalty payable @ Rs. 0.91 per unit is a major

cost component of the Petitioner as the royalty has not been waived by the concerned

Government Authority. Therefore, the Commission is requested to consider the amount of

royalty while determining the project specific tariff. The Petitioner has to pay the royalty to

the Water Resources Department as per bid condition for utilization of water provided by

them for generation of electricity which is an input for generation, hence, the same is a part

of the generation cost as allowed in the other energy projects.

14.4. Commission’s Analysis

14.4.1. The Petitioner has claimed Royalty/License Fees @ Rs. 0.91 per unit payable to the

Narmada, Water Resources, Water Supply and Kalpsar Department, Government of

Gujarat. The Respondent GUVNL has objected the same stating that it is a commercial

decision of the Petitioner who had quoted higher Licence Fees to get the project awarded in

favour of the Petitioner and therefore, the cost of the same may not be included in the tariff

otherwise it will be a burden on the consumers. The Commission notes that the Licence Fees

payable by the Concessionaire is stated at Clause 8.1.1 of the Concession Agreement dated

16.03.2015 executed between the Petitioner and Narmada Water Resources, Water Supply

& Kalpsar Department which reads as under:

“………. 8.1.1 The Concessionaire shall pay to Grantor the license fees as per his Financial Bid. Accordingly, the concessionaire shall pay to the Grantor an amount equal to Rs. 0.91 (Ninety one Paisa) per unit of the electricity generated and transmitted to the interconnection point. ……….”

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Thus, the aforesaid agreement stipulates that the Petitioner shall pay the Royalty/License

Fees as per its Financial Bid.

14.4.2. The Licence Fees paid by the Petitioner to the Government of Gujarat is a part of the cost

incurred by it for generation of electricity from the water received from Narmada Water

Resources, Water Supply and Kalpsar Department, Government of Gujarat. The

Commission is determining the project specific tariff on cost plus basis. Therefore, all the

reasonable costs incurred by the Petitioner for generation of electricity and supply to the

Respondent GUVNL need to be factored after prudence check.

14.4.3. Accordingly, at this stage, we decide to allow the cost of Rs. 0.91 per unit as Licence Fees

payable by the Petitioner to Government of Gujarat as a part of tariff. However, in the

interest of the consumers at large, the Commission shall advise the State Government under

Section 86 of the Electricity Act, 2003 to consider waiver of the Royalty so that the benefit

of Rs. 0.91 per unit shall go to the consumers of the State with reduction in tariff. The

Petitioner / the Respondent GUVNL shall file a petition, if the State Government or

concerned department takes the decision for reduction/waiver of Royalty.

15. Life of the Plant:

15.1. Petitioner’s Submission:

While the Petitioner has considered the useful life of the project as 35 years, the Respondents

have not made any submissions thereon.

15.2. Commission’s decisions:

As per the Clause-2 of the Concession Agreement signed between the Narmada Water

Resources, Water Supply and Kalpsar Department dated 16.03.2015, the concession period

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is 35 years. Hence, we decide the useful life of the project as 35 years for determination of

tariff.

16. Capital Subsidy:

16.1. Petitioner’s Submission:

16.1.1. Application for financial assistance has been submitted to Director (SHP), MNRE which is

under process so far.

16.1.2. The Petitioner has submitted an Application dated 10.05.2016 to the Director (Small Hydro

Power), MNRE, Government of India, New Delhi for registration and financial support for

Dolatpura SHP. The financial assistance of MNRE, is based on plant size and the application

is pending with MNRE, Govt. of India.

16.2. Respondent’s Submission:

16.2.1. The Petitioner has belatedly submitted the letters dated 07.07.2015, 15.05.2016 and

31.03.2017 addressed to Director (Small Hydro Power) MNRE, Government of India

seeking Financial Assistance for the Hydro Project. The Petitioner has not submitted the

latest status of the application for the Financial Assistance made to MNRE. Therefore, the

Commission may seek the information from the Petitioner with regard to

availability/entitlement of the above benefit to the project and consider the same while

determining the tariff of the Petitioner in case the same is available/entitled.

16.2.2. The Petitioner has deliberately avoided to submit the details of eligible amount of Financial

Assistance for their small hydro project and status of application made to MNRE. It is

understood that the small hydro projects are eligible for Financial Assistance from

Government of Rs. 1 Crore/MW, therefore, the Commission is requested to consider the

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Financial Assistance of Rs. 1 Crore/MW while deciding the capital cost of the project and

determine the tariff accordingly.

16.2.3. The Commission may also direct the Petitioner to submit the information/details in relation

to the following:

a. Status and details of application for availing Financial Support/Capital Financial

Assistance/Grants from Government (MNRE)/ Government Agency.

b. Capital Cost of the project considered in the application to Government (MNRE) for

availing Financial Support and justification for deviation, if any along with supporting

documents.

