NTPC LTD Vs. MADHYA PRADESH POWER TRADING COMPANY LIMITED
CENTRAL ELECTRICITY REGULATORY COMMISSION
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(1.) THIS application has been made for review of order dated 19.7.2006 in Petition No. 159/2004, determining the tariff in respect of Korba Super Thermal Power Station, (hereinafter called "the generating station") for the period 1.4.2004 to 31.3.2009.
(2.) The petitioner has contended that there are certain fundamental errors in the said order dated 19.7.2006 and accordingly has sought review. According to the petitioner, the order needs to be reviewed on account of the following errors present therein:
(a) Not considering First-In-First-Out (FIFO) method of loan repayment.
(b) Impact of de-capitalization of assets on cumulative re-payment of loan.
(c) Calculation of balance life of plant
(d) Computation of interest on loan
(e) Computation of cost of maintenance spares.
Heard Shri Goel on behalf of the petitioner on admission. Admit on points at sub-paras (d) and (e) above. The reasons for rejection of review on other grounds is discussed in the succeeding paras.
First- In- First-Out (FIFO) method of loan repayment.
(3.) THE petitioner has stated that it borrows money on the basis of consolidated corporate balance sheet which enables it to finalize loan on favourable terms. According to the petitioner, borrowing at the corporate level instead of at the specific project level enables it to reduce the cost of borrowing.
In the absence of any specific stipulation to the contrary attached to a particular borrowing, the petitioner adopts FIFO method for repayment of loans. This is particularly beneficial to the respondents as the first drawls are generally at higher rates of interest and later drawls are at lower ones in the current interest rate regime. THE petitioner also has the flexibility of re-negotiating loans on reduced rates of interest for subsequent drawal with the same lender.;
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