MERC, Order in Case No 44 of 2013 Page 1 Before the ...

MERC, Order in Case No 44 of 2013

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai – 400 005

Email: [email protected]

Website: www.mercindia.org.in/www.merc.gov.in

Case No.44 of 2013

IN THE MATTER OF

Maharashtra State Power Generation Company Limited’s (MSPGCL’s) Petition

for determination of Capital Cost and Tariff of Khaperkheda Unit # 5 for FY

2012-13

Shri V. P. Raja, Chairman

Shri Vijay L. Sonavane, Member

Smt Chandra Iyengar, Member

Date: 4 September, 2013

ORDER

The Maharashtra State Power Generation Company Limited (MSPGCL or

Mahagenco) submitted a Petition under Sections 61, 62 and 86 (1)(a)(b) of the

Electricity Act, 2003 and Part E of MERC (Terms and Conditions of Tariff)

Regulations, 2005 before the Maharashtra Electricity Regulatory Commission

(MERC or the Commission) on 22 March, 2013 for determination of Capital Cost and

Tariff of its Khaperkheda Thermal Power Station Unit # 5 for FY 2012-13. The

Commission, in exercise of the powers vested in it under Section 61 and Section 62 of

the Electricity Act, 2003 (EA 2003) and all other powers enabling it in this behalf,

and after taking into consideration all the submissions made by MSPGCL, all the

suggestions and objections of the public, responses of MSPGCL, issues raised during

the Public Hearing, and all other relevant material, determines the Capital Cost and

Tariff of Khaperkheda Unit # 5 for FY 2012-13 as under.


Table of Contents

1 BACKGROUND AND BRIEF HISTORY ......................................................... 11

1.1 Background ................................................................................................... 11

1.2 Admission of the current Petition and Public Hearing process .................... 12

1.3 Organisation of the Order .................................................................................. 14

2 OBJECTIONS RAISED, RESPONSE FROM MSPGCL AND

COMMISSION’S VIEW ............................................................................................. 16

2.1 Capital Cost ................................................................................................... 16

MSPGCL’s reply ........................................................................................................ 18

Commission’s view ..................................................................................................... 19

2.2 Tariff ............................................................................................................. 20

MSPGCL’s reply ........................................................................................................ 22


2.3 Merit Order Despatch ................................................................................... 23

MSPGCL’s reply ........................................................................................................ 23


2.4 Project Management ..................................................................................... 24

MSPGCL’s reply ........................................................................................................ 24


3 APPROACH OF THIS ORDER .......................................................................... 25

4 CAPITAL COST OF KHAPERKHEDA UNIT # 5 ............................................ 26

4.1 Capital Cost of Khaperkheda Unit # 5 .......................................................... 26

4.2 Background to Project Commissioning ........................................................ 28

4.3 Comparison of capital cost ........................................................................... 37

4.4 Hard cost ....................................................................................................... 48

Land & Site Development ................................................................................... 48

Commission’s Analysis .............................................................................................. 48

BTG Package ....................................................................................................... 49


BoP Electrical and Mechanical Package ............................................................. 52



Civil Works .......................................................................................................... 53


Construction and Pre-Commissioning activities .................................................. 59


Overheads 61


Initial Spares ........................................................................................................ 62

4.5 Interest During Construction ........................................................................ 63


4.6 Liquidated Damages ..................................................................................... 69


4.7 MEANS OF FINANCE ................................................................................ 72


5 Tariff of Khaperkheda Unit # 5 for FY 2012-13 ................................................. 75

5.1 Energy Charges ............................................................................................. 75

Fuel Supply Agreement ....................................................................................... 75


Calorific Value and Price of Fuel ........................................................................ 79


Operational Parameters ........................................................................................ 81


5.2 Additional capitalisation ............................................................................... 90


5.3 Annual Fixed Charges .................................................................................. 94

Operation and Maintenance Expenses ................................................................. 94


Depreciation ......................................................................................................... 98


Interest on Long Term Loan .............................................................................. 100


Commission’s Analysis ............................................................................................ 100

Advance Against Depreciation .......................................................................... 103


Return on Equity ................................................................................................ 104


Income Tax ........................................................................................................ 105


Interest on Working Capital ............................................................................... 106


Non Tariff Income ............................................................................................. 107

Annual Fixed Charges ....................................................................................... 107


List of Tables

Table 1.1: Newspaper Notice of Public Hearing ......................................................... 14

Table 4.1: Comparison of Ordering Cost and Cost as on COD submitted by MSPGCL

(Rs. Crore) ................................................................................................................... 27

Table 4.2: Award of BoP Package submitted by MSPGCL ........................................ 29

Table 4.3: Award of other Packages submitted by MSPGCL ..................................... 29

Table 4.4: Letters written to M/s BHEL and M/s BGR submitted by MSPGCL ........ 33

Table 4.5: Delay in milestone activities submitted by MSPGCL ................................ 34

Table 4.6: Key milestones ........................................................................................... 37

Table 4.7: Comparison of Capital Cost submitted by MSPGCL (Rs. Crore/MW) ..... 38

Table 4.8: Item wise comparison of Capital Cost submitted by MSPGCL (Rs. Crore)

..................................................................................................................................... 39

Table 4.9: Land & Site Development Cost as on COD approved by the Commission

(Rs. Crore) ................................................................................................................... 49

Table 4.10: Comparison of Ex-works supply price of BTG submitted by MSPGCL . 49

Table 4.11: Comparison of price for Erection, Testing and Commissioning submitted

by MSPGCL ................................................................................................................ 50

Table 4.12: Cost of BTG as on COD approved by the Commission (Rs. Crore) ........ 52

Table 4.13: Cost of BoP Electrical and Mechanical as on COD approved by the

Commission ................................................................................................................. 53

Table 4.14: Details of Miscellaneous Civil Works submitted by MSPGCL ............... 54

Table 4.15: Cost of Civil Works as on COD approved by the Commission (Rs. Crore)

..................................................................................................................................... 59

Table 4.16: Cost of Construction and pre commissioning activities as on COD

approved by the Commission (Rs. Crore) ................................................................... 61

Table 4.17: Overheads as on COD approved by the Commission (Rs. Crore) ........... 62

Table 4.18: Initial Spares as on COD approved by the Commission .......................... 63

Table 4.19: Hard Cost as on COD approved by the Commission (Rs. Crore) ............ 63

Table 4.20: Loan Drawdown Schedule submitted by MSPGCL (Rs. Crore) .............. 64

Table 4.21: Assumptions for IDC Computation submitted by MSPGCL ................... 65

Table 4.22: Project Cost including IDC approved by the Commission (Rs. Crore) .... 69

Table 4.24: Capital Cost as on COD approved by the Commission (Rs. Crore) ......... 71

Table 4.26: Details of Internal Accruals submitted by MSPGCL (Rs. Crore) ............ 73

Table 4.27: Debt and Equity as on COD submitted by MSPGCL .............................. 74

Table 4.28: Means of Finance considered by the Commission (Rs. Crore) ................ 74

Table 5.1: Imported Coal supply schedule submitted by MSPGCL ............................ 75

Table 5.2: Study on usage of coal submitted by MSPGCL ......................................... 78

Table 5.3: Calorific Value and Price of Fuel submitted by MSPGCL ........................ 79

Table 5.4: Landed Price and Calorific Value of Fuel considered by the Commission 80


Table 5.5: Comparison of Bunkered Calorific Value and Weighted Average Calorific

Value ............................................................................................................................ 81

Table 5.6: Actual Realisation of coal during FY 2012-13 submitted by MSPGCL .... 86

Table 5.7: Impact on performance parameters submitted by MSPGCL ...................... 87

Table 5.8: Performance parameters approved by the Commission ............................. 89

Table 5.9: Energy Charge approved by the Commission for FY 2012-13 .................. 89

Table 5.10: Details of Additional Capitalisation submitted by MSPGCL .................. 91

Table 5.11: Quantum of Spares after COD and upto cut-off date approved by the

Commission (Rs. Crore) .............................................................................................. 93

Table 5.12: Additional Capitalisation for FY 2012-13 approved by the Commission 93

Table 5.13: O&M expenses for FY 2012-13 submitted by MSPGCL ........................ 95

Table 5.14: Computation of escalation rate for FY 2008-09 submitted by MSPGCL 95

Table 5.15: Basis for Escalation rates submitted by MSPGCL ................................... 96

Table 5.16: WPI data submitted by MSPGCL ............................................................ 96

Table 5.17: CPI data submitted by MSPGCL .............................................................. 96

Table 5.18: WPI Inflation submitted by MSPGCL ..................................................... 96

Table 5.19: CPI Inflation submitted by MSPGCL ...................................................... 96

Table 5.20: Computation of escalation rate for FY 2012-13 submitted by MSPGCL 97

Table 5.21: O&M expenses approved by the Commission for FY 2012-13 (Rs. Crore)

..................................................................................................................................... 98

Table 5.22: Depreciation for FY 2012-13 approved by the Commission ................... 99

Table 5.23: Loan Drawal considered by the Commission for FY 2012-13 (Rs. Crore)

................................................................................................................................... 102

Table 5.24: Loan repayment submitted by MSPGCL ............................................... 102

Table 5.25: Interest on Loan approved by the Commission (Rs. Crore) ................... 103

Table 5.26: Advance Against Depreciation approved by the Commission (Rs. Crore)

................................................................................................................................... 104

Table 5.27: Return on Equity for FY 2012-13 approved by the Commission (Rs.

Crore) ......................................................................................................................... 105

Table 5.28: Income Tax approved by the Commission for FY 2012-13 (Rs. Crore) 106

Table 5.29: Interest on Working Capital approved by the Commission for FY 2012-13

(Rs. Crore) ................................................................................................................. 107

Table 5.30: AFC approved by the Commission for Khaperkheda Unit # 5 for FY

2012-13 (Rs. Crore) ................................................................................................... 108

Table 5.31: Tariff approved by the Commission for FY 2012-13 ............................. 108


List of Figures

Figure 1: Timeline for development of 500 MW Units by Central Utilities submitted

by MSPGCL ................................................................................................................ 35

Figure 2: Timeline for development of 500 MW Units by State Sector Utilities

submitted by MSPGCL ................................................................................................ 35


List of Abbreviations

AAD Advance Against Depreciation

ABT Availability Based Tariff

AFC Annual Fixed Cost

AHP Ash Handling Plant

APH Air Pre Heater

ARR Aggregate Revenue Requirement

ATE Appellate Tribunal for Electricity

A&G Administrative & General

BHEL Bharat Heavy Electricals Ltd.

BTG Boiler, Turbine and Generator

CEA Central Electricity Authority

CERC Central Electricity Regulatory Commission

CHP Coal Handling Plant

COD Commercial Operation Date

CPI Consumer Price Index

CPRI Central Power Research Institute

CV Calorific Value

CIL Coal India Limited

CPRI Central Power Research Institute

DCB Domestic Competitive Bidding

DPR Detailed Project Report

EA 2003 Electricity Act, 2003

FC Financing Charges

FD Forced Draft

FO Furnace Oil

FSA Fuel Supply Agreement

FY Financial Year

GAAP Generally Accepted Accounting Principles

GCV Gross Calorific Value

GFA Gross Fixed Assets

GoM Government of Maharashtra

IBPL India Bulls Power Ltd.

ICB International Competitive Bidding

ID Induced Draft

IWC Interest on Working Capital

kcal kilo calories


kg Kilogram

kV kilo Volt

kW Kilo Watt

kWh kiloWatt hour

LD Liquidated Damages

LDO Light Diesel Oil

MAT Minimum Alternative Tax

MDBFP Motor Driven Boiler Feed Pump

MERC Maharashtra Electricity Regulatory Commission

MGR Merry-Go-Round

Mkcal Million kilo calories

MMT Million Metric Tonne

MoU Memorandum of Understanding

MSEB Maharashtra State Electricity Board

MSEDCL/

MAHADISCOM

Maharashtra State Electricity Distribution Co. Ltd.

MSETCL Maharashtra State Electricity Transmission Company

Ltd.

MSLDC/SLDC Maharashtra State Load Despatch Centre

MSPGCL Maharashtra State Power Generation Company Limited

MT Metric Tonnes

MTPA Million Tonne per Annum

MU Million Units

MW Mega Watt

NTPC National Thermal Power Corporation

O&M Operations and Maintenance

PLF Plant Load Factor

PLR Prime Lending Rate

PPA Power Purchase Agreement

R&M Repair & Maintenance

RoE Return on Equity

RTD Resistance Temperature Detector

SFO Secondary Fuel Oil

SFOC Secondary Fuel Oil Consumption

SHR Station Heat Rate

STPP Super Thermal Power Plant

STPS Super Thermal Power Station


TDBFP Turbine Driven Boiler Feed Pump

Th.MT Thousand Metric Ton

TPS Thermal Power Station

TVS Technical Validation Session

WCL Western Coalfields Ltd.

WPI Wholesale Price Index


1 BACKGROUND AND BRIEF HISTORY

1.1 Background

1.1.1 This Order relates to the Petition filed by Maharashtra State Power Generation

Company Limited (MSPGCL) for determination of Capital Cost and Tariff for

FY 2012-13 for the newly commissioned Khaperkheda Unit # 5 of 500 MW

capacity. MSPGCL is a Company formed under the Government of

Maharashtra General Resolution No. ELA-1003/P.K.8588/Bhag-2/Urja-5

dated 24 January, 2005 with effect from 6 June, 2005 according to the

provisions envisaged in Part XIII of the EA 2003. MSPGCL is a Company

registered under the Companies Act, 1956.