16.3. Petitioner’s Compliance:

As regard the financial assistance/capital subsidy, MNRE vide circular dated 02.07.2014

provided the Scheme for financial support to set up new SHP projects upto 25 MW Capacity

in the private, co-operative, joint sector etc., wherein for projects in Gujarat under Other

States the financial assistance/subsidy is at Rs. 1 Crore/MW limited to Rs. 5 Crore per

project. Hence, the financial assistance admissible is Rs. 5 Crore for which application has

been submitted to MNRE on 10.05.2016, which is pending before the MNRE, Govt. of

India.

16.4. Commission’s Analysis

16.4.1. The Petitioner submitted that it has applied for capital subsidy/financial support to MNRE

vide Application dated 10.05.2016 which is pending. It is also submitted that the subsidy

amount for the Petitioner’s 12 MW project will be Rs. 1 Crore/MW limited to Rs. 5 Crore

per project. However, at present there is no capital subsidy/financial assistance sanctioned

for the project.

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16.4.2. The Respondent contended that since the Petitioner is eligible for the capital subsidy of Rs.

1 Crore/MW, the Commission may factor the same in the capital cost and determine the

tariff accordingly.

16.4.3. We note that the Petitioner has executed an Agreement with the Respondent GUVNL, hence

the tariff for the project is to be borne by the licensee and ultimately by consumers at large.

Therefore, whatever benefit/financial assistance/support is received for the project, the same

needs to be passed on to the licensee/consumers. It is an admitted fact that the Petitioner has

applied for availing financial support/capital assistance from the MNRE on 10.05.2016. The

relevant Clauses of the MNRE Scheme in this regard are reproduced below:

“…. No. 14(03)2014-SHP GOVERNMENT OF INDIA MINISTRY OF NEW AND RENEWABLE ENERGY (Small Hydro Power Division) ….

Subject : SMALL HYDRO POWER PROGRAMME (upto 25 MW Capacity) – ADMINISTARTIVE APPROAL FOR THE YEAR 2014-15 & REMAINING PERIOF OF 12TH PLAN

Sir, I am directed to convey the sanction of the Government of India for the implementation of Small Hydro Power (SHP) programme (upto 25 MW capacity) during the year 2014-15 & remaining period of 12th Plan i.e. upto 31st March 2017, with Central Financial Assistance/ financial support in the form of grants/assistance / subsidy in respect of the following schemes / activities: … B) Scheme to support for setting up new SHP Projects in the private / co-operative / Joint sector etc. Details are given at Annexure – B. ….. ”

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“….. ANNEXURE - B MINISTRY OF NEW AND RENEWABLE ENERGY (Small Hydro Power Division)

SCHEME FOR FINANCIAL SUPPORT TO SET UP NEW SHP PROJECTS UPTO 25 MW CAPACITY IN THE PRIVATE, CO-OPERTAITVE, JOINT SECTOR ETC. ……….. 3. The quantum of financial support will be independent of the term loan and will be limited to the amount indicated below:

Category Above 0.1 MW – 25 MW N E Region, J & K, H.P & Uttarakhand Rs. 1.5 crore/ MW limited to Rs. 5.00 (Special Category States) crore per project Rs. 1.0 crore/ MW limited to Rs. 5.00 Other States crore per project

…..” As per the aforesaid Scheme, the subsidy receivable for the project is Rs. 1 Crore/MW but

limited to Rs. 5 Crore per project. Accordingly, the Petitioner’s project is entitled to a

maximum capital subsidy of Rs. 5 Crore.

16.4.4. In the interest of the consumers of the State, we decide to account for the capital subsidy of

Rs. 5 Crore and the tariff for the Petitioner’s project after factoring the capital subsidy works

out to Rs. 4.70/kWh (without AD benefits) and Rs. 4.40/kWh (with AD benefits). The

Petitioner shall have to approach to MNRE to get the subsidy amount released expeditiously

after ensuring due compliance of the requirement and making all possible efforts. However,

the Commission shall take a view in case the subsidy is not released by the Ministry for

which the Petitioner may approach the Commission.

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In view of foregoing, the Commission approves various parameters for the Petitioner’s

project as follows:

Sought by the Approved by the Sr. Parameters Unit Petitioner Commission 1 Capacity MW 12 12 2 Capital Cost Rs. Crore 113.895 111.38 3 Capital Subsidy Rs. Crore 5.00 5.00 4 Net Capital Cost Rs. Crore 106.38 % of 5 Normative O & M Costs Capital 3% 2.50% Cost Escalation in O & M from 2nd year % per 6 5.72 5.72 onwards annum

Capacity For 1st year 35 42.58 7 Utilization % Factor (CUF) 2nd year onwards 42.5 42.58

8 Auxiliary Consumption % 2 1 9 Project life Years 35 35 Financial Parameters 10 Debt-Equity Ratio 70:30 82:18 11 Term Loan Period Years 10 10 12 Interest on Term Loan % 11.5 11.05 O & M Expenses Month 1 1 Stocks for Maintenance and Month 1 - Spares Receivable

