- (1.) THE petitioner, North Eastern Electric Power Corporation Ltd (NEEPCO) had filed this petition for approval of tariff in respect of Agartala Gas Turbine Power Project (4X21 MW) (hereinafter referred to as "Agartala GTPP") for the period from 1.4.2003 to 31.3.2004 based on the terms and conditions contained in the Commission's Notification dated 26.3.2001, (hereinafter referred to as the "notification dated 26.3.2001"). On completion of pleadings and after hearing the parties, final tariff in respect of the generating station for the said period was awarded vide the Commission's order dated 9.9.2005 restricting the capital cost to Rs. 31910 lakh, traced from the original project cost approved by the Central Government. Subsequently, the petitioner filed Review Petition No 132/2005 for revision of tariff of the generating station, which was dismissed vide Order dated 6.6.2006. THE summary of the annual fixed charges awarded is given hereunder: JUDGEMENT_297_TLET0_20070.htm JUDGEMENT_297_TLET0_20071.htm
(2.) The petitioner filed Appeal No 167 of 2005 before the Appellate Tribunal for Electricity (hereinafter referred to as "the Appellate Tribunal") which was disposed vide order dated 31.10.2006. The Appellate Tribunal vide the above order had held as under: (a) As the beneficiaries were not prepared to evacuate power, time over-run and consequently cost over-run shall be allowed along with claim for depreciation. (b) Interest on loan capital shall be determined based on normative debt repayment formula. The above judgment of the Appellate Tribunal has necessitated recalculation of the annual fixed charges for the generating station. We proceed accordingly. Capital Cost
(3.) CAPITAL cost of the project as per original approval of Ministry of Power vide letter dated 9.12.1994 is Rs. 29405 lakh including IDC of Rs. 2697 lakh. However, because of the time and cost over-run in the project, the Commission while determining tariff for the period 2003-04, considered capital cost of Rs. 31910 lakh as on 1.4.2003 including FERV up to 31.3.2003, as against actual capital expenditure of Rs. 32488 lakh on that date. The capital cost of Rs.31910 lakh was considered for the purpose of tariff as on 1.4.2003 in the following manner. JUDGEMENT_297_TLET0_20072.htm JUDGEMENT_297_TLET0_20073.htm 5. The Commission had arrived at actual capital expenditure of Rs. 32217 lakh after excluding net revenue of Rs. 271 lakh earned by the petitioner from sale of infirm power. However, tariff was determined based on the approved capital cost and allowable additions thereon, towards FERV and IDC. In the proceedings in the Review Petition No. 132/2005, the petitioner confirmed that the net revenue of Rs. 271 lakh earned from the sale of infirm power was already deducted at the time of capitalization as per its accounting policy. As a result, Rs. 271 lakh was not required to be deducted from the actual capital expenditure submitted by the petitioner. This clarification by the petitioner, however, did not result in any revision of tariff because tariff was determined based on the approved cost and allowable additions thereon on account of FERV and IDC and not the actual capital expenditure as on 31.3.2003. 6. In terms of the above judgment of the Appellate Tribunal, cost over-run consequent to the delay in commercial operation of the project needs to be allowed in favour of the petitioner. As per the reconciliation of accounts submitted by the petitioner, actual capital expenditure as on 31.3.2003 was Rs. 32488 lakh, including FERV of Rs. 790 lakh and additional capitalisation of Rs. 1889 lakh for the period 1999-2003 (subsequent to the date of commercial operation) and without adjusting the net revenue of Rs. 271 lakh earned from the sale of infirm power which had already stood adjusted at the time of capitalization. Accordingly, Rs. 32488 lakh is allowed as the capital expenditure as on 1.4.2003 for the purpose of tariff. Return on equity 7. While debt -equity ratio of 1:1 as considered in the original tariff order has been retained, consequent to the revision of capital cost, equity base has increased to Rs. 16244 lakh. Accordingly, return on equity at the rate of 16% has been computed as Rs. 2599 lakh. Interest on Loan 8. As per the above judgment of the Appellate Tribunal, interest on loan is to be recalculated on normative basis. Accordingly, interest on loan is recalculated as under: (a) Gross opening loan amount has been worked out based on normative debt - equity ratio of 1:1 (b) Cumulative repayment of loan upto 31.3.2003 has been worked out considering the scheduled repayment based on loan details provided by the petitioner. (c) Annual repayment amount for the year 2003-04 has been worked out on normative basis as per the following formula: Actual repayment during the year X normative net loan at the beginning of the year/actual net loan at the beginning of the year (d) Loan drawals upto 31.3.2003 have been considered (e) Government of India loans having higher rate of interest were pre-paid during 2003-04 by syndicated loan having floating rate of interest on 19.3.2003. Refinancing/substitution of Government of India loan by syndicated loan having floating rate of interest has not been considered in the calculation for the reasons detailed in paras 4 (g) and 4 (h) of our order dated 7.1.2008 in Petition No. 33/2003, wherein the same issue has been discussed elaborately. (f) Deutsche Bank loan is having four parts and each part carries floating rate of interest. Therefore, the base rate of interest applicable for the tariff period for each part of Deutsche Bank loan has been worked out on weighted average basis based on the petitioner's submission dated 23.6.2005. Thereafter, the weighted average interest of Deutsche Bank loan on consolidated basis applicable for the tariff period has been worked out. The interest rate considered in the present computation is base rate of interest plus 0.60% margin. However, the interest on loan would be subject to adjustment in case of any change in base interest rate during the tariff period. (g) Guarantee fee of Rs. 84.86 lakh in case of Deutsche Bank loan for the year 2003-04 [1.12% (approximately)] of average loan amount for the year as per the petitioner's submission dated 23.6.2005 has been allowed. 9. Interest on Loan has been recalculated, by applying on the normative average loan, the weighted rate of interest on average loan worked out on the basis of actual rate of interest on actual loans as per the following details: JUDGEMENT_297_TLET0_20074.htm JUDGEMENT_297_TLET0_20075.htm Depreciation 10. While the rate of depreciation has remained 5.53%, as in the original tariff order, revision of capital cost has resulted in the revision of depreciation. Accordingly depreciation at the rate of 5.53% of the revised capital cost of Rs. 32488 lakh has been worked out as Rs. 1797 lakh. Interest on Working CAPITAL 11. Revision of return on equity, interest on loan and depreciation has resulted in the revision of interest on working capital as interest on loan is a component of 'receivables ' included in the working capital. Accordingly, interest on working capital has been recalculated as under: JUDGEMENT_297_TLET0_20076.htm JUDGEMENT_297_TLET0_20077.htm 12. The annual fixed charges for the year 2003-04 revised on the basis of the above are as under: Rs in lakh) JUDGEMENT_297_TLET0_20078.htm JUDGEMENT_297_TLET0_20079.htm 13. The petitioner shall recover the balance amount within six months immediately following the date of this order.;