1.1.2 MSPGCL, in its Petition, has prayed as under:

“

a. Approve the Capital Cost and Tariff of the unit for FY 2012-13 as

computed.

b. Allow any additional submission of MSPGCL for approval of Tariff for

Khaperkheda Unit # 5 for FY 2012-13.

c. Provide the Petitioner with the workable excel model used to determine

the final tariff of the unit.

d. Condone any shortcomings in the petition and allow the Petitioner to

submit additional information as may be required by the Commission at a

later stage.

e. Allow MSPGCL to recover fixed cost and energy charges as per the tariff

to be approved from MSEDCL through Energy Bills from the date of

order.

f. Issue appropriate directives to MSEDCL for payment of the dues to

MSPGCL with respective financial year of the date of the order.

g. Allow MSPGCL to recover the difference in the current tariff/provisional

tariff vis-a-vis the final tariff to be approved in this petition from the date

of issue of order.

h. Issue any such further orders as the Commission may deem fit.”

1.1.3 The Petitioner submitted that it owns eight thermal Power Stations including

one Gas Power Station, and also operates and maintains hydro Stations located

in the State of Maharashtra. The Petitioner submitted that having added four

Units of 250 MW each (Paras Unit # 3, Paras Unit # 4, Parli Unit # 6 & Parli

Unit # 7), the Company, in its endeavour to increase the power generating


capacity in the State of Maharashtra, commissioned Khaperkheda Unit # 5 on

16 April, 2012 with an installed capacity of 500 MW.

1.1.4 The Petitioner submitted that it has entered into a Power Purchase Agreement

(PPA) with Maharashtra State Electricity Distribution Company Limited

(MSEDCL) for supply of power from the said Unit for a period of 25 years.

1.1.5 The Petitioner submitted that the Commission vide its MYT Regulations, 2011

dated 4 February, 2011 introduced the second MYT Control Period regime in

the State of Maharashtra with effect from 1 April, 2011. The Petitioner

submitted that it was granted two years exemption from MYT second Control

Period regime by the Commission vide its Order dated 23 August, 2011 in

Case No. 44 of 2011 and accordingly, the second Control Period regime for it

would be applicable from FY 2013-14 to FY 2015-16. The Petitioner

submitted that in light of the aforesaid Order, it has filed the present Petition

for determination of Tariff for Khaperkheda Unit # 5 for the period 16 April,

2012 to 31 March, 2013 based on MERC (Terms and Conditions of Tariff)

Regulations, 2005.

1.2 Admission of the current Petition and Public Hearing process

1.2.1 A set of data gaps were forwarded to MSPGCL on 12 April, 2013. Further, the

Commission raised additional data gaps to ensure adequacy of information for

processing the Petition. The data gaps raised by the Commission can be

grouped under the following heads:

a. Methodology of arriving at original cost estimates as shown in DPR

submitted

b. Details of Competitive Bidding process conducted for award of various

Packages

c. Board approval at various levels of execution

d. Justification for revision in Cost Estimates

e. Verification of actual expenditure incurred

f. Justification for increase in Cost under various heads

g. Fuel related issues.

1.2.2 The first Technical Validation Session (TVS) was held on 17 April, 2013.

During the TVS, the Petitioner made a presentation focusing on salient

features of the Petition. The Petitioner also highlighted issues such as increase


in Capital Cost of the Unit as compared to original estimated cost, delays in

implementation, reasons for delay, and measures taken by MSPGCL to

minimize the increase in Project Cost due to time overruns. The list of

individuals, who participated in the TVS held on 17 April, 2013 is provided at

Appendix-1.

1.2.3 The second TVS was held on 9 May, 2013. During the TVS, MSPGCL

presented the comparison of Capital Cost of Khaperkheda Unit # 5 with other

similar projects of 500 MW Unit size. MSPGCL also presented the

comparison of Capital Cost of Khaperkheda Unit # 5 with benchmarking of

Capital Cost (Hard Cost) for Thermal Power Stations with Coal as fuel

notified by CERC vide its Order dated 4 June, 2012. MSPGCL also presented

the Fuel Supply Agreement (FSA) details of Khaperkheda Unit # 5 and

performance parameters during FY 2012-13. In the second TVS, the

Commission directed MSPGCL and Officers of the Commission to hold

meetings for joint inspection of the internal files related to Khaperkheda Unit

# 5. The list of individuals, who participated in the TVS held on 9 May, 2013

is provided at Appendix-2.

1.2.4 The Officers of the Commission held meetings in this regard with MSPGCL

on 14 May, 2013, 17 May, 2013, 21 May, 2013 and 6 June, 2013.

1.2.5 The third TVS was held on 23 May, 2013. In the third TVS, MSPGCL

presented the comparison of Capital Cost of Khaperkheda Unit # 5 with Power

Stations of NTPC and CERC benchmarks on Capital Cost (Hard Cost).

Further, MSPGCL presented the analysis of factors impacting the IDC. The

list of individuals, who participated in the TVS held on 23 May, 2013 is

provided at Appendix-3.

1.2.6 MSPGCL submitted the replies to data gaps raised vide its letters dated 26

April, 2013, 7 May, 2013, 15 May, 2013, 30 May, 2013, 7 June, 2013 and 1

August, 2013.

1.2.7 The Commission admitted MSPGCL’s Petition on 12 June, 2013. In

accordance with Section 64 of the Electricity Act, 2003, the Commission

directed MSPGCL to publish its Petition in the abridged form to ensure due

public participation. The Public Notice was published in the following

newspapers inviting suggestions/objections from the stakeholders.


Table 1.1: Newspaper Notice of Public Hearing

Name of the Newspaper Date of Publication

Free Press journal (English)

20 June, 2013 Saamna (Marathi)

Pudhari (Marathi)

Times of India (English)

1.2.8 The copies of MSPGCL’s Petition and its Executive Summary were made

available at MSPGCL’s offices and on MSPGCL’s website

(www.mahagenco.in). The copy of the Public Notice and Executive Summary

of the Petition was also available on the website of the Commission

(www.mercindia.org.in) in downloadable format. The Public Notice specified

that the objections and comments, either in English or Marathi, may be filed

along with the proof of service on MSGPCL.

1.2.9 The Commission received objections/suggestions/comments from 6

stakeholders in writing on the Petition filed by MSPGCL for determination of

Capital Cost and Tariff of Khaperkheda Unit # 5 for FY 2012-13.

1.2.10 The public Hearing in the matter was held on16 July, 2013 at 11:00 hrs. at the

Commission’s Office. The list of individuals who participated in the Public

hearing is provided in Appendix – 4. The Commission has ensured that the

due process as contemplated under the law to ensure transparency and public

participation was followed at every stage meticulously and adequate

opportunity was given to all the persons concerned to file their say in the

matter.

1.3 Organisation of the Order

This Order is organised in the following six Sections:

Section 1 of the Order provides a brief history of the quasi-judicial regulatory

process undertaken by the Commission. For the sake of convenience, a list of

abbreviations with their expanded forms has been included.

Section 2 of the Order lists out the various suggestions and objections raised by

the objectors in writing as well as during the Public Hearing before the

Commission. Various suggestions and objections have been summarized,

http://www.mahagenco.in/

http://www.mercindia.org.in/


followed by the response of MSPGCL and the rulings of the Commission on each

of the issues.

Section 3 of the Order deals with the approach of this Order.

Section 4 deals with approval of Capital Cost of Khaperkheda Unit # 5.

Section 5 deals with the determination of Tariff for Khaperkheda Unit # 5 for FY

2012-13.


2 OBJECTIONS RAISED, RESPONSE FROM MSPGCL

AND COMMISSION’S VIEW

2.1 CAPITAL COST

2.1.1 Shri. Pratap Hogade, Maharashtra Veej Grahak Sanghatana, submitted that the

Capital Cost of Khaperkheda Unit # 5 of 500 MW is Rs. 3376.90 Crore, i.e.,

Rs. 6.7538 Crore per MW while the Capital Cost of the recently

commissioned other Units is Rs. 4.5 Crore/MW to Rs. 5 Crore/MW. He

submitted that the Capital Cost of Khaperkheda Unit # 5 is almost 1.5 times

higher as compared to other Units and the submission of MSPGCL should be

carefully scrutinised.

2.1.2 Shri. R. B. Goenka, Vidarbha Industries Association, submitted that the capital

cost approved on March 28, 2006 for Khaperkheda Unit # 5 was Rs. 2169.88

Crore, which was inclusive of the IDC amounting to Rs.147.88 Crore. He

submitted that the BTG and BoP contracts awarded to M/s. BHEL on 23

January, 2007 and M/s. BGR on 3 July, 2007, respectively, totalled up to Rs.

2708.93 Crore, which is an increase of Rs. 539.05 Crore in a span of 10 to 12

months. He suggested that the Commission should enquire about this

escalation in the price within a span of only 10 to 12 months.

2.1.3 Shri. R. B. Goenka submitted that the contracts do not include Liquidated

Damages (LD) clause, but include Price Variation Clause (PVC). He further

submitted that the delay in the project and cost escalation was due to the use of

poor quality material, which was rejected by quality control of MSPGCL and

delay in erection by contractors and in such a case, PVC cannot be applied and

LD clause should have been invoked. He also submitted that apart from PVC

Clause, MSPGCL incurred additional cost on IDC, which increased from Rs.

147.88 Crore to Rs. 667.35 Crore.

2.1.4 Shri. R. B. Goenka submitted that the final project cost approved by the Board

of MPSGCL on 24 May, 2010 is Rs. 3219.66 Crore but the cost as on COD is

Rs. 3376.90 Crore which works out to be Rs. 6.753 Crore/MW and in today’s

market cost per MW cost for coal based super critical thermal power plants is

between Rs. 4.75 Crore/MW to Rs. 5 Crore/MW. He further submitted that the

capital cost of MSPGCL is almost 35 to 40% higher than market rates and the

Commission should initiate an enquiry and should not approve purchase of

power through this project.


2.1.5 Shri. Babanrao Chaure, Maharashtra Chamber of Commerce, Industry &

Agriculture, requested the Commission to refer to the Petition of Korba Super

Thermal Power Station Stage-III of 500 MW capacity for comparison and

evaluation of various parameters of Khaperkheda Unit # 5. He submitted that

the order for Main Plant equipment of Khaperkheda Unit # 5 was placed on

BHEL in January, 2007 while that of Korba project was placed in March,

2006 and BTG equipments in both the projects were ordered from BHEL but

BHEL had completed Korba Project within stipulated time as compared to

Khaperkheda Unit # 5. He requested the Commission to conduct the hearing

on this Petition in front of all the contractors/stakeholders as MSPGCL has

submitted that the cause of delay is due to BHEL and other

contractors/agencies. He further submitted that the proposal should be

evaluated and reviewed considering the Petition filed by Korba Stage III

project and Public Private Partnership based Indiabulls owned project of

Nasik/Amravati of 1300 MW as the said Project had already been completed

before time by BHEL and other contractors and is waiting for fuel linkage/rail

linkage.

2.1.6 Shri. Ashok Pendse, Thane Belapur Industries Association, submitted that the

Commission vide its Order dated 30 November, 2011 in Case No. 71 of 2011

has approved the PPA for 7 Units of MSPGCL. Shri. Ashok Pendse submitted

that the PPA for Parli Unit # 7, Parli Unit # 8, Bhusawal Unit # 4, Bhusawal

Unit # 5 and Nasik are yet to be submitted for approval. He submitted that

whatever philosophy, the Commission adopts for approval of tariff for

Khaperkheda Unit # 5, it will have to be repeated for all the stations for which

PPA’s have been signed and hence, the philosophy adopted by the

Commission is crucial. Shri. Ashok Pendse submitted that Paras Unit # 3, Parli

Unit # 6 and Tata Power Company-Generation’s Unit # 8 were synchronised

in a span of about 6 to 8 months of each other and all the three Units got

equipment from BHEL. He submitted that the capital cost per MW of Paras

Unit # 3 and Parli Unit # 6 is 52% higher than capital cost per MW of TPC-G

Unit # 8. Shri. Ashok Pendse submitted that MSPGCL has submitted the

reasons for delay because of BHEL, which is the common supplier for the said

three Units. Shri. Ashok Pendse submitted that the decision of Hon’ble ATE

regarding allowance of pass through 50% of incremental expenses due to

delay to the consumers is an adhoc decision and the Commission should not

consider it in finality.


2.1.7 Shri. Ashok Pendse submitted that if MSPGCL can procure 250 MW Units at

Rs. 6.25 Crore/MW as against the cost per MW of Rs. 7.50 Crore/MW of

Khaperkheda Unit # 5 of 500 MW, configuration of 2x250 MW should be

considered as compared to 1x500 MW. He submitted that approved capital

cost per MW of Vindhyachal Super Thermal Power Station is Rs. 5.23

Crore/MW, NTPC Mauda is Rs. 6.92 Crore/MW, Essar Power Gujarat is Rs.