13 Working Capital equivalent to Months 1 charges for sale 1 of electricity % of Maintenance and Capital 1 Spares - Cost 14 Interest on Working Capital % 13.5 11.05 For first 10 years % 6 7 15 Depreciation th From 11 year % 1.2 0.80 onwards

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Sought by the Approved by the Sr. Parameters Unit Petitioner Commission Minimum 16 For first 10 years % 21.34 21.34 Alternate Tax Corporate th 17 From 11 year % 34.61 34.61 Income Tax onwards 18 Return on Equity % 14 14

19 Discount Rate % 10.15 8.79

20 Royalty/Licence Fees Rs. /unit 0.91 0.91

17. Commercial Issues:

17.1. Exemption from Cross Subsidy Surcharge:

17.1.1. Petitioner’s Submission:

The Petitioner’s Hydro Project is a renewable energy based power generating project.

Section 86 (1) (e) of the Act as well as Tariff Policy and National Electricity Policy provide

for promotion of renewable energy based generation. The Petitioner, therefore, has

requested the Commission to decide and declare that the energy generated from the

Petitioner’s plant be exempted from the Cross Subsidy Surcharge and Additional Surcharge

on such energy consumed by any consumer and/or third party sale.

17.1.2. Respondent’s Submission:

The provisions of the Generic Tariff Order dated 14.12.2016 may also be made applicable

to the Petitioner’s project.

Third party sale is a commercial proposition and should be treated at par with normal Open

Access Consumer and such consumer shall be liable to pay all the charges including Cross

Subsidy Surcharge as applicable to normal Open Access consumers else it leads to burden

on other consumers.

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17.1.3. Commission’s Analysis

We note that the Commission passed Generic Tariff Order No. 5 of 2016 dated 14.12.2016

in which the Commission has decided the aforesaid issue as under:

“……….. 4.1. Transmission and Wheeling Charges:

………

Commission’s Decision The Commission recognizes the fact that the cost of transmission/distribution assets created for evacuation of power from any generating project should be recovered to, a reasonable extent, from such generators. Otherwise, it will amount to cross-subsidizing such generators by other users. The category of consumers which generally sources power through open access can afford to pay normal transmission and wheeling charges from the savings made through such transactions.

In view of above and as per the provisions of Gujarat Small Hydel Policy 2016, the Commission decides the following norms for the open access transactions of power generated by small, mini and micro hydro projects for control period of this order:

i. Wheeling of power for third party sale from the small hydro projects shall be allowed on payment of transmission charges, wheeling charges and losses of energy fed into the grid, as applicable to normal open access consumers.

ii. Further, the small hydro projects who desire to wheel electricity under third party open access has to pay 50% of cross subsidy surcharge as applicable to normal open access consumers. Further, additional surcharge as determined by the Commission from time to time shall also be applicable for selling power to third party under open access. ………….

Small mini, micro hydro power projects availing open access for captive use/third-party sale and willing to register under REC mechanism shall be governed as per CERC REC Regulations in force. Renewable Energy projects installed for captive use will have to meet the eligibility criteria specified in CERC REC Regulations (Fourth Amendment), 2016 for availing RECs on

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total generation including self-consumption, provided that such projects have to forego the concessional transmission and wheeling charges/losses and banking benefit.

………..”

Thus, in the aforesaid Order, the Commission has decided the commercial parameters

including the applicability of the Cross Subsidy Surcharge and Additional Surcharge to the

Small Hydro Projects to be commissioned within the Control period. According to the said

Order, Cross Subsidy Surcharge shall not be applicable for the Captive Use for the projects

not registered under the REC mechanism. For the third-party sale and the projects not

registered under REC mechanism, 50% of the Cross Subsidy Surcharge as applicable to

normal open access consumers shall apply. Further, Additional Surcharge as determined by

the Commission from time to time shall also be applicable for selling power to third party

under open access. The aforesaid Order also specifies the treatment for the projects

registered under the REC mechanism. Based on the above, we decide that the Petitioner’s

plant shall be subject to the same treatment as specified in the Commission’s Order No. 5

of 2016 dated 14.12.2016 as the Petitioner’s plant too is commissioned during the Control

Period of the said order.

17.2. Exemption from Payment of Electricity Duty & Sales Tax:

17.2.1. Petitioner’s Submission:

As the Petitioner produces renewable energy, the consumption of such electricity, if any,

by any person, may be exempted from electricity duty as a promotional measure. The

Commission may declare that the electricity supply from the Petitioner’s plant consumed

by any person be exempted from the payment of electricity duty and sales tax.

17.2.2. Respondent’s Submission:

Respondents have not offered any comment on this issue.

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17.2.3. Commission’s Analysis:

The aforesaid issue is beyond the jurisdiction of the Commission and no decision thereon

can be rendered by the Commission.

