S.M. ENVIRONMENTAL TECHNOLOGIES PVT. LTD. Vs. RAJASTHAN ELECTRICITY REGULATORY COMMISSION AND ORS.
TELECOM DISPUTES SETTLEMENT AND APPELLATE TRIBUNAL
S.M. Environmental Technologies Pvt. Ltd.
Rajasthan Electricity Regulatory Commission And Ors.
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Rakesh Nath, Member (T) -
(1.) THIS Appeal has been filed by SM Environmental Technologies Pvt. Ltd. against the order dated 27.11.2013 passed by the Rajasthan Electricity Regulatory Commission ("State Commission") whereby the State Commission has held that the biomass based power plant developed by the Appellant is not eligible to get incentivised tariff as per the State Commission's tariff order dated 17.08.2009.
(2.) THE Appellant is a biomass generator having an 8 MW biomass based power plant in Rajasthan. The State Commission is the Respondent No. 1. The Distribution Licensees are Respondent Nos. 2 to 4. Rajasthan Renewable Energy Corporation, the State Government agency for development of renewable energy projects is the Respondent No. 5. The brief facts of the case are as under: - -
"a) A Power Purchase Agreement ("PPA") was executed between M/s. Kalpataru Energy Ventures Pvt. Ltd. and Rajasthan Vidyut Prasaran Nigam on 19.03.2003 for development of a biomass project in District Bharatpur. The generating company was taken over by SM group from the original promoters in November 2004. SM group identified and acquired land in Bharatpur District to set up the project. Later SM group changed the name of the entity from M/s. Kalpataru Energy Ventures Pvt. Ltd. to M/s. SM Environmental Technologies Pvt. Ltd. However, in view of local disturbances and resistance SM group decided to shift the plant location and was granted to shift the site from District Bharatpur to District Baran vide letter dated 07.08.2006 by the Respondent No. 5.
b) There was no progress in the project and the Respondent No. 5 cancelled registration of the project on 10.08.2006.
c) The parent company of the Appellant, M/s. Orient Green Power Company Limited which was formed in the year 2007 took over the entire biomass power project assets of SM Group by purchasing 100% of its shares.
d) On 16.01.2008 after taking over the shares of SM Group the Orient Green Power took steps to implement the project.
e) On 23.01.2008 work order was placed on M/s. Shriram EPC Ltd. for supply of the power plant equipments at completely renegotiated and new prices.
f) On 15.02.2008, land at the new site was allotted to the Appellant by the District Collector, Baran.
g) On 08.03.2008, the Lease Deed was obtained from the Collector and on 15.04.2008 Lease Deed was executed by the District Collector and the State Government.
h) On 28.04.2008 revised Lease Deed was registered by the District Collector, Baran.
i) On 25.06.2008 work order was placed by the Appellant on M/s. Cheema Boilers Ltd. for supply of the balance items of boilers.
j) On 23.01.2009, the State Commission notified the Tariff Regulations, 2009.
k) On 17.08.2009, the State Commission passed the tariff order for biomass based power plant. The State Commission provided for an incentivised tariff for the plants being commissioned in the year 2009 -10 subject to a time interval of 15 months between the financial closure and commissioning of the project.
l) On 19.02.2010, the project was commissioned and on 23.02.2010 Certificate of Commercial Operation was issued to the Appellant.
m) Since the Distribution company was not applying the incentivized tariff to the Appellant in terms of the order dated 17.08.2009, the Appellant filed a petition before the State Commission claiming that it is entitled to the incentivized tariff. By the impugned order dated 27.11.2013, the State Commission dismissed the petition. Aggrieved by the impugned order declining to apply the incentivised tariff to its plant, the Appellant has filed the present Appeal."
(3.) THE Appellant has made the following submissions to emphasize that incentivised tariff would be applicable to its power plant:
"a) The State Commission in the Tariff Regulations, 2009 had determined a particular tariff for biomass plants commissioned upto 31.03.2007 and also for plants commissioned between 01.04.2007 and 31.01.2009. However, the State Commission only fixed the norms for plants due to be commissioned with effect from 01.04.2009 but did not determine any tariff.
b) In the memo of statement of objects and reasons of the Tariff Regulations, 2009, the State Commission opined that it would be appropriate to consider base year for tariff determination of biomass project as FY 2010 -11 i.e. second year of the Control Period as base year for the purpose of tariff determination. Further the fixed charge component of tariff determined for FY 2010 -11 shall also be applicable in case project is commissioned during FY 2009 -10 which can act as incentive for early commissioning.
c) In the tariff order dated 17.08.2009 the State Commission stipulated the granting of an incentivised tariff to biomass power plants commissioned in the year 2009 -10 subject to a time interval of 15 months between the financial closure and commissioning of the project and the fixed cost determined for the year 2010 -11 would apply to such projects commissioned in 2009 -10 itself.
d) The Appellant had taken up the project by acquiring the shares of SM Group in the year 2008 to whom the project land had not been allotted. Apart from the above, the Appellant did not use any other asset of the original project. The Appellant acquired fresh land, renegotiated for the plant and machinery at the latest prices and funded the project from its own equity. The Appellant also obtained a fresh registration dated 12.06.2009 from the renewable agency and entered into a new Power Purchase Agreement dated 21.12.2009 for sale of power from its biomass plant to the distribution companies.
e) With regard to financial closure, the Appellant did not wait even for funding from the Banks. The Appellant invested its own equity and completed the project within the year 2009 -10. The term loan was sanctioned by the Federal Bank and Bank of India to the original promoter and after taking over the project the Appellant contacted the said Banks to fund the project at the new location at revised project cost. However, the Federal Bank and Bank of India did not respond. The Appellant invested its equity and constructed and commissioned its project. Since the Appellant shares had been purchased by the Orient Green Power Company Ltd. from the SM Group, the loans of Federal Bank and Bank of India remained in the books of the Appellant. However, after commissioning of the project, Tata Capital agreed to takeover part of the funding. At this stage the outstanding loans of Federal Bank and Bank of India were paid back and NOC was obtained from each of the Banks. Accordingly a post facto financial closure was obtained by the Appellant on 08.06.2010 when Tata Capital approved the funding pattern and agreed to finance a part of the project.
f) Regarding land acquisition, the Appellant applied for a fresh land in April, 2008. Acquisition of land is the first step in setting up of project and no developer would have waited for the State Commission's order dated 17.08.2009 and then take up the steps for acquiring land to commission the project by 31.03.2010 to obtain the incentivised tariff.
g) Merely because land is acquired in the advance would not disentitle the Appellant to incentivised tariff in terms of the order dated 17.08.2009.
h) The Appellant after acquiring the shares of SM Group in the project company had to place revised order for equipment at renegotiated prices and this had nothing to do with the costs negotiated by the earlier developer.
i) The State Commission has wrongly come to the conclusion that loan was earlier sanctioned by the Federal Bank and Bank of India in December, 2005 which was subsequently taken over by Tata Capital after commissioning of the project. The Appellant had invested its equity and constructed and commissioned its project. After commissioning of the project, Tata Capital had agreed to takeover a part of the funding and at this stage the outstanding loans of Federal Bank and Bank of India were paid back.
j) It is wrong that the financial closure had taken place in the year 2005 itself. In so far as the 15 months gap between financial closure and commissioning of the project is concerned, in case of the Appellant, when the project was constructed by investing equity and commissioned by 19.02.2010, there was no question of financial closure. In fact in the present case a post facto financial closure was obtained by the Appellant on 08.06.2010.";
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