4.80 Crore/MW, Adhunik Power Chhattisgarh is Rs. 6.10 Crore/MW. He

further submitted that while the capital cost per MW for other projects is in the

range of Rs. 5 to 6 Crore/MW, the cost of Rs. 7.50 Crore/MW of Khaperkheda

Unit # 5 is on higher side. He submitted that in case of Paras and Parli new

Units, the reason for high cost was BHEL and in Khaperkheda Unit # 5, the

reason is high interest cost. Shri. Ashok Pendse submitted that the capital cost

per MW should be capped at Rs. 6 Crore/MW as it has implications on other

projects wherein Power Purchase Agreement has been signed.

MSPGCL’s reply

2.1.8 MSPGCL submitted that as per CERC norms on benchmarking of Capital

Cost dated 4 June, 2012, the capital cost for newly commissioned plants of

capacity 1x500 MW is Rs. 5.05 Crore/MW which is exclusive of taxes and

duties, IDC, coal handling, unloading equipment at jetty, wagon rakes, railway

siding, rolling stock, railway engine, etc. MSPGCL replied that the total cost

including the above would be Rs. 5.93 Crore/MW and that of Khaperkheda

Unit # 5 is Rs. 5.42 Crore/MW. MSPGCL replied that the estimates show that

the capital cost of Khaperkheda Unit # 5 is as per the norms specified by

CERC. MSPGCL replied that as per the prevalent industry rates, the

mentioned capital cost of Rs. 4.5 to 5 Crore /MW for a 500 MW plant is not at

all feasible. MSPGCL replied that the Capital Cost per MW of Rihand TPP

(2x500 MW) is Rs. 6.23 Crore/MW, Mauda TPP (2x500 MW) is Rs. 6.01

Crore/MW, and Vallur TPP (2x500 MW) is Rs. 6.06 Crore.

2.1.9 MSPGCL replied that CERC norms indicate that for a 2x500 MW plant, the

capital cost per MW reduces by approximately 16% as compared to 1x500

MW. The cost reduction is dependent on tax on equipment, interest costs, etc.

MSPGCL replied that a Company with a favourable credit rating can avail

loans at a lower interest rate. MSPGCL replied that it being a BBB rated

entity, has higher interest cost as compared to NTPC with AAA rating.

MSPGCL replied that it has put in efforts to reduce the capital cost to a great

extent. MSPGCL replied that orders for BTG and BoP contracts have been

placed with renowned companies under competitive bidding and Contractual


agreements with the Companies have been signed to eliminate cost overruns

and time overruns. MSPGCL replied that as compared to other projects,

MSPGCL has given detailed cost calculations for Khaperkheda Unit # 5,

which has been determined by adequate discretion.

Commission’s view

2.1.10 Regulation 30.1 of MERC (Terms and Conditions of Tariff) Regulations, 2005

specifies as under:

“Subject to prudence check by the Commission, the actual expenditure

incurred on completion of the project shall form the basis for determination of

the original cost of project....”

2.1.11 The present Petition is for determination of capital cost and tariff for the newly

commissioned Khaperkheda Unit # 5, for which the Commission has carried

out the prudence check of Capital Cost of Khaperkheda Unit # 5. The Hon’ble

ATE in its order dated 27.04.11 in Appeal No. 72 of 2010 in Para 7.2 of its

order, has explained the scope of prudence check as under:

“The capital cost has to be determined on the basis of actual expenditure

incurred on completion of the project subject to prudence check by the State

Commission. The dictionary meanings of the word ‘prudent’ are “sensible and

careful when you make judgments and decisions and avoiding unnecessary

risk”. The prudence check of the capital cost has to be looked into considering

whether the Appellant has been careful in its judgments and decisions while

executing the project or has been careful and vigilant in executing the

project.”

2.1.12 Thus, the scope of prudence check is to examine whether the Petitioner has

been careful and vigilant in taking decisions while executing the project. The

Commission has hence, looked into the justification given by MSPGCL in

respect of any change in scope of items of work, reasons for increase in cost as

compared to estimated cost, reasons for delay in project and process of

awarding various contracts. As regards the comparison of Capital Cost with

other projects, the Commission is of the view that such analysis is important to

analyse the price trends, but such a comparison cannot be absolute in

determining the prudence of cost incurred for a particular project as the cost of

project varies from project to project depending on the ground realties and

project specific features. The prudence check carried out by the Commission


in approving the Capital Cost of Khaperkheda Unit # 5 is detailed in further

Sections of this Order.

2.1.13 As regards the increase in Capital Cost in ordering Cost vis a vis Capital Cost

originally approved by the Board, MSPGCL in its submissions has mentioned

that the original estimates of Khaperkheda Unit # 5 were mere estimates while

the Ordering Cost was the cost discovered through Competitive Bidding

Process for the award of respective packages. The Commission has gone

through the details of Contracts Awarded while carrying out the prudence

check of the Capital Cost as detailed in further Sections of this Order.

2.2 TARIFF

2.2.1 Shri. Pratap Hogade submitted that considering the fixed cost of Rs. 596.21

Crore and generation of 1991.93 MU for FY 2012-13, the fixed cost per kWh

is Rs. 2.99. Shri. Pratap Hogade submitted that in future, assuming a PLF of

75%, the generation would be 3285 MU and fixed cost per kWh would be Rs.

1.82 which is also on the higher side. Shri. Pratap Hogade also submitted that

the Energy Charge of Rs. 3.21/kWh during stabilisation period and Rs.

2.84/kWh post stabilisation period is also on the higher side.

2.2.2 Shri. R. B. Goenka submitted that the sum of projected fixed cost for FY

2012-13 of Rs. 2.99/kWh and variable cost of Rs. 2.96/kWh is Rs. 5.95/kWh

and this is very high in today’s market scenario. Shri. R. B. Goenka submitted

that the PLF of 32.85% during the stabilisation period and 51.68% post

stabilisation period indicates inefficient working of MSPGCL. Shri. R. B.

Goenka submitted that for super critical thermal power plant the coal

consumption of E grade coal is about 0.65kg/kWh, and hence the variable cost

at 100% efficiency considering oil consumption should be about Rs.

0.95/kWh. Shri. R. B. Goenka submitted that even at 50% efficiency, the

variable cost should not be more than Rs. 1.8/kWh. He further submitted that

the high cost of power from Khaperkheda Unit # 5 should not be permitted to

be purchased by MSEDCL as cheaper power is available in the market.

2.2.3 Shri. R. B. Goenka submitted that there are number of Captive Power Plants

and private power plants that are kept idle as MSEDCL had denied purchase

of power even at Rs. 3.50 per unit. Shri. R. B. Goenka submitted that in the

Power Exchanges, the average power cost in last 3 months is ranging from Rs.

2/unit to Rs. 2.5/unit. Shri. R. B. Goenka submitted that the Commission had


approved power purchase rates of MSEDCL from JSW at Rs. 3.54/kWh,

Adani Power at Rs. 2.55/kWh, EMCO at Rs. 2.87/kWh and IBPL at Rs.

3.26/kWh. Shri. R. B. Goenka requested the Commission to direct MSEDCL

to purchase power in merit order system only.

2.2.4 Shri. Babanrao Chaure submitted that in its Petition, MSPGCL had not shown

the detailed tariff working. Shri. Babanrao Chaure submitted that MSPGCL is

deviating from the principles of determination of Tariff. He submitted that the

Annual Fixed Charges of Khaperkheda Unit # 5 are Rs. 596.21 Crore and rate

of Energy Charge per unit is Rs. 2.96/kWh against 81.867 Paise/kWh of

Korba Project and hence, Khaperkheda Unit 5 rates are 3.61 times higher than

Korba Project.

2.2.5 Shri. Raksh Pal Abrol, Bharatiya Udhami Avam Upbhokta Sangh, submitted

that the Annual Fixed Charges for Khaperkheda Unit # 5 for FY 2012-13 is

Rs. 596.21 Crore and Variable Cost is Rs. 2.96/kWh. He submitted that the

data submitted by MSPGCL for Khaperkheda Unit # 5 for FY 2012-13 is not

comparable with the parameters approved by the Commission for Dahanu

Generating Station of 500 MW of Reliance Infrastructure Company Limited -

Generation for FY 2012-13, which utilises Domestic Coal and Imported Coal.

He submitted that the Commission should carry out the analysis of the figures

provided by MSPGCL for Khaperkheda TPS and of Unit # 5 of 500 MW

capacity.

2.2.6 Shri. Ashok Pendse submitted that Tata Power Company-Generation can

procure coal from mines in Australia and domestic coal is available to

MSPGCL and hence, MSPGCL has advantage of 20% in respect of energy

cost. He submitted that the fixed cost of Khaperkheda is Rs. 2.38/kWh and

variable cost is Rs. 1.77/kWh at 80% PLF and Rs. 2.52/kWh at 56% PLF and

hence, the total cost is Rs. 4.15-4.90/kWh. He further submitted that the fixed

cost of Khaperkheda Unit # 5 is very high in comparison to that of M/s Adani

at Rs. 1.11/kWh.

2.2.7 Shri. George John submitted that the Fixed Charges for FY 2012-13 is Rs. 596

Crore and considering 3500 MU, the rate of Fixed Charge at Rs. 1.70/kWh is

very high. Shri. George John requested for the following information with

regard to Khaperkheda Unit # 5:

a. MU generated during Stabilisation period

b. MU generated post Stabilisation period


c. Rate of depreciation considered and amount on which depreciation is

worked out

d. Working capital, Rate of interest considered for working capital and

duration for which working capital is computed

e. Equity base considered for computation of RoE and rate of return

considered

f. Variable Charge for FY 2012-13

g. Variation in Heat rate during Stabilisation Period and post Stabilisation

period.

MSPGCL’s reply

2.2.8 MSPGCL replied that the components of fixed costs are Depreciation, Interest

on Loan, O&M costs, RoE and income tax as per Regulations. MSPGCL

replied that inadequate coal supply of around 62.59% of the contracted

amount during the stabilization period led to reduced generation. MSPGCL

replied that it is noteworthy to highlight that projects of approximately 15000-

20000 MW capacity have been delayed due to shortage of coal and in view of

the scarcity of coal all over the country, CIL has issued directives of blending

of imported coal with domestic coal; the import of the same has to be

undertaken by the power producers. MSPGCL replied that this would lower

the fixed costs but simultaneously raise the variable cost of generation.

MSPGCL replied that it is making efforts to maximize generation and has

used blended coal as stipulated.

Commission’s view

2.2.9 The Commission has notified the MERC (Terms and Conditions of Tariff)

Regulations, 2005, the applicability of which has been extended till FY 2012-

13 for MSPGCL. In the said Regulations, the Commission has laid out the

principles for determination of Annual Fixed Charges and Energy Charges for

a Generating Station. The Commission had also specified the norms of

Availability, Auxiliary Energy Consumption, Gross Station Heat Rate,

Secondary Oil Consumption and Transit Loss for operation of Thermal

Generating Stations in the Regulations. MERC Tariff Regulations, 2005 also

specifies the mechanism of sharing of gains and losses on account of

controllable and uncontrollable factors. The Commission has approved the

Fixed Charges and Energy Charge of Khaperkheda Unit # 5 for FY 2012-13 in

accordance with the provisions of MERC Tariff Regulations, 2005, as

discussed in detailed in subsequent Sections of the Order.


2.3 MERIT ORDER DESPATCH

2.3.1 Shri Pratap Hogade submitted that the power purchase cost of MSEDCL

through medium term/short term sources is Rs. 4/kWh to Rs. 4.25/kWh and

the power purchase cost through long term PPA is much lesser. He submitted

that price of electricity from Adani is Rs. 2.64/kWh, Jindal is Rs. 3.33/kWh,

Mundra is Rs. 2.52/kWh, India Bulls is Rs. 3.28/kWh and from short and

medium term market at Rs. 4/kWh. Shri. Pratap Hogade submitted that in

view of availability from cheaper generation sources, power should not be

bought at higher price from Khaperkheda Unit # 5.

2.3.2 Shri Pratap Hogade submitted that MSEDCL and other Distribution Licensees

are bound to procure power from low cost generation sources in accordance

with the provisions of Merit Order Despatch. He requested the Commission

that power should be bought only from low cost Units of MSPGCL in

accordance with the provisions of Merit Order Despatch. Shri. Pratap Hogade

submitted that allowing procurement of power from sources with high cost of

generation would encourage inefficiency in the form of lower PLF and would

contradict with the spirit of competition envisaged in Electricity Act, 2003 and

consumer protection rights. Shri. Pratap Hogade requested the Commission to

give appropriate directions in this regard.

MSPGCL’s reply

2.3.3 MSPGCL replied that the Commission had approved the PPA between

MSPGCL and MSEDCL after due regulatory process. MSPGCL replied that

as per the principles of tariff determination for actual recovery of costs,

satisfactory performance of the generation as per norms is required and in case

of underperformance, the Commission does not allow recovery of variable

cost and fixed costs recovery is also reduced on a pro-rata basis, which has

been faced by MSPGCL. MSPGCL replied that SLDC is authorized to

determine the load dispatch schedule and the principles of merit order dispatch

is followed and the directive of the SLDC is binding on the utilities. MSPGCL

replied that all new Units of MSPGCL have tariffs determined separately

whereas old Units have cumulative tariff. MSPGCL replied that similarly the

tariff of Khaperkheda Unit # 5 will be determined separately from other Units

and the same will be taken into account in merit order dispatch. MSPGCL

replied that Merit order dispatch is followed in Maharashtra in the strict sense

of the term.