17.3. Non-applicability of Merit Order Despatch and Must Run Status:

17.3.1. Petitioner’s Submission:

Small/Mini/Micro hydro power project is a renewable energy based generation project and

the generation from such plant is dependent on the water released in canal by the Irrigation

Authorities. Therefore, whenever water is released in the canal by the Irrigation Authorities,

the plant may be allowed to run and generate the electricity as the water released is under

the control of Irrigation Authorities. Hence, the Commission may declare that the

availability of the project is possible only when adequate quantity of water with adequate

head released from the Dam/Reservoir in canal and only then the plant is able to generate

electricity. The Commission may, therefore, declare the Petitioner’s plant exempted from

the merit order dispatch and has must run status.

17.3.2. Respondent’s Submission:

The provisions of the Generic Tariff Order dated 14.12.2016 may also be made applicable

to the Petitioner’s project.

17.3.3. Commission’s Analysis

We note that the Commission while passing the Generic Tariff Order No. 5 of 2016 dated

14.12.2016 has dealt with the aforesaid subject as under:

2.4.1 General Principles e. Applicability of merit order despatch principle

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In the discussion paper it was proposed that, small hydro power project irrespective of its capacity shall be treated as ‘MUST RUN’ power plant and shall not be subjected to merit order despatch principles.

Suggestions of the Objectors No suggestions were received from the stakeholders on the applicability of merit order despatch specified in the discussion paper.

Commission’s Decision The Commission decides that, like other RE technologies the small hydro power projects shall be provided ‘MUST RUN’ status and exempted from the principle of Merit Order Despatch. However, the project operator shall follow the instructions of the grid operator in view of overall security of the grid.

Accordingly, we decide that the aforesaid decision shall also be applicable to the Petitioner’s

plant commissioned during the control period of the above order. We also decide that the

Petitioner will be required to give schedules for generation and shall be governed by the

Scheduling and Despatch Code.

17.4. Payment of Surplus Energy: 17.4.1. Petitioner’s Submission:

The electricity generated from the Petitioner’s plant supplied either to the consumers or

consumed by the Petitioner as a captive generation and if the electricity generated and

injected into the grid is not consumed by the consumer at its place as a captive consumption

in the third party sale or by the Petitioner at its consumption place as a captive consumption,

the surplus energy if any available after consumption as set off, be declared as deemed sale

to the distribution licensee. The distribution licensee be required to pay the tariff as

determined by the Commission in the present petition to the Petitioner. If the project is

registered under REC mechanism, in that case the distribution licensee be required to pay

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APPC of the licensee in the relevant year in which the surplus electricity is purchased by it

as deemed sale from the Petitioner’s Plant.

17.4.2. Respondent’s Submission:

The provisions of the Generic Tariff Order dated 14.12.2016 may also be made applicable

to the Petitioner’s project.

Gujarat Small Hydel Policy, 2016 provides for the details of energy accounting. The

Commission may adopt the same for the Petitioner’s plant.

17.4.3. Commission’s Analysis

We note that the aforesaid issue is covered by the decision of the Commission in the Generic

Order No. 5 of 2016 dated 14.12.2016 at para 4.5 and 4.6, the relevant part of which is

reproduced below:

“… 4.5 Banking of Surplus Energy and Purchase of Surplus Power from Projects Opting for Captive Use and Third Party Sale under Open Access (Non REC projects) …

Commission’s Decision The Commission noted the observations made by the stakeholders regarding banking and purchase of surplus power by the utilities in respect of the SHP projects not registered under REC mechanism. The Commission also considered the banking and surplus power purchase provisions given under the Gujarat Small Hydel Policy, 2016 announced by the Government of Gujarat. The Commission decides the banking and purchase of surplus power from non REC SHP projects as follows:

a) If the consumer does not take renewable attribute for meeting its RPO, energy generated by SHP power project shall be set off against the consumption during the consumers billing cycle. Surplus power after giving set off shall be purchased by DISCOM at Average Pooled Power Purchase Cost (APPC) of the year of commissioning of project and entire generation shall be credited to DISCOM’s account for meeting RPO. For net import of power, Distribution Utilities will charge applicable tariff of respective category to the consumer

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including fixed / demand charges, energy charges, peak charges, other charges/penalty, etc. as applicable to other consumers.

b) If the consumer takes renewable attribute of SHP energy for meeting its RPO, energy accounting shall be based on 15 minutes’ time block basis. Surplus power after giving set off shall be purchased by DISCOM at APPC of the year of commissioning of project. Surplus SHP energy purchased by DISCOM shall be considered for meeting RPO of DISCOM. For net import of power, Distribution Utilities will charge applicable tariff of respective category to the consumer including fixed / demand charges, energy charges, peak charges, other charges / penalty, etc. as applicable to other consumers.