Commission’s view

2.3.4 The present ABT mechanism allows MSLDC to schedule energy by applying

merit order to the entire State of Maharashtra. In this mechanism, all the

generating Units of the State are ranked in the order of the variable cost and

the costliest Unit is dispatched the last.

2.4 PROJECT MANAGEMENT

2.4.1 During Public Hearing, Shri. Sridhar stated that the project administration and

implementation of MSPGCL should be in an efficient manner to safeguard the

interest of the consumers.

MSPGCL’s reply

2.4.2 In response to the comments received, MSPGCL in its reply stated that the

project was efficiently monitored and managed by the Project Department and

review of same is taken at Head Office periodically.

Commission’s view

2.4.3 The Commission is of the view that the project management technique of

MSPGCL needs to be improved further and proper co-ordination with major

contractors should be done for a focused approach to ensure timely completion

of all stages of the project.


3 APPROACH OF THIS ORDER

3.1.1 MSPGCL filed the present Petition for determination of Capital Cost and

Tariff of Khaperkheda Unit # 5 for FY 2012-13 under Sections 61, 62 and

86(1)(a)(b) of the Electricity Act, 2003 and Part E of MERC (Terms and

Conditions of Tariff) Regulations, 2005.

3.1.2 It is to be noted that MERC (Terms and Conditions of Tariff) Regulations,

2005 were applicable till the end of FY 2010-11. The Commission notified the

MERC (Multi Year Tariff) Regulations, 2011 to be applicable from FY 2011-

12 to FY 2015-16. However, the Commission exempted MSPGCL from

applicability of MERC MYT Regulations, 2011 for a period of 2 years

through its Order dated 23 August, 2011 in Case No. 44 of 2011. The said

dispensation reads as follows:

“There is no choice but to enable the Petitioner to file its ARR and Tariff

filings under the “Maharashtra Electricity Regulatory Commission (Terms

and Conditions of Tariff) Regulations, 2005”.

“In light of the above, the Commission is of the view that it has become

necessary to invoke the proviso to Regulation 4.1 of MYT Regulations, 2011 in

order to exempt the determination of tariff of the Petitioner under the Multi-

Year Tariff framework till March 31, 2013 (i.e., for a period of 2 years). The

said exemption is hereby granted. The Commission is also empowered under

Regulation 100 of MYT Regulations, 2011 to remove any difficulty arising in

giving effect to the provisions of MYT Regulations, 2011.”

3.1.3 Hence, the Commission in this Order has approved the Capital Cost and Tariff

of Khaperkheda Unit # 5 for FY 2012-13 in accordance with MERC (Terms

and Conditions of Tariff) Regulations, 2005.


4 CAPITAL COST OF KHAPERKHEDA UNIT # 5

4.1 Capital Cost of Khaperkheda Unit # 5

4.1.1 As regards Capital Cost, Regulation 30.1 of MERC Tariff Regulations, 2005

specifies as under:

“Subject to prudence check by the Commission, the actual expenditure incurred

on completion of the project shall form the basis for determination of the

original cost of project. The original cost of project shall be determined based

on the approved capital expenditure actually incurred up to the date of

commissioning of the generating station and shall include capitalised initial

spares subject to following ceiling norms as a percentage of the original cost as

on cut-off date:

(i) Coal-based/lignite-fired generating stations - 2.5%

(ii) Gas Turbine/Combined Cycle generating Stations – 4.0%

(iii) Hydro power generating stations – 1.5%

Provided that where the power purchase agreement entered into between the

Generating Company and the Distribution Licensee provides a ceiling of actual

expenditure, the original cost of project shall not exceed such ceiling for the

purpose of these Regulations:

Provided further that in case of the existing generating stations, the actual

original cost of project recorded in the books of account of the Generating

Company, subject to prudence check by the Commission, shall be considered as

the original cost of project for the purpose of these Regulations.”

4.1.2 MSPGCL submitted that the proposal for developing 500 MW Khaperkheda

Unit # 5 was approved by the Board of MSPGCL vide the Board Resolution

MSPGCL/BM-9/Item-5 dated 28 March, 2006. MSPGCL submitted that as per

the said Resolution, the approved cost estimates were for Rs. 2170 Crore and it

included hard cost of Rs. 2022 Crore and IDC of Rs. 148 Crore. MSPGCL

submitted that IDC was calculated at a notional rate of 7.5%. MSPGCL

submitted that it had placed the BTG contract with M/s BHEL on 23 January,

2007 and M/s BGR was appointed for undertaking the BoP works on 3 July,

2007.


4.1.3 MSPGCL submitted that the capital cost approved by its Board was indicative

in nature and should not be considered as base cost. MSPGCL submitted that

the project cost capitalised on the Date of Commercial Operation of the Unit is

Rs. 3376.90 Crore and it includes hard cost of Rs. 2709.55 Crore and IDC of

Rs. 667.35 Crore. The comparison of various components of Capital Cost as per

Orders placed for various packages of the Project (i.e., Ordering Cost) and

actual cost incurred (i.e., Cost as on COD) as submitted by MSPGCL is given in

Table below:

Table 4.1: Comparison of Ordering Cost and Cost as on COD submitted by MSPGCL

(Rs. Crore)

Particulars Ordering Cost Cost as on COD

Land & Site Development 35.00 29.00

BTG 1352.62 1427.14

BoP 666.59 641.80

Civil Works 563.87 483.96

Construction & Pre-

Commissioning activities 1.00 40.11

Overheads 89.85 87.53

IDC *658.15 667.35

Total 3367.08 3376.90

*Calculated

4.1.4 MSPGCL submitted that the key reasons for deviation in Ordering Cost vis-a-

vis the cost as on COD are as below:

a. Certain works in BTG, BoP Electrical and Mechanical and BoP Civil

which were supposed to be completed within COD are now in progress

beyond COD. MSPGCL submitted that these balance works are now

proposed to be completed within the cut-off date and capitalized under

additional capitalization.

b. The BTG contract has a price variation clause subject to a ceiling of

20% on the overall increase on account of indexed prices.

c. The difference in ordering cost and cost as on COD of Construction and

Pre-Commissioning activities is mainly due to the cost of fuel (Rs. 28.05

Crore) used for startup power generation.


d. The project was scheduled to complete trial operations within 42 months

but was commissioned in a time period of around 63 months leading to

increase in IDC.

4.1.5 The analysis of submissions of MSPGCL and the Commission’s ruling on

various components of Capital Cost are detailed in the subsequent sections of

the Order.

4.2 Background to Project Commissioning

4.2.1 The Commission in its Order dated 10 January, 2006 in Case No. 35 of 2005

directed MSPGCL to explain through an affidavit its efforts to ensure the

implementation of its capacity addition programme as planned. Subsequently,

MSPGCL filed an affidavit before the Commission vide letter dated 29 April,

2006 enclosing the DPR of Khaperkheda Unit # 5 along with other Units under

its Capacity Addition Programme. The Commission on assessing the capacity

addition programme submitted by MSPGCL with reference to the provisions of

the Electricity Act, 2003, Tariff Policy and Tariff Regulations accorded the in-

principle clearance of the proposed capacity addition programme vide its letter

dated 14 July, 2006. In the said DPR of Khaperkheda Unit # 5, MSPGCL has

estimated a cost of Rs. 2170 Crore including IDC.

4.2.2 MSPGCL submitted that the proposal for developing 500 MW Khaperkheda

Unit # 5 was approved by its Board vide the Board Resolution MSPGCL/BM-

9/Item-5/ dated 28 March, 2006. As per the said resolution, the approved cost

estimate was for Rs. 2170 Crore. In the said Board Resolution, the Board

concluded to invite International Competitive Bidding (ICB) tenders for Main

Plant Package and separate tenders through Domestic Competitive Bidding

(DCB) for BoP Package including the civil works for Main Plant Package.

4.2.3 MSPGCL submitted that it had initiated ICB process for award of BTG and M/s

Ansaldo Caldie SpA (local associate in India: M/s Monnet Projects India Ltd.),

M/s BHEL and M/s Doosan Heavy Industries & Construction Co. Ltd.

purchased the bid documents. MSPGCL submitted that pursuant to ICB process,

M/s BHEL emerged as the sole participant and was found to qualify the

requirements of the RFP and the order was placed on M/s BHEL on 23 January,

2007.


4.2.4 MSPGCL submitted that pursuant to Domestic Competitive Bidding, the

contract for BoP and other works was placed on M/s BGR Energy Systems on 3

July, 2007. MSPGCL submitted that out of 10 bidders who purchased the tender

document, only four bidders submitted their bid and the lowest bidder M/s BGR

was awarded the Contract for BoP and the civil and structural works of Main

Plant. The details of Award of BoP package as submitted by MSPGCL is given

in the Table below:

Table 4.2: Award of BoP Package submitted by MSPGCL

Package Agencies participated Qualified Agencies Final Order

placed on

BoP (Electrical,

Mechanical and

Civil)

1) Tata Projects Ltd. 1) Tata Projects Ltd. GEA Energy

Systems (I) Ltd.

(Later named as

BGR Energy

Systems Ltd.)

2) L&T Ltd. 2) Reliance Energy Ltd.

3) Reliance Energy Ltd. 3) GEA Energy Systems (I)

Ltd. (Later named as BGR

Energy Systems Ltd.)

4) GEA Energy Systems (I)

Ltd. (Later named as BGR

Energy Systems Ltd.)

4.2.5 MSPGCL submitted that in order to ensure least cost principle, it had adopted

the conventional route of inviting tenders through Competitive Bidding process

for placement of associated auxiliaries and sub-systems for Khaperkheda Unit #

5. MSPGCL submitted that the following agencies were awarded the other

works of Khaperkheda Unit # 5 through DCB as per details given in Table

below:

Table 4.3: Award of other Packages submitted by MSPGCL

S.

No. Package Agencies participated Qualified Agencies

Final Order

Placed on

Date of

Award

1 C.W. & R.W.

Ozonisation

1) M/s.SMS Infrastructure

Ltd., Nagpur

1) M/s.Ozone Research &

Applications Pvt. Ltd., Nagpur

M/s.Ozone

Research &

Applications Pvt.

Ltd., Nagpur

7

February,

2011 2) M/s.Ozone Research &

Applications Pvt. Ltd., Nagpur

2) M/s. Fluid Technologies,

Raipur

3) M/s. Fluid Technologies,

Raipur

2 Civil Works

(Staff

Quarters)

1) M/s.Shah Construction 1) M/s.Shah Construction M/s.Shah

Construction

13 June,

2007 2) M/s Nagarjun Construction 2) M/s Nagarjun Construction

3) M/s Laxmi Engineering 3) M/s Laxmi Engineering

4) M/s Metcon India 4) M/s Metcon India


S.

No. Package Agencies participated Qualified Agencies

Final Order

Placed on

Date of

Award

3 Civil Works

(Railway

Sliding)

1) M/s.ARSS Infrastructure 1) M/s.ARSS Infrastructure M/s SMS

Infrastructure

22

October,

2008

2) M/s Indrajit Singh Chhabra 2) M/s Indrajit Singh Chhabra

3) M/s Suresh Chand Gupta 3) M/s Suresh Chand Gupta

4) M/s SMS Infrastructure 4) M/s SMS Infrastructure

5) M/s NMC Industries

4 Civil Works

(Railway

Sliding)

1) M/s.ISC Project 1) M/s.ISC Project M/s.ISC Project 21

October,

2008

2) M/s Suresh Chanda Gupta 2) M/s Suresh Chanda Gupta

5 Civil Works

(Ash Bund)

1) M/s. Ketan Construction 1) M/s MG Bhangdiya M/s Sunil Hitech

Engineer Ltd

-

2) M/s MG Bhangdiya 2) M/s Anoj Kumar Agarwal

3) M/s Anoj Kumar Agarwal 3) M/s R.N.Nayak & Sons

4) M/s R.N.Nayak & Sons 4) M/s SMS Infrastructure

Limited

5) M/s SMS Infrastructure

Limited

5) M/s Sharda Construction &

Corporation

6) M/s Sharda Construction &

Corporation

6) M/s Sunil Hitech Engineer

Ltd

7) M/s Sunil Hitech Engineer

Ltd

7) M/s Srihari Associates Pvt.

Ltd.

8) M/s Srihari Associates Pvt.

Ltd.

6 Civil Works

(Ash Bund)

1) M/s. Abhi Engineering

Corporation

1) M/s SMS Infrastructure M/s B.C Biyani

Projects Pvt. Ltd.

-

2) M/s SMS Infrastructure 2) M/s B.C Biyani Projects

Pvt. Ltd. 3) M/s Bhavana Energy

Infrastructure Pvt. Ltd.

4) M/s B.C Biyani Projects

Pvt. Ltd.

4.2.6 MSPGCL submitted that it is empowered to utilise the services of Government

Institute and Government undertaking on single quotation basis and in exercise

of such powers, the order for consultancy of Project Management for Railway

Siding was placed on M/s RITES on single quotation basis after assessing the

reasonability of the offer, specialised nature of work and expertise of M/s

RITES in executing similar type of work.

4.2.7 MSPGCL submitted that its Board has approved the revised cost estimates of

Khaperkheda Unit # 5 vide the Board Resolution MSPGCL/BM-69/Item-69.17/

dated 24 May, 2010. MSPGCL submitted that Power Finance Corporation


(PFC) had sanctioned additional loan to the tune of 80% of revised cost estimate

vide its Loan Sanction letter dated 4 August, 2010.

4.2.8 MSPGCL submitted that due to the delays in execution of the Project, the

scheduled COD has been extended from 22 July, 2010 to actual COD 16 April,

2012. MSPGCL submitted that the Project was under constant supervision of

Ministry of Power, Government of India and Central Electricity Authority.

4.2.9 MSPGCL submitted that the following reasons contributed to the delay in

commissioning of the Unit:

Non-sequential material receipt such as LDO pump skid and related piping,

LDO trip valve, LDO pressure controller, igniters, scanner system, valve for

Boiler Light up, etc.

Award of contracts to BHEL in excess of their production capacities.

Shifting of some critical material such as Boiler Circulating pump, Ring

header of boiler, etc., to Dadri TPS as per the guidelines of Govt. of India as

same was to be commissioned within scheduled period for supply of power

to Commonwealth games.

Inadequate erection group/ manpower provided by the contractors.

Pre-project activities such as infrastructural development, roads, and

drainage compound wall work started after Zero date as per earlier policy

that led to delay in project.

Local issues like contractor strike, shortage of professional and technical

manpower of contractors led to delay.

Stator lifting activity delayed by 3 months.

Delay of 63 days occurred during shifting of ash slurry line to Waregoan due

to demand/agitation on 2 May, 2011 by local people to lay the line on ground

level instead of high level (on pedestals).

Problems faced in material storage, material handling and fabrication works

of BTG as well as BoP activities during construction due to space constraint.

Dismantling of old civil structure, in the vicinity of plant area took more time

than envisaged and was completed in December, 2010.

Non-readiness of FD and PA Fan A, ESP Pass B, TDBFP, CHP and AHP by

BHEL and BGR led to delay in start of trial operations.

Damages in equipments/ materials supplied and erected by BHEL.


Supply of inadequate quantity of coal by MCL. MSPGCL submitted that the

delay in commissioning of the project due to non availability of coal was

communicated to the Commission vide the letter dated 19 May, 2012.

4.2.10 Further, MSPGCL submitted that the following reasons contributed to the delay

between Synchronisation and COD.

i) MSPGCL submitted that the following activities were pending in BHEL’s

scope:

FD & PA Fan A were not ready

ESP pass B was not ready

TDBFP was not ready

Standby station transformer was not ready

Unit Auxiliary Transformer was not ready

ii) MSPGCL submitted that the following activities were pending in BGR’s

scope:

Coal Handling Plant (Wagon tippler, CHP control room and CHP

second stream) was not ready

Ash Handling Plant (Pumps, Ash slurry disposal line and Transfer Air

Compressor) was not ready

iii) MSPGCL submitted that the following equipments/ materials supplied and

erected by BHEL were found damaged:

Control & Power cable of water wall soot blowers, coal mill dampers,

flames scanners, secondary air damper control actuators, positioners,

limit switches, igniters, burner tilt cylinders, Drum level transmitters,

thermocouples & RTDs laid between corner 3 & 4 of the boiler

Igniter hoses, Igniter transformers and oil gun hoses

Secondary air damper actuators, positioners, burner tilt cylinders

Drum level transmitters

Insulation at various locations at Corner no. 4 such as oil station at

firing floor, secondary air wind-box

iv) MSPGCL submitted that the Unit was synchronized on 22 November, 2011

and withdrawn on 24 November, 2011 due to water wall tube leakage in 9 mtr

S-panel.


v) MSPGCL submitted that the Unit was synchronized on 28 November, 2011

and withdrawn on 20 December, 2011 due to Boiler tube leakage in 2nd

pass in

between Lower and Middle Economizer coils.

vi) MSPGCL submitted that the Unit was synchronized on 28 December, 2011,

and tripped on Drum level high, fire protection, MDBFP R/c valve failed to

close.

vii) MSPGCL submitted that M/s BHEL could not locate the material at any

sourcing point pertaining to Trichy.

viii) MSPGCL submitted that the Unit was synchronised on 10 February, 2012 and

tripped due to condenser vacuum and fire incident @ 22.15 hrs on 13

February, 2012 at corner no. 4 of the Boiler.

4.2.11 MSPGCL submitted that the Project Management Group was very vigilant on

the performance of the contractors in terms of quality, quantity and supply of

materials. MSPGCL submitted that it was very proactive in terms of pursuing

the contractors through letters and communication at the highest level for

supply of equipments at the right time and of the best quality. The summary of

letters written by MSPGCL to M/s BHEL and M/s BGR is given in Table

below:

Table 4.4: Letters written to M/s BHEL and M/s BGR submitted by MSPGCL

Date of Letter Agency Issue highlighted

16 June, 2008 M/s BHEL Slow erection rate

18 October, 2008 M/s BHEL Boiler Ceiling Girder ‘D’ Welding Joint failure and

erection of ‘D’ Girder regarding

10 November, 2008 M/s BHEL Slow progress of Boiler erection and pending works

2 March, 2009 M/s BHEL Critical issues with BHEL Haridwar

5 March, 2009 M/s BHEL Non-availability of civil inputs

15 April, 2009 M/s BHEL Slow progress in Boiler erection

11 September, 2009 M/s BHEL Hydraulic Test (Drainable) regarding

3 November, 2009 M/s BGR CS Tank filling for hydraulic test of boiler

4 February, 2010 M/s BHEL Delay in boiler light up schedule

26 February, 2010 M/s BHEL Casual approach towards date committed in site

movement meetings

5 March, 2010 M/s BHEL Boiler Light up


Date of Letter Agency Issue highlighted

18 March, 2010 M/s BHEL Commissioning and charging of Station

Transformer 5B

26 March, 2010 M/s BHEL Casual approach towards date committed in site

movement meetings

6 April, 2010 M/s BHEL Non-Sequential supply of material

18 May, 2010 M/s BHEL Delay in erection of auxiliaries for want of material

26 May, 2010 M/s BGR Slow Progress of BoP works

31 May, 2010 M/s BHEL No progress in ESP work due to labour unrest

17 July, 2010 M/s BHEL Issues in charging of Station Transformer 5-A

3 August, 2010 M/s BHEL Defects in Station transformer and Bus ducts

29 October, 2010 M/s BHEL Erection and Commissioning defect of Boiler

27 December, 2010 M/s BHEL Slow progress of Steam Blowing activities

6 June, 2011 M/s BGR Slow work progress of Coal handling Plant

4.2.12 MSPGCL submitted the delay in milestone activities as shown below:

Table 4.5: Delay in milestone activities submitted by MSPGCL

S.

No. Milestone Activity

Scheduled

Date

Actual

Date

Activity

Delay

(Days)

Period Required

for Completion

from Previous

Activity as per

Schedule

(Days)

Period Required

for Completion

from Previous

Activity as per

Actual

(Days)

Contribution

of Delay in the

Activity

(Days)

1 2 3 4 5=4-3 6 7 8=7-6

Boiler Activities

1 Project Start 23.01.2007 23.01.2007 0

2 Boiler Erection Start 22.12.2007 22.02.2008 62 333 395 62

3 Drum lifting 22.06.2008 28.11.2008 159 183 280 97

4 Hydraulic Test (D) 22.05.2009 05.11.2009 167 334 342 8

5 Boiler Light Up 22.12.2009 27.10.2010 309 214 356 142

Turbine Activities

6 Condenser Erection Start 22.09.2008 28.03.2009 187 608 795 187

7 Turbine Erection Start 22.11.2008 05.06.2009 195 61 69 8

8 Oil Flushing Completion 22.01.2010 07.02.2011 381 426 612 186

Commissioning Activities

9 Steam Blowing 22.02.2010 08.02.2011 351 31 1 *-30

10 Synchronization 22.03.2010 31.03.2011 374 28 51 23

11 Coal Firing 22.04.2010 31.03.2011 343 31 0 *-31

12 Trial Operation 22.06.2010 04.04.2012 652 61 370 309


*As per schedule, steam blowing and coal firing activities were supposed to be taken

up in series. However, the same were taken up in parallel and have thus led to a

saving of 30 and 31 days, respectively.

4.2.13 MSPGCL submitted that delay in execution of the project is an industry-wide

phenomenon. MSPGCL submitted the comparison of project timelines as shown

in the figures below:

Figure 1: Timeline for development of 500 MW Units by Central Utilities submitted by

MSPGCL

Figure 2: Timeline for development of 500 MW Units by State Sector Utilities submitted

by MSPGCL

4.2.14 As regards the delay in commissioning of the Unit, the Commission directed

MSPGCL to submit the details of Revenue Loss due to the delay.


4.2.15 In reply, MSPGCL submitted that on a time scale, the expenses incurred by

MSPGCL can be broadly classified into pre-COD and post-COD expenses.

MSPGCL submitted that the expenses incurred by it are Interest on Loans,

Operations and Maintenance Expenses and Fuel Expenses. MSPGCL submitted

that apart from the above, depreciation which is a non-cash expense is allowed

under the Tariff Regulations. MSPGCL submitted that there is also a return on

the equity invested in to the project. MSPGCL submitted that after the COD of

the project, the sum of the aforesaid expenses as approved after prudence check

by the Commission for each of the financial years is allowed to be recovered

from the consumers at least till the 25 year normative life of the project.

4.2.16 MSPGCL submitted that before COD of the project, O&M expenses (expenses

towards salaries, administration and general expenses), and interest on loans

gets capitalised and becomes part of the GFA. MSPGCL submitted that the fuel

cost incurred by MSPGCL for generating the infirm power (power generated

before COD) is also charged to the Discom as per prevailing practices and the

net amount (cost of fuel – revenue from sale of such inform power) is

capitalised in the project cost subject to prudence check by the Commission.

MSPGCL submitted that in case of delay in the project commissioning, such

expenses which otherwise would have been allowed as a revenue expense

upfront in the form of ARR gets capitalised and their recovery gets spread over

the life of the project. MSPGCL submitted that the RoE in this case will be

allowed on the approved equity investment from the actual date of COD of the

project at least till 25 years of normative life. MSPGCL submitted that even in

this case, if time value of money is not considered, then there is only an

apparent deferment in the start of the RoE amount.

4.2.17 MSPGCL submitted that if the project had been commissioned as per schedule,

it would have started getting the returns from such earlier envisaged COD date.

MSPGCL submitted that in the current circumstances, there is a deferment in

start of such recovery to the extent of delay in the project.

4.2.18 MSPGCL submitted that it had elaborated the reasons for the delay in the

Petition and had requested the Commission to approve the project cost.

MSPGCL submitted that any disallowance in actual project cost would

essentially lead to a loss of revenue to MSPGCL as the approved expenses

would not be sufficient to recover the actual cost incurred by it.


4.2.19 The key milestones in the commissioning of the Unit as submitted by MSPGCL

are as follows:

Table 4.6: Key milestones

S. No. Particulars Date

1 Approval of Board for implementation of

Khaperkheda Unit # 5 28 March, 2006

2 Placement of Order for Main Plant

equipment/Project start 23 January, 2007

3 Approval of Board based on revised cost estimates 24 May, 2010

4 Synchronization date 31 March, 2011

5 COD of the Unit 16 April, 2012

4.2.20 MSPGCL submitted the Audited Accounts as on 15 April, 2012, pertaining to

Khaperkheda Unit # 5.

4.3 COMPARISON OF CAPITAL COST

4.3.1 The Commission in the first TVS directed MSPGCL to submit the comparison

of Capital Cost of Khaperkheda Unit # 5 with other Units of 500 MW capacity.

The Commission also directed MSPGCL to submit item wise comparison of

Capital Cost with other Units of 500 MW capacity.

4.3.2 MSPGCL submitted that CERC vide its Order dated 4 June, 2012 had suggested

the benchmark hard cost for thermal power plants with coal as primary fuel.

MSPGCL submitted that as per CERC, the benchmark prices for Greenfield

1x500 MW project is Rs. 5.08 Crore/MW and that of 2x500 MW is Rs. 4.71

Crore/MW. MSPGCL submitted that the above cost excludes taxes and duties,

IDC, FC, MGR, Railway siding, unloading equipment at jetty, rolling stock,

locomotive, transmission line till tie point, right of way charges, cost of R & R.

MSPGCL submitted that Capital Cost of Khaperkheda Unit # 5 falls in the

range of industry benchmark as shown in the Table below:


Table 4.7: Comparison of Capital Cost submitted by MSPGCL (Rs. Crore/MW)

Parameter CERC CERC

NTPC

Mauda

NTPC

Rihand

Khaperkheda

Unit # 5

1x500 MW 2x500 MW 2x500 MW 2x500 MW 1x500 MW

Base Capital Cost (BTG, BoP,

Civil Works, Overheads) 5.08 4.71 4.79 4.79 4.91

Add Items not included in above

Taxes and Duties 0.61 0.57 0.27*

MGR and Railway Siding 0.24 0.24 0.26 0.23 0.24

Sub Total 5.93 5.52 5.05 5.02 5.42

Less: Benefit in Tax due to Mega

Status 0.00 0.41 0.00

Total Hard Cost 5.93 5.11 5.05 5.02 5.42

IDC 1.14** 0.99** 0.53 0.50 1.33

Total Project Cost 7.07 6.51 5.58 5.53 6.75

*Part of Taxes and Duties merged with the main package cost in BoP

components

**IDC in CERC cost is added by assuming uniform drawl of individual hard

cost over 42 month period @ 11% rate of interest for State Utility

4.3.3 MSPGCL submitted that cost of Khaperkheda Unit # 5 appears reasonable as

compared to the benchmark norm of 1x500 MW Units. MSPGCL submitted

that the Hard Cost is also within the range when compared to a cost of Rs. 5.86

Crore/MW worked out on based on NTPC project cost. MSPGCL submitted

that variation in IDC is observed in comparison to NTPC, which can arise on

account of the following:

a. Rate of borrowing depending upon the rating of the utility

b. Debt Equity Ratio of the project

c. Hard cost of the project

4.3.4 MSPGCL submitted that the packages vary from Unit to Unit. MSPGCL

submitted the item wise comparison of cost of Khaperkheda Unit # 5 with other

Units of 500 MW capacity as shown in the Table below:

Table 4.8: Item wise comparison of Capital Cost submitted by MSPGCL (Rs. Crore)

S.