4.6 Renewable Energy Certificates for Third Party Sale and Captive Use of Electricity Generated from Small Hydro Projects …

Commission’s Decision Power generated from small, mini and micro hydro projects, if wheeled to third party or used for captive purpose, will be eligible for availing the Renewable Energy Certificates. Qualification of such projects for availing REC benefit shall be governed by the CERC (Terms and Conditions for Recognition and Issuance of REC for Renewable Energy Generation) Regulations, 2010 and its subsequent amendments. Further, in line with the provisions of the Gujarat Small Hydel Policy 2016, energy accounting shall be based on 15 minutes’ time block basis and surplus power, after set off in the 15 min time block, shall be purchased by Distribution Company at 85% of APPC of the year of commissioning of project. For net import of power, Distribution Utilities will charge applicable tariff of respective category to the consumer including fixed / demand charges, energy charges, peak charges, other charges / penalty, etc. as applicable to other consumers.

In view of the above, we decide to make the aforesaid provisions of the Order No. 5 of 2016

dated 14.12.2016 applicable to the Petitioner’s project also as the Petitioner’s plant is

commissioned within the control period of this Order.

17.5. Period of Banking:

17.5.1. Petitioner’s Submission:

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Since the generation of electricity from the Plant is dependent upon the quantum of water

released and the head of water available at relevant times, it is possible that in some months

the generation of electricity is quite higher than the consumption at the captive consumption

place or under third party sale at consumer place. In such a situation, the Commission may

decide that the surplus energy, if any, available be consumed by the Petitioner for self

consumption or by the consumer in third party sale within a period of 12 months as a banking

period for such energy.

17.5.2. Respondent’s Submission:

The provisions of the Generic Tariff Order dated 14.12.2016 may also be made applicable

to the Petitioner’s project.

The Gujarat Small Hydel Policy, 2016 provides for the details of energy accounting and

inter-alia banking. The Commission may adopt the same.

17.5.3. Commission’s Analysis

Since this aspect is already covered in the Order No. 5 of 2016 dated 14.12.2016 and the

relevant extract has already been quoted above, we decide that the provisions of the Order

No. 5 of 2016 on this aspect shall also be applicable to the Petitioner’s project as the

Petitioner’s plant is commissioned within the control period of the said Order.

17.6. Concessional Transmission Charges and Wheeling Charges:

17.6.1. Petitioner’s Submission:

The Commission may decide the transmission charges and transmission loss payable by the

Open Access customer to be half of the transmission charges and losses determined by the

Commission for the relevant year. The Commission may also decide and declare that the

wheeling charges and wheeling losses if any required to be paid by the generator in case of

utilization of distribution network for supply of power from the plant to the consumption

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place, the consumer be required to pay one fourth of the wheeling charges and wheeling

losses determined by the Commission for the relevant year in which such energy is

transmitted and wheeled.

17.6.2. Respondent’s Submission:

The provisions of the Generic Tariff Order dated 14.12.2016 may also be made applicable

to the Petitioner’s project.

The Gujarat Small Hydel Policy, 2016 provides for the Transmission Charges and Wheeling

Charges payable by the power producers. The Commission may consider the Transmission

and Wheeling Charges as specified in the Policy for the Petitioner’s plant.

17.6.3. Commission’s Analysis

The Commission has while passing the Order No. 5 of 2016 dated 14.12.2016 also decided

the applicability of Transmission and Wheeling Charges to the projects covered under the

control period of the Order. The relevant paras are extracted below:

“……….. Other Commercial Issues 4.1 Transmission and Wheeling Charges ……………. Commission’s Decision The Commission recognizes the fact that the cost of transmission/distribution assets created for evacuation of power from any generating project should be recovered to, a reasonable extent, from such generators. Otherwise, it will amount to cross-subsidizing such generators by other users. The category of consumers which generally sources power through open access can afford to pay normal transmission and wheeling charges from the savings made through such transactions.

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In view of above and as per the provisions of Gujarat Small Hydel Policy 2016, the Commission decides the following norms for the open access transactions of power generated by small, mini and micro hydro projects for control period of this order.

i. Wheeling of power for third party sale from the small hydro projects shall be allowed on payment of transmission charges, wheeling charges and losses of energy fed into the grid, as applicable to normal open access consumers. ii. Further, the small hydro projects who desire to wheel electricity under third party open access has to pay 50% of cross subsidy surcharge as applicable to normal open access consumers. Further, additional surcharge as determined by the Commission from time to time shall also be applicable for selling power to third party under open access.