No. Particulars

Capital Cost as on COD (Rs. Crore)

Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

Capacity 1500 1000 1500 500 1000 500 1000 500

Developer

NTPC Tamil

Nadu Energy

Company Limited

(NTECL)

NTPC

Aravali Power

Company Limited

(APCL)

MSPGCL NTPC NTPC NTPC CSPGCL

Date of award of EPC 13-Aug-07 28-Nov-08 7-Jun-07 23-Jan-07 26-Mar-07 30-Oct-06 28-Feb-09 11-Apr-08

Actual/Estimated COD of 1

st

Unit 31-Aug-12 1-Oct-12 31-Oct-10 16-Apr-12 16-Sep-11 1-Nov-11 19-May-12 22-Mar-13

Actual/Estimated COD of last

Unit 30-Sep-13 1-Apr-13 1-Nov-12 16-Apr-12 31-Jul-12 1-Nov-11 Dec-13 22-Mar-13

1 Cost of Land & Site

Development

1.1 Land

204.50

279.57

545.00

-

22.00

24.00

1.2 Rehabilitation & Resettlement

(R&R)

- - -

-

2.36

4.90

1.3 Preliminary Investigation & Site

development

73.03

1.15

139.80

29.00

5.24

3.67

0.50

1.4 Other Development Works -


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

27.00 -

Total Land & Site

Development

304.53

280.72

684.80

29.00

7.60

3.67

27.40

24.00

2 BTG

2.1 Steam Generator Island

2,175.03

1,384.24

2,059.39

834.27

1,301.20

1,153.67

1,805.04

1,656.00 2.2 Turbine Generator Island

1,271.86

735.94

1,134.72

498.85

923.58

1,006.61

2.3 BOP Mechanical

2.3.1 External water supply system

- -

2.30

14.99

21.60

2.3.2 CW system

215.00

79.14

66.93

16.09

21.12

8.67

2.3.3 DM water Plant

113.77

16.16

29.18

48.73

10.23

13.80

2.3.4 Clarification plant

- -

31.73

9.25

30.21

2.3.5 Chlorination Plant(Ozonization)

9.91

28.11

27.13

2.3.6 Fuel Handling & Storage

system

87.72 - -

3.69

7.87


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

2.3.7 Ash Handling System

207.98

170.99

175.06

153.15

114.98

85.13

142.76

2.3.8 Coal Handling Plant

365.21

285.76

284.00

170.49

126.00

9.03

407.50

2.3.9 Rolling Stock and Locomotives

-

29.24

28.01

2.3.10 MGR

235.40

110.14

2.3.10 External CHP

89.52

2.3.11 Air Compressor System

- - -

6.19

2.3.12 Air Condition & Ventilation

System

18.91

16.36

20.58

17.39

12.67

7.85

25.09

2.3.13 Fire fighting System

25.72

17.78

21.13

22.66

16.89

8.00

22.98

2.3.14 HP/LP Piping

-

26.69

41.02

33.60

94.74

23.44

2.3.17 Work shop equipments

1.88

4.06

7.32

0.50

1.52

2.3.18 Other items not covered above - -


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

- 7.83 21.66

Total BOP Mechanical

1,135.60

909.68

842.21

474.29

406.38

163.17

696.76

2.4 BOP Electrical

2.4.1 Switch Yard Package

126.99

69.85

71.05

42.00

28.10

126.39

2.4.2 Transformers Package

236.55

107.82

150.09

19.07

88.20

45.00

13.67

2.4.3 Switch gear Package

-

24.26

35.79

21.86

34.11

19.12

41.34

2.4.4 Cables, Cable facilities &

grounding

-

16.45

68.08

69.58

42.44

25.91

49.48

2.4.5 Lighting Spacage

-

38.48 -

4.07

2.4.6 Emergency D.G. set

0.36 - -

8.46

2.4.10 communication system

-

7.59 -

0.83

2.4.13 Other items not covered above

-

8.23 -

8.25

Total BOP Electrical


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

363.90 272.67 325.01 118.97 206.75 123.03 239.13 993.00

2.5 Control & Instrumentation (C

& I) Package

52.77

36.34

47.01

2.32

38.66

22.40

32.32

Total Plant & Equipment

excluding taxes & Duties

5,303.69

3,619.59

5,093.15

1,957.70

2,884.17

1,465.94

3,807.26

2,673.00

2.6 Taxes and Duties

2.6.1 Custom Duty

- - -

2.6.2 Other Taxes & Duties

- - -

133.50

Total Taxes & Duties

- - -

133.50

-

-

Total Plant & Equipment

5,303.69

3,619.59

5,093.15

2,091.20

2,884.17

1,465.94

3,807.26

2,673.00

3 Initial spares

15.15

4 Civil Works

4.1 Main plant/Adm. Building

719.32

523.66

598.71

186.50

359.53

188.71

619.14

4.2 CW system

104.11

63.55

164.53

19.19

92.87

30.54


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

4.3 Cooling Towers

-

81.09

200.28

52.68

167.04

43.36

106.88

4.4 DM water Plant WTP

- - -

35.07

2.25

4.7 Minor bridge

56.15 - -

4.19 Fuel Handling & Storage

system

- - -

1.47

4.20 Coal Handling Plant

- - -

21.66

92.52

4.21 MGR & Marshalling Yard

- - -

120.63

72.26

232.10

4.22 Ash Handling System

177.45 - -

8.54

20.08

4.23 Ash disposal area development

- -

27.13

-

23.99

4.24 Fire fighting System

165.37 - -

0.36

4.25 Township & Colony

40.00

137.57

84.70

17.88

6.04

4.26 Temp. construction & enabling


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

works - 2.16 16.60 0.56 4.06 0.53

4.27 Road & Drainage

- -

18.00

4.86

28.36

4.28 Chimney

71.29

54.25

64.18

46.89

23.39

4.32 Misc. works not covered above

- - -

19.42

48.72

Total Civil works

1,333.69

862.27

1,174.14

483.96

893.34

309.00

1,035.20

86.00

5 Construction & Pre-

Commissioning Expenses

5.1 Erection Testing and

commissioning

-

24.38

31.94

24.63

5.2 Site supervision

- - -

5.3 Operator's Training

- -

2.00

12.06

2.00

5.4 Construction Insurance

- - -

6.74

5.5 Tools & Plant

11.81

11.81

30.82

7.00

0.18


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

5.6 Start up fuel less generation

215.00 - -

28.05

29.83

21.59

Total Construction & Pre-

Commissioning Expenses

226.81

36.19

64.76

46.86

36.83

21.77

26.63

6 Overheads

6.1 Establishment

271.63

258.53

188.33

76.30

152.83

6.2 Design & Engineering

- -

85.50

4.30

6.3 Audit & Accounts

- - -

6.4 Contingency unknown

- -

186.05

4.00

6.7 Vehicles for project and O&M

staff

- - -

0.06

6.9 Cost toward hospital

upgradation/ extension -

6.10 Others (T&P and Special T&P)

2.87

139.07

86.36

Total Overheads

271.63

258.53

459.88

87.53

139.07

86.36

152.83


S.

No. Particulars


Vallur TPP

(3x500 MW)

Mauda TPP

(2x500 MW)

Indira Gandhi

STPP (3x500

MW)

Khaperkheda

TPS Unit-5

(1x500 MW)

Simhadri

STPS

Stage-II

(2x500

MW)

Farakka

STPS

Stage-III

(1x500

MW)

Rihand

TPP

Stage-III

Korba

West Ext.

7 Capital cost excluding IDC &

FC

7,135.82

4,776.58

6,791.92

2,709.55

3,968.56

1,883.07

5,021.92

2,759.00

7.1 Interest During Construction

(IDC)

1,182.90

526.34

910.52

667.35

418.75

318.08

347.56

397.31

7.2 Financing Charges (FC)

3.30 -

26.93

0.52

25.00

7.5 Notional IDC

14.30 - -

Total IDC, FC, FERV &

Hedging Cost

1,200.50

526.34

937.45

667.35

418.85

318.60

504.41

397.31

8 Capital cost including IDC &

FC

8,336.32

5,302.92

7,729.37

3,376.90

4,387.41

2,201.67

5,526.33

3,156.31

9 Capital cost (Rs. Crore/MW)

5.56

5.30

5.15

6.75

4.39

4.40

5.53

6.31

4.4 HARD COST

Land & Site Development

4.4.1 MSPGCL submitted that Khaperkheda Unit # 5 was set up in the space lying

vacant after dismantling 3 Units of 10 MW and 3 Units of 30 MW in the vicinity

of Khaperkheda TPS.

4.4.2 MSPGCL submitted that the estimated cost for Land and Site Development was

Rs. 35.00 Crore and actual cost incurred as on COD is Rs. 29.00 Crore.

Commission’s Analysis

4.4.3 The Commission asked MSPGCL to submit the justification for Land and Site

Development cost of Rs. 29.00 Crore in addition to Site Development work

awarded to M/s BGR.

4.4.4 MSPGCL submitted that the Site Development work awarded to M/s BGR under

the BoP Civil Package does not include the removal of 132 kV substation and

associated GCR building and transmission lines of MSEDCL located in the

premises of Khaperkheda unit # 5. MSPGCL further submitted that Scope of work

involved in the Site Development is as follows:

Removal of 66 kV Saoner Transmission Line with associated works.

Removal of 66 kV Koradi Transmission Line with associated works.

Removal of 66 kV Khanane Transmission Line with associated works.

Removal of 33 kV Gundyagao Transmission Line.

Removal of 33 kV Mhadula Transmission Line.

Any other associated work.

4.4.5 The Commission has gone through the submissions of MSPGCL and

observed that the actual cost under land and site development as claimed by

MSPGCL is the cost incurred by MSPGCL in addition to the site

development work awarded to M/s BGR under the BoP Civil package order.

Hence, the Commission has approved the cost of Rs. 29.00 Crore for Land

and Site Development as on COD as submitted by MSPGCL.


Table 4.9: Land & Site Development Cost as on COD approved by the Commission (Rs.

Crore)

Particulars MSPGCL Approved Cost as

on COD Ordering Cost Cost as on COD

Land & Site

Development 35.00 29.00 29.00

BTG Package

4.4.6 MSPGCL submitted the copy of note put up to its Board for approval of

placement of Order for Main Plant Package for Khaperkheda Unit # 5 on M/s

BHEL. MSPGCL submitted that in order to assess the reasonability of the price

offered by M/s BHEL, it had compared the Ex-works supply price offered by M/s

BHEL for Khaperkheda Unit # 5 with the accepted Ex-works supply price of Parli

Unit # 7 and Paras Unit # 4 on cost per MW basis. MSPGCL submitted that the

Ex-Works supply price offered by M/s BHEL for Khaperkheda Unit # 5 was also

compared with that of Korba Stage III, 500 MW Unit of NTPC ordered on M/s

BHEL on 24 March, 2006. MSPGCL submitted the copy of Letter of Intent dated

24 March, 2006 issued by NTPC on M/s BHEL for supply of Main Plant Package

for Korba Super Thermal Power Project Stage III (1x500 MW). The comparison

of ex-works supply price of BTG submitted by BHEL is given in Table below:

Table 4.10: Comparison of Ex-works supply price of BTG submitted by MSPGCL

Particulars Khaperkheda

Unit 5

Parli Unit 7/

Paras Unit 4

Korba

Stage III

Capacity offered (MW) 500 250 500

Ex Works Supply Price (Rs. Crore) 956.24 498 961.95

Ex Works Supply Price (Rs. Crore per

MW) 1.913 1.992 1.9239

4.4.7 MSPGCL submitted that the price for erection, testing and commissioning was

also compared with the accepted price for Parli Unit # 7 and Paras Unit # 4

Main Plant Equipment on percentage basis as shown in the Table below:


Table 4.11: Comparison of price for Erection, Testing and Commissioning submitted by

MSPGCL

Particulars Khaperkheda

Unit 5

Parli Unit 7/

Paras Unit 4

Ex Works Supply Price (Rs. Crore) 956.24 498

Price for Erection, testing and

commissioning (Rs. Crore) 93.69 65.88

Price for Erection, testing and

commissioning as percentage of Ex

Works Supply Price

9.80% 13.23%

4.4.8 MSPGCL submitted that considering the reasonability of the BHEL offer, it had

placed the Order with M/s BHEL for supply, erection and commissioning of

BTG.

4.4.9 MSPGCL submitted that the placement of order on M/s BHEL for BTG was

approved by its Board vide the Board Resolution MSPGCL/BM-14/Item-4/

dated 6 October, 2006. MSPGCL submitted that the approval of Government of

Maharashtra for placement of order on M/s BHEL was accorded vide the letter

dated 25 January, 2007.

4.4.10 MSPGCL submitted that against the Ordering Cost of Rs. 1352.62 Crore, the

actual cost as on COD is Rs. 1427.14 Crore.


4.4.11 The Commission asked MSPGCL to submit the Contract Agreements executed

with M/s BHEL. The Commission also asked MSPGCL to submit the statement

of bills received in respect of BTG and the justification for variation in cost as

on COD from Ordering cost.

4.4.12 MSPGCL submitted the Contract Agreements executed with M/s BHEL for

Supply and Erection & Commissioning of Main Plant Package along with

statement of bills received. MSPGCL also submitted that the increase in cost as

on COD from Ordering cost is due to Price Variation and Taxes & Duties.

4.4.13 The Price Variation clause as per the Contract Agreements is as shown below:


“4.0 CONTRACT PRICE ADJUSTMENT / VARIATION

4.1 The Ex-works supply price shall be subjected to the price variation and

shall be paid as per the formulae given in clause No.11.0 of Section-3 of

Volume-I of the Bid Specification under ref.1, if any, for the

corresponding period, with base indices as on June’06. The Price

Variation shall be subjected to a ceiling of (+/-) 20% of the Ex-works

supply price

4.2 In case the contract period is required to be extended beyond the cut off

dates for reasons attributable to the Contractor, for making payments

towards price variation, the Owner shall select the indices in the P.V.

formula either by restricting their value to contractual cut off date or the

actual indices prevailing at that time, whichever is lower. In case the

contractual period is extended for the reasons attributable to the Owner,

in such event the price variation shall be payable on the extended period

of contractual cut off dates, based on prevailing market indices.”

4.4.14 MSPGCL submitted that the Price Variation has been computed in accordance

with relevant provisions of Contract Agreements.

4.4.15 The Commission, in view of delay on part of M/s BHEL in execution of the

Project and quality issues submitted by MSPGCL, asked MSPGCL to submit

the action taken against M/s BHEL in terms of payments made to them.

MSPGCL submitted that as per the Contractual Agreements, it is only entitled

to levy the Liquidated Damages on the supplier and it was religiously

undertaken by it. The Commission has detailed its approach on Liquidated

Damages in subsequent sections of this Order.

4.4.16 The Commission has gone through the submissions of MSPGCL. As discussed

earlier, MSPGCL initiated ICB process for award of BTG and pursuant to ICB

process, only M/s BHEL emerged as the sole participant, which was found to

qualify the requirements of the RFP and hence, the order was placed by M/s

MGPCL on M/s BHEL on 23 January, 2007.

4.4.17 As regards the contract price variation, the Commission observed that the

same is within the 20% price variation cap as stipulated in the contract and

further, the Contract stipulates that in case of delay for reasons

attributable to the Contractor, price variation shall be restricted till


contractual cut off date. As MSPGCL has awarded the BTG Contract after

following the competitive bidding process and cost increase is on account of

the price variation for various components as per the formulae prescribed

in the contract, the Commission approves the actual cost of BTG package

as on COD.

Table 4.12: Cost of BTG as on COD approved by the Commission (Rs. Crore)

Particulars MSPGCL Approved cost

as on COD Ordering Cost Cost as on COD

BTG Supply

Supply of BTG Package 954.77 954.69 954.69

Taxes 192.70 128.16 128.16

PV - 168.59 168.59

Total Supply 1147.47 1251.43 1251.43

BTG Erection & Commissioning

Erection of BTG Package 87.69 86.66 86.66

Insurance 6.00 14.55 14.55

Taxes 11.47

PV - 17.61 17.61

Total Erection 105.15 118.83 118.83

BoP Electrical and Mechanical Package

4.4.18 MSPGCL submitted that pursuant to Domestic Competitive Bidding, the

contract for BoP and other works was placed on M/s BGR Energy Systems on 3

July,2007. MSPGCL also submitted that it had sought feedback on performance

of M/s BGR in execution of BoP works at Vijayawada and Kakatiya 500 MW

Projects of APGENCO from Director (Projects), APGENCO and in reply to the

same it was confirmed that the performance of the agency in execution of

Balance of Plant works is found to be generally satisfactory. MSPGCL

submitted that the comparison of the scope of M/s BGR for BoP package of

Kakatiya project with that of Khaperkheda Unit # 5 was also made to assess the

reasonability of price quoted by M/s BGR for Khaperkheda Unit # 5.

4.4.19 MSPGCL submitted that against the Ordering Cost of Rs. 666.59 Crore of BoP

Electrical and Mechanical, the actual cost as on COD is Rs. 641.80 Crore.

MSPGCL submitted that Ozonisation Plant was beyond the scope of work of

M/s BGR and was awarded to M/s Ozone Research & Application Pvt. Ltd.


MSPGCL submitted that the Ozonisation Plant is included in Additional

Capitalisation of FY 2012-13. MSPGCL submitted the Contracts executed for

Supply and Erection of BoP Electrical and Mechanical with M/s BGR are firm

price contracts.


4.4.20 The Commission asked MSPGCL to submit the Bid evaluation report for the

Competitive Bidding Process conducted for award of BoP Package, Contract

Agreements executed with M/s BGR and the statement of bills received in

respect of BoP Package.

4.4.21 MSPGCL submitted the Note put up to its Board evaluating the bids submitted

for BoP Package and Contract Agreements executed with M/s BGR for Supply

and Erection, Testing and Commissioning of BoP Package. MSPGCL also

submitted the statement of bills received.

4.4.22 The Commission has gone through the submissions of MSPGCL and is of

the view that it has followed prudent utility practices in the award of BoP

Package as the same was awarded after the competitive bidding process.

Further, the actual cost of BoP Electrical & Mechanical as on COD is lower

than the Ordering Cost. The Commission has hence, approved the cost of

BoP Electrical and Mechanical as on COD as submitted by MSPGCL.

Table 4.13: Cost of BoP Electrical and Mechanical as on COD approved by the

Commission

Particulars MSPGCL Approved cost as


BoP Supply 617.23 614.25 614.25

BoP Erection 30.80 25.12 25.12

Mandatory Spares 12.48 2.43 2.43

Ozonisation Plant 6.08 - 0.00

Grand Total 666.59 641.80 641.80

Civil Works

4.4.23 MSPGCL submitted that the Civil Works includes BoP Civil, Railway Siding,

Ash Disposal area, Township and other miscellaneous works.


4.4.24 MSPGCL submitted that Civil Works have been awarded through Domestic

Competitive Bidding.


4.4.25 The Commission asked MSPGCL to submit the Contract Agreements for major

contracts executed for Civil Works. The Commission also asked MSPGCL to

submit the statement of actual bills received against the contracts for Civil

Works.

4.4.26 MSPGCL submitted the Board Resolutions on award of Civil Works and the

Contract Agreements executed for Civil Works along with the statement of

actual bills received against such contracts.

4.4.27 Further, MSPGCL submitted Miscellaneous works of Rs. 19.42 Crore as on

COD. The Commission asked MSPGCL to submit the breakup of such

miscellaneous works. MSPGCL submitted the breakup of miscellaneous works

as shown in the Table below:

Table 4.14: Details of Miscellaneous Civil Works submitted by MSPGCL

Scope of Work Contractor Ordering Cost

(Rs. Crore)

Cost as on COD

(Rs. Crore)

Soil investigation work Soham Engg. 0.12 0.08

Soil investigation work Kulkarni & Asso 0.15 0.15



Soil investigation sample for

Nandgaon Ash Bund

Shrirang Pande 0.05 0.04

Dismantling of existing

Power House structure

(RCC)

M/s W. D. Kumbhare 0.03 0.03

Chainlink fencing M/s Surkan company 0.62 0.19

WBM approach road to

Power House

M/s Deepak Const. 0.23 0.23

11 KV sub-station M/s W. D. Kumbhare 0.14 0.11



(Rs. Crore)

Cost as on COD

(Rs. Crore)

Additional work carried out

for WBM Road

M/s Deepak Const. 0.29 0.29

WBM road to BHEL yard M/s Abhi Engr 0.15 0.04

WBM road to BHEL yard M/s M.F.Jain 0.15 0.13

Chainlink fencing M/s Shah Constn. 0.49 0.36

Diversion of pipe line fuiling

in ID fan area

M/s Abhi Engr 0.20 0.19

Diversion of pipe line foiling

in NDCT

M/s Sudhir Constn. 0.31 0.30

Conts. Of Store shed MF Jain 0.54 0.41

Const of store shed in Major

Store

M/s. S.R. Enterprises 0.17 0.17

Const of store shed in CHP

Area for 4x210 MW

M/s. Sunil Hi-Tech 0.08 0.08

Diversion of Nalla K.J.Jadhav 4.20 2.72

Providing drinking water

supply pipe line

Prime Constn 0.34 0.34

Providing and laying 800

mm dia pipeline

Abhi Engr. Corpn. 3.72 3.81

sanitary line to new staff

quarters

Shah Const 0.09 0.09

water supply to new staff

quarters

Shah Const 0.29 0.30

a) Work of providing and

fixing Tree Guards to

plantation site at Chicholi

and TPS colony K'kheda.

M/s. Subhash Construction ,

Khaperkheda.

0.01 0.01

b) Work of providing and




M/s. Mohini Constn. K'kheda. 0.01 0.01

c) Work of providing and




M/s R.N. Kukde, K'kheda. 0.01 0.01



(Rs. Crore)

Cost as on COD

(Rs. Crore)

d) Work of providing and




M/s. Sanjay V. Waghmare ,

Khaperkheda

0.01 0.01

e) Work of providing and




M/s. Anjali Constn. K'kheda 0.005 0.005

f) Work of providing and




M/s. D.H. Bhagat, K'kheda. 0.005 0.005

Diverting 300 mm dia MS

pipe and 200 mm dia D.I.

pipe line, 100 mm dia G.I.

pipe line and strengthening

of over head bridge for

carrying diverted pipe lines.

M/s W. D. Kumbhare, K'kheda and

Various other agencies

0.49 0.35

Land cost (Forest land ,

Govt. land and

Afforestation)

Amount deposited to Forest Dept. 4.79 4.79

Land cost for pump house at

Pench RBC

0.00 0.00

various small order 0.00 1.48 1.32

Development of land and

landscaping in power house

area

Various agencies 0.03 0.01

Compound wall near

Bhanegaon


Construction of road in plant

area outside battery limit of

BOP package


Water supply line for ‘A’

type quarters


Construction of ‘B’ type

building 3 nos. including




(Rs. Crore)

Cost as on COD

(Rs. Crore)

road, water supply, sanitary

etc. (Soil Investigation

work)

Miscellaneous work (out

sourcing of typist, day to day

assistance, vehicle drivers,

hiring of vehicle,

departmental vehicles,

maint. Contract for Xerox

machine, computer repairs

on office establishment

(Period of one and half year

( 2.25 x 18 = 41)


For Unseen works Various agencies 0.25 0.23

consultancy for design of

pile

IIT, Chennai 0.01 0.00

consultancy & Engg services

for Project implementation

DCPL 0.00

consultancy for Project

management(B.G. Railways)

Rites 5.20


management(Exchange

yard)

Rites 1.37


management(Renovation)

Kalumna to Khaperkheda

Rites 2.53

Consultancy for ROB on

Dahegaon - Kamptee road

PWD 0.48 0.35

Consultancy for Nandgaon

Ash Bund

CDO, Nashik (MERI) 0.46 0.40

Construction of WBM along

re-routed ash pipe line.

M/s. M.F. Jain, K'kheda 0.15 0.10

Walkway for maintenance of

re-routed pipe line

M/s. David Industrial Works,

K'kheda

0.05 0.05

a) Work of providing and M/s. A. R. Toshniwal, 0.03 0.02



(Rs. Crore)

Cost as on COD

(Rs. Crore)

construction of fabricated

supports out of 300/350 mm

dia. M.S. scrap pipes for

rerouting of 1 No. -200 mm

dia.HCSD pipe lines from

Ch. 2884.00 M to 4524.00

M leading to Waragaon Ash

Bund. (Line 1).

Laxmi Nagar,

Nagpur

b) Construction of supports

and thrust block for 350mm

dia ash disposal pipe line of

1X500 MW Unit from Ch.

2884.00 M to 4524.00 M

leading to Waragaon Ash

Bund.

M/s. P.R. Chandekar

Main Road,

Ward No. 2

Khaperkheda

0.14 0.14

Constn. of operator's cabin

at various floors in main

plant building, boiler & mill

area. - 9.99% above.

(Estimated cost. Rs.

14,27,551.00)

M/s David Industrial Work.,

Khaperkheda

0.16 0.13

Providing & fixing single

concertina coil fencing over

UCR boundary wall around

the periphery of 1x500MW

TPS Expansion. Proj.

K'kheda

M/s. S. Lahoti

Enterprises

Akola

0.08 _

Construction of WBM road

from OHP to Wagon Tippler

passing through railway

track for new expansion

project 1x500MW TPS

Khaperkheda

M/s. M. F. Jain,

Engineers & Contractors,

Main Road, Khaperkheda,

0.23 _

Pipeline Various agencies 0.35

Other Works Various agencies 0.39 0.38

Total 31.72 19.42


4.4.28 The Commission has gone through the submissions of MSPGCL and found

the same to be in order. The Commission observed that the Contracts

executed for Staff Quarters and Railway Siding through Domestic

Competitive Bidding includes Price Variation clause. As the increase in

price is mainly due to Price Variation, the Commission approves the cost of

Civil Works as on COD as submitted by MSPGCL.