The Commission decides the following norms for captive transaction of power generated by small, mini and micro hydro projects for control period of this order: i. Wheeling of power to consumption site at 66 kV voltage level and above: Wheeling of electricity generated from small, mini, micro hydro projects within the State shall be allowed on payment of transmission charges and transmission losses as applicable to normal open access consumer. ii. Wheeling of Power to consumption site below 66 kV voltage level: In case the injection of power is at 66 kV or above and drawal is below 66 kV, wheeling of electricity generated from small, mini, micro hydro projects within the State, shall be allowed on payment of transmission charges and transmission losses applicable to normal open access consumers and 50% of wheeling charges and 50% of distribution losses of the energy fed into the grid as applicable to normal open access consumers. iii. Injection at 11 kV and drawal at 11 kV and below voltage level within the same distribution area: When the point of injection is at 11 kV and drawal is at 11 kV or below, and both injection and drawl points lies within the same distribution area, the charges levied on the user shall be 50% of wheeling charges and 50% of wheeling losses of the energy fed into the grid as applicable to normal open access consumers. No other charges shall be levied on such transaction.

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iv. Injection at 11 kV and drawal at 11 kV and below voltage level in different distribution area: When the point of injection is at 11 kV and drawal is at 11 kV or below, and the injection and drawl is in different distribution area, the charges levied on the user shall be 50% of wheeling charges and 50% of wheeling losses of the energy fed in to the grid as applicable to normal open access consumers. In addition, transmission charges and transmission losses as applicable to normal open access consumer shall be payable.

v. Further, the Commission, specifies that project owners, who wheel electricity for captive use / third party sale, to more than one location, shall pay 5 Paisa/kWh of energy fed into the grid to the distribution company concerned in the area, in which the power is consumed in addition to above mentioned applicable transmission charges and losses.

vi. For captive use and third party sale, wheeling of electricity below 100 KW will be allowed only within the same distribution licensee area where plant is located.

Small mini, micro hydro power projects availing open access for captive use/third-party sale and willing to register under REC mechanism shall be governed as per CERC REC Regulations in force. Renewable Energy projects installed for captive use will have to meet the eligibility criteria specified in CERC REC Regulations (Fourth Amendment), 2016 for availing RECs on total generation including self-consumption, provided that such projects have to forego the concessional transmission and wheeling charges/losses and banking benefit. ……………”

Since the Petitioner’s plant is commissioned within the control period of the aforesaid Order,

we decide that the aforesaid provisions pertaining to Transmission Charges and Wheeling

Charges shall also be applicable to the Petitioner’s project.

17.7. Evacuation of Energy:

17.7.1. Petitioner’s Submission:

Since the size of the project is smaller, the evacuation of the power generated from it may

be carried out by the transmission licensee by erecting the transmission line between the

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sub-station of the generating station to the sub-station of the transmission licensee. The cost

of the evacuation of energy may be borne by the transmission licensee. Alternatively, if the

Petitioner is required to construct the transmission system for evacuation of power, the same

may be considered as a part of capital cost.

17.7.2. Respondent’s Submission:

The Respondents have not offered any comment on this issue.

17.7.3. Commission’s Analysis

As recorded in earlier para, the Petitioner has erected the transmission line and the cost of

the transmission system has already been factored into the Capital Cost. Thus, the aforesaid

issue has already been dealt with as a part of the Capital Cost of the project and hence, no

such cost is paid by the it is not to be paid by the DISCOM or the Transmission Licensee

separately.

17.8. Approval of PPA:

17.8.1. Petitioner’s Submission:

The Commission may approve the draft PPA which may be placed for approval of the

Commission specifying the terms and conditions mentioned in the PPA required to be

signed between the parties.

17.8.2. Respondent’s Submission:

The Respondents have not offered any comment on this issue.

17.8.3. Commission’s Analysis

As per Section 86(1)(b) of the Electricity Act, 2003, the Commission is empowered to

regulate the electricity purchase and procurement process of the distribution licensee when

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electricity is purchased by it from the generating company or licensee or from other sources

through an agreement. In the present petition, there is no prayer for approval of the PPA

executed between the Petitioner and the Procurer GUVNL executed on 16.03.2018. The

Petitioner also did not amend the prayer subsequently when the PPA was executed. In the

absence of any specific prayer for approval of PPA, the Commission cannot approve the

same on its own.

We also note that for approval of PPA, it is necessary to give an opportunity of hearing to

the consumers. The procurer has to file a petition for approval of PPA by paying necessary

fee as per the GERC (Fees, Fines and Charges) Regulations, 2005. Hence, we direct the

Respondent to follow the required procedure and get the approval of the Commission for

the PPA for procurement of power from the Petitioner.

17.9. Part PPA:

17.9.1. Petitioner’s Submission:

The Commission may allow signing of part PPA with the distribution licensee to supply the

electricity generated from the Petitioner’s plant. The Commission may also allow that out

of total capacity of the plant, the Petitioner is eligible to sell the energy partly to the

distribution licensee and partly for self-consumption and also partly sale to the third party

by signing different agreements with different persons for different time frames.

17.9.2. Respondent’s Submission:

The Gujarat Small Hydel Policy 2016 read with the Concession Agreement signed by the

Petitioner does not provide for signing of part PPA.

17.9.3. Commission’s Analysis: We note that the Power Purchase Agreement is executed by the Distribution Licensee with

Generator. Power Purchase Agreement is a contractual agreement between the procurer and

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seller where the procurer and seller have to decide and agree upon the terms of agreement

etc. The Commission has no role to consider the plea of the procurer or seller and decide

about part procurement of energy from the project of the seller. Hence, we decide that the

aforesaid issue is beyond the scope of the Commission.

17.10. Discount on Early Payment:

17.10.1. Petitioner’s Submission:

The Commission may direct the distribution licensee for removal of clause related to

discount/rebates for early payment of energy, from the Power Purchase Agreement to be

signed between the parties.

17.10.2. Respondent’s Submission:

On one hand the Petitioner is entitled to levy the delayed payment interest for delay in

payment beyond due date and on the other hand, the Petitioner is not willing to give rebate

for prompt payment. The provision for prompt payment rebate is an established commercial

principle for incentivizing the buyer to make the payment in time. This provision is there in

the Model PPA prescribed by the Commission for Renewable Energy Sources. The rebate

is also provided in the GERC (MYT) Regulations, 2016.

17.10.3. Petitioner’s Compliance:

Prompt Payment attracts rebate of 2% if the payment is made within seven days, rebate of

1 % if the payment is made within thirty days and it attracts surcharge @ 1.25% if payment

is made after thirty days. It is pertinent to note that the hydro power project is 24×7 running

plant for a period of 35 years which attracts various O & M expenses, current liabilities and

contingencies therefore, the prompt payment clause is in accordance with the penalty clause

for delay made by the distribution licensee.

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17.10.4. Commission’s Analysis:

We note the submissions made by the parties. As per the Petitioner’s submission dated

10.08.2017 there does not seem to be any disagreement on this account as the Petitioner has

accepted the Respondent’s analogy. Thus, the Respondent is held eligible for prompt

payment rebate and that the Petitioners shall offer the same as pet the terms of the PPA

executed between them.

17.11. Clean Development Mechanism:

17.11.1. Petitioner’s Submission:

At present there is no market for CDM and the sale out value of CDM is negligible. The

CDM market is highly uncertain. Huge amount is payable for receiving the CDM status by

the generators, which is not a part of the tariff determination. Therefore, the Commission

may decide that in case the CDM benefits is available, the same is not passed through to the

distribution licensee. The actual CDM benefit to the project can only be worked out on

accrual basis once the project is commissioned.

17.11.2. Respondent’s Submission:

The Commission may specify that the CDM benefits as and when availed, shall be shared

in line with the Generic Tariff Order dated 14.12.2016 and the Petitioner should make all

efforts to avail the CDM benefits so that the benefit of the same may be passed on to the

consumers.

The Gujarat Small Hydel Policy, 2016 provides for sharing of CDM benefits between the

power producer and power procurer.

17.11.3. Petitioner’s Compliance: CDM benefit is based upon the actual happening of the savings of carbon footprint. The

environmental degradation is being saved by the initiation of such a kind of renewable

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energy source of projects. However, actual CDM benefit can be calculated as per the final

commissioning of the project by way of power generation from the hydro power plant,

which includes various technical parameters to be read with National and International

Policy. Thus, CDM benefits, if any, can only be worked out after commissioning of the

hydro power project.

17.11.4. Commission’s Analysis

We decide that whenever the CDM benefit is available to the Petitioner’s project, the same

shall be shared in line with the Order No. 5 of 2016 dated 14.12.2016, the relevant portion

of which is reproduced below:

“The Commission decides that the sharing of net proceeds on account of CDM benefits

realized through sale of CER generated from the corresponding annual energy generation

from small hydro projects shall be as follows:

4.5 Commission’s Decision

(i) 100% of net proceeds through sale of CER generated from the energy generation in the

first year after the date of commercial operation of the project shall be retained by the

beneficiary/developer.

(ii) In the second year, the share of the beneficiary shall be 10% which shall be progressively

increased by 10% every year till it reaches 50% in the sixth year; thereafter the proceeds

shall be shared in equal proportion by the power generating company and the beneficiary.

Small Hydro projects availing CDM benefit shall share the net CDM proceeds annually as

per above, by 31 March of every year with affidavit stating the annual energy generation

(date of commissioning as starting point of the first year), CER generated, gross receipts

and net receipts.”

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In addition to the above commercial issues, we decide that all of the Commercial Aspects

that have been decided by the Commission in the Generic Tariff Order No. 5 of 2016 dated

14.12.2016, shall also be equally applicable to the Petitioner’s project since the Petitioner’s

project is commissioned within the Control Period of this Order.

18. Tariff:

In view of the above observation, tariff for the Petitioner’s plant works out to Rs.4.70 per

kWh (without AD benefit) and Rs. 4.40 per kWh (with AD benefit) considering the Capital

Subsidy of Rs. 5 Crore. We direct the Petitioner to avail the Subsidy by making all possible

efforts since the same is in the interest of consumers at large. However, we clarify that if the

aforesaid Capital Subsidy is not received by the Petitioner despite making all possible

efforts, the Petitioner is at liberty to approach the Commission.

Another issue that arises before the Commission is with regard to the applicability of the

project specific tariff determined by the Commission in the aforesaid paragraphs. We note

that during the proceedings, the Petitioner requested the Commission that since the

Petitioner’s project being on verge of completion, the tariff determined by the Commission

in the present petition be made applicable from the date of commissioning of the project.

We note that the Petitioner has filed an affidavit stating that the Project achieved the

Commercial Operation Date on 16.03.2018. Moreover, the Petitioner has also filed Power

Purchase Agreement dated 16.03.2018 executed with GUVNL, wherein at Article 5.2, the

parties have agreed that the tariff determined by the Commission in the present petition shall

be applicable with effect from the date as decided by the Commission. Hence, considering

the above observation, we decide that the tariff determined by the Commission in the above

para will apply from the date of commissioning of the project certified by the relevant

authority/agency.

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We also note that the Petitioner vide letter dated 15.07.2017 and subsequent

correspondences has stated that the Petitioner would not be availing Accelerated

Depreciation for its project. However, in the absence of any supporting documents, it is not

appropriate to decide in this petition as to whether the Petitioner is availing the benefit of

accelerated depreciation or not. We, decide that the Respondent GUVNL who has signed

the PPA with the Petitioner shall ascertain as to whether the accelerated depreciation is

availed by the Petitioner or not and it is duty of the Petitioner to prove the same by

submitting necessary evidences/documents such as Income Tax Return, Chartered

Accountant’s Certificate etc. in this regard to the Procurer.

19. We Order accordingly.

20. With this Order the present petition is disposed of.

Sd/- Sd/- Sd/- [P. J. THAKKAR] [K. M. SHRINGARPURE] [ANAND KUMAR] Member Member Chairman

Place: Gandhinagar. Date: 24/12/2019

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Tariff Calculation (Factoring Subsidy) for M/s Ajanta Energy Private Limited Year 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 Net Energy sold 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 (lakh kWhs) Costs

Land lease 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29

O&M 21.87 23.12 24.44 25.84 27.32 28.88 30.54 32.28 34.13 36.08 38.14 40.33 42.63 45.07 47.65 50.38 53.26

Depreciation (SLM) 62.06 62.06 62.06 62.06 62.06 62.06 62.06 62.06 62.06 62.06 7.09 7.09 7.09 7.09 7.09 7.09 7.09

Interest on term loan 76.31 68.28 60.24 52.21 44.18 36.15 28.11 20.08 12.05 4.02 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Interest on working 2.26 2.21 2.16 2.11 2.06 2.02 1.97 1.93 1.89 1.85 1.37 1.41 1.45 1.50 1.55 1.60 1.65 capital Return on Equity 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34

Tax on equity 4.77 4.77 4.77 4.77 4.77 4.77 4.77 4.77 4.77 4.77 7.73 7.73 7.73 7.73 7.73 7.73 7.73

Royalty 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 Total Cost 223.50 216.66 209.90 203.22 196.62 190.10 183.68 177.35 171.13 165.01 110.57 112.80 115.14 117.63 120.25 123.03 125.97 (Rs lakh) Tariff (Rs/kWh) 6.05 5.87 5.68 5.50 5.32 5.15 4.97 4.80 4.63 4.47 2.99 3.05 3.12 3.19 3.26 3.33 3.41

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Tariff Calculation (Factoring Subsidy) for M/s Ajanta Energy Private Limited Year 18 19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 Net Energy sold 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 36.93 (lakh kWhs) Costs

Land lease 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29 0.29

O&M 56.30 59.52 62.93 66.53 70.33 74.36 78.61 83.11 87.86 92.89 98.20 103.82 109.75 116.03 122.67 129.69 137.10 144.95 Depreciation 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 7.09 (SLM) Interest on term 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 loan Interest on working 1.77 1.83 1.90 1.97 2.04 2.12 2.21 2.29 2.39 2.49 2.59 2.70 2.82 2.94 3.07 3.21 3.35 1.77 capital Return on Equity 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34 22.34

Tax on equity 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73 7.73

Royalty 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 33.60 Total Cost 132.35 135.82 139.48 143.36 147.46 151.79 156.37 161.21 166.33 171.74 177.46 183.51 189.91 196.67 203.81 211.37 219.36 132.35 (Rs lakh) Tariff (Rs/kWh) 3.58 3.68 3.78 3.88 3.99 4.11 4.23 4.37 4.50 4.65 4.81 4.97 5.14 5.33 5.52 5.72 5.94 3.58

Discount Rate 8.79% Gross Tariff 4.70 (Rs./kWh) A D Benefit 0.30 (Rs./kWh) Net Tariff 4.40 (Rs/kWh)

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