Table 4.15: Cost of Civil Works as on COD approved by the Commission (Rs. Crore)

Particulars MSPGCL Approved cost as


Civil Works

BOP-Civil

package 337.51 326.03 326.03

MGR &

Marshalling Yard 135.73 120.63 120.63

Ash disposal area

development 42.03 0.00 0.00

Township &

Colony 16.89 17.88 17.88

Miscellaneous 31.71 19.42 19.42

Total 563.87 483.96 483.96

Construction and Pre-Commissioning activities

4.4.29 MSPGCL submitted that the cost of construction and pre-commissioning

activities as on COD is Rs. 40.11 Crore as against the Ordering cost of Rs. 1.00

Crore. MSPGCL submitted that the difference in ordering cost and cost as on

COD is mainly due to the cost of fuel of Rs. 28.05 Crore used for startup power

generation. MSPGCL also submitted that the cost of operators’ training as on

COD is Rs. 12.06 Crore as against the estimated cost of Rs. 1.00 Crore.


4.4.30 The Commission in the data gaps asked MSPGCL to submit the justification for

increase in cost of construction and pre commissioning activities.

4.4.31 MSPGCL submitted that the estimate of Rs. 1.00 Crore for Operators Training

was based on the initial estimates for the training of Project staff. MSPGCL


submitted that it had deputed its O&M staff in addition to Project staff for

rigorous training and this has led to increase in cost of Operators Training from

Rs. 1.00 Crore to Rs. 12.06 Crore.

4.4.32 MSPGCL further submitted that it had incurred fuel expenses of Rs. 171.78

Crore for 454.86 MU infirm power supplied to MSEDCL. MSPGCL submitted

that it had received payment of Rs. 143.73 Crore from MSEDCL against the

same and MSEDCL asked MSPGCL to include the balance expenses of Rs.

28.05 Crore in the Capital Cost.

4.4.33 The Commission, in this regard, asked MSPGCL to submit the supporting

documents for the bills raised for supply of infirm power to MSEDCL and

payments received from MSEDCL. MSPGCL submitted the copies of bills

raised and the copies of payments received for the supply of infirm power to

MSEDCL.

4.4.34 The Commission observes that MSPGCL has capitalised the amount of fuel

costs less revenue, on account of infirm generation of power. However, as

fuel cost is a revenue expense, whether incurred during infirm generation

or firm generation, the Commission is of the view that the same needs to be

recovered directly for the power supplied during the period instead of

capitalising it as a part of Capital Cost. As these expenses have been

incurred prior to the COD, the Commission has considered the same as a

part of capital cost for the purpose of computation of IDC. However, the

Commission has not considered fuel expenses as part of Capital Cost for

computing the tariff and the Commission hereby allows MSPGCL to

recover the under-recovered fuel cost, i.e., Rs. 28.05 Crore for infirm

power supplied to MSEDCL in three monthly instalments after the issue of

this Order and MSEDCL can recover this amount through Fuel

Adjustment Cost (FAC) mechanism.

4.4.35 Hence, the Commission has allowed cost of construction and pre

commissioning activities as on COD as Rs. 40.11 Crore including net fuel

costs for start-up power generation .


Table 4.16: Cost of Construction and pre commissioning activities as on COD approved

by the Commission (Rs. Crore)

Construction and pre

commissioning activities

MSPGCL Approved Cost

as on COD Estimated Cost Cost as on COD

Operators Training 1.00 12.06 12.06

Net Fuel Cost for Start-up

Generation 0.00 28.05 28.05

Total 1.00 40.11 40.11

Overheads

4.4.36 MSPGCL submitted that the capitalisation of Overheads is based on the

accounting principles adopted to reduce the revenue expenses. MSPGCL

submitted that the actual overheads as on COD is Rs. 87.53 Crore as against

estimated cost of Rs. 89.85 Crore.


4.4.37 The Commission in the data gaps asked MSPGCL to submit the justification for

variation in various heads of overheads as on COD from estimated cost.

4.4.38 MSPGCL submitted that the establishment expenses in the base cost were mere

estimates to the extent of the hard cost of the project and did not factor in the

actual prevailing cost. MSPGCL submitted that these charges pertain to

expenses incurred by it towards employees working in the project site, A&G

and other miscellaneous expenses of similar nature, which have been capitalised

on actual basis. MSPGCL submitted that the capitalisation against Contingency

unknown is actually towards miscellaneous expenses incurred on very small

contracts under contingency provision awarded for the Project. MSPGCL has

also submitted the list of such contracts along with brief description of scope of

work of each contract.

4.4.39 The Commission has gone through the submissions of MSPGCL. The

Commission observes that the overheads as on COD are approximately 3%

of hard cost, which seems reasonable as per the industry practices. Hence,

the Commission has approved the overheads as on COD as submitted by

MSPGCL.


Table 4.17: Overheads as on COD approved by the Commission (Rs. Crore)

Overheads MSPGCL Approved cost as

on COD Estimated Cost Cost as on COD

Establishment 56.32 76.30 76.30

Design &

Engineering 16.44 4.30 4.30

Contingency

Unknown 5.71 4.00 4.00

Vehicles for Project

and O&M staff 1.00 0.06 0.06

Others (T&P and

Special T&P) 10.39 2.87 2.87

Total 89.85 87.53 87.53

Initial Spares

4.4.40 As regards the cost of spares, Regulation 30.1 of the MERC Tariff Regulations,

2005 stipulates as under:

“Subject to prudence check by the Commission, the actual expenditure

incurred on completion of the project shall form the basis for determination of

the original cost of project. The original cost of project shall be determined

based on the approved capital expenditure actually incurred up to the date of

commissioning of the generating station and shall include capitalised initial

spares subject to following ceiling norms as a percentage of the original cost

as on the cut-off date:

(i) Coal-based/lignite-fired generating stations - 2.5%

...”

4.4.41 The Commission observed that the cost of spares procured till COD is

1.79% of Capital Cost as on COD, which is within 2.5% of project cost as

stipulated in Regulation 30.1 of MERC (Terms and Conditions of Tariff),

Regulations, 2011. Hence, the Commission has approved the cost of spares

as on COD as submitted by MSPGCL.


Table 4.18: Initial Spares as on COD approved by the Commission

Particulars MSPGCL Approved cost

as on COD Ordering Cost Cost as on COD

BTG - Mandatory Spares (included in cost of BTG)

Supply of Mandatory Spares 81.42 49.57 49.57

Taxes 18.58

PV - 7.31 7.31

Total 100.00 56.88 56.88

BoP - Mandatory Spares (included in cost of BoP)

Mandatory Spares 12.48 2.43 2.43

Total Spares 112.48 59.31 59.31

Based on the above, the total Hard Cost approved by the Commission is Rs.

2709.55 Crore.

Table 4.19: Hard Cost as on COD approved by the Commission (Rs. Crore)

Particulars

MSPGCL Approved

Cost as on

COD

Ordering

Cost

Cost as on

COD

Land & site development 35.00 29.00 29.00

BTG (including spares) 1352.62 1427.14 1427.14

BOP (including spares) 666.59 641.80 641.80

Civil Works 563.87 483.96 483.96

Construction & Pre-Commissioning activities 1.00 40.11 40.11

Overheads 89.85 87.53 87.53

Total Hard Cost 2708.93 2709.55 2709.55

4.5 INTEREST DURING CONSTRUCTION

4.5.1 MSPGCL submitted that the initial estimate of IDC in the Capital Cost of

Khaperkheda Unit 5 approved by its Board vide the Board Resolution dated 28

March, 2006 was worked out in a notional manner considering a notional

interest rate of 7.5%. MSPGCL submitted that in accordance with the Judgment

of Hon’ble ATE in Appeal No. 34 of 2012, it had calculated the base IDC

considering the actual interest rates. MSPGCL submitted that it had considered

the base case IDC as the IDC that would have been incurred if the base project


cost was to be taken into consideration for a scheduled construction period of 42

months.

4.5.2 MSPGCL submitted that as per Clause 2.3 of the Loan Sanction letter, PFC had

an option to reset the interest rate immediately following the 3rd

period from the

date of first disbursement and accordingly the interest rate on individual tranche

of loan was constant for a 3 year period beginning with the date of first

disbursement. MSPGCL submitted that it had considered the loan drawal

schedules as shown in the Table below:

Table 4.20: Loan Drawdown Schedule submitted by MSPGCL (Rs. Crore)

Year Quarter Scheduled Loan

Drawal

Cumulative

Scheduled Loan

Drawal

Actual Loan

Drawal

Cumulative

Actual Loan

Drawal

FY

2006-07

Q3 180.31 180.31

Q4 31.72 212.03

FY

2007-08

Q1 88.49 300.52

Q2 195.34 495.86 98.00 98.00

Q3 202.02 697.88 7.11 105.11

Q4 278.81 976.69 152.53 257.64

FY

2008-09

Q1 283.82 1260.51 83.38 341.02

Q2 283.82 1544.33 150.28 491.30

Q3 298.85 1843.18 113.05 604.35

Q4 318.88 2162.06 338.06 942.41

FY

2009-10

Q1 198.68 2360.74 203.37 1145.79

Q2 215.37 2576.11 237.73 1383.52

Q3 161.95 2738.06 213.44 1596.96

Q4 188.66 2926.72 113.50 1710.45

FY

2010-11

Q1 42.19 1752.65

Q2 115.76 1868.41

Q3 23.64 1892.05

Q4 31.89 1923.93

FY

2011-12

Q1 28.22 1952.15

Q2 86.09 2038.23

Q3 104.38 2142.62


Year Quarter Scheduled Loan

Drawal

Cumulative

Scheduled Loan

Drawal

Actual Loan

Drawal

Cumulative

Actual Loan

Drawal

Q4 140.68 2283.30

FY

2012-13

Q1 0.00 2283.30

Total 2926.72 2283.30

4.5.3 MSPGCL submitted that the envisaged loan drawal was supposed to start from

October 2006 while the actual loan drawal started from 2nd

quarter of FY 2007-

08. MSPGCL submitted that the envisaged loan drawal was spread over a

period of 42 months as compared to the actual loan drawal spread over a period

of 63 months. MSPGCL submitted that due to the deferred loan drawal, there

has been an overall increase in IDC. MSPGCL submitted that the IDC has been

computed considering the following parameters shown in the Table below:

Table 4.21: Assumptions for IDC Computation submitted by MSPGCL

Particulars Base Case Cost as on COD

Project Cost (Rs. Crore) 3658.39 3376.90

Debt Equity ratio 80:20 77:23 (excluding

Undischarged Liabilities)

Loan component (Rs.

Crore) 2926.72 2283.30

Draw down schedule

Original draw down

schedule envisaged in

Loan Agreement with PFC

Actual draw down

Interest Rate Actual Actual

Construction Period 42 months 63 months

COD 22 July, 2010 16 April, 2012

IDC (Rs. Crore) 658.15 667.35

4.5.4 MSPGCL submitted that in comparison to base case IDC of Rs. 658.15 Crore

the actual IDC is Rs. 667.35 Crore and the increase in IDC due to time overrun

is Rs. 9.20 Crore.



4.5.5 The Commission asked MSPGCL to submit the actual phasing of capital

expenditure.

4.5.6 The Commission has recomputed actual IDC considering the approved Hard

Cost, actual phasing of capital expenditure and actual interest rates submitted by

MSPGCL.

4.5.7 The Commission observed the variation in Project Cost and Loan amount

submitted by MSPGCL in the Petition as considered for computation of Base

Case IDC and the same in the Excel computation sheet of Base Case IDC

submitted by MSPGCL. MSPGCL submitted the Loan amount considered for

computation of Base case IDC as Rs. 2926.72 Crore in the Petition and as Rs.

2925.50 Crore in the Excel computation sheet. The Commission asked

MSPGCL to reconcile the data and MSPGCL has submitted the revised

computations of Base Case IDC. The Commission observed that the Hard Cost

approved by MSPGCL’s Board vide the Board Resolution MSPGCL/BM-

69/Item-69.17/ dated 24 May, 2010 is Rs. 3000.24 Crore and the same has been

considered by MSPGCL in the Excel computation sheet of Base Case IDC. The

Commission observed that MSPGCL, in its computation of Base Case IDC, has

considered the Hard Cost approved by its Board vide the Board Resolution

dated 24 May, 2010 and has computed the IDC based on actual interest rates

and proportion of loan drawal as envisaged in the original drawal schedule.

Further, MSPGCL has considered the Debt Equity ratio of 80:20 approved by

its Board.

4.5.8 Based on the Base Case IDC computations submitted by MSPGCL, the

Commission observed that the Hard Cost as well as Loan amount considered by

MSPGCL for computation of Base Case IDC is substantially higher than the

actual Hard Cost and actual Loan amount as on COD respectively. MSPGCL in

its submissions also submitted that the capital cost approved by its Board was

indicative in nature and should not be considered as base cost.

4.5.9 The Commission observes that the purpose of Base Case IDC is to determine

the impact of time overrun on IDC, i.e., to determine the difference in IDC if

the Project had been completed in the stipulated time duration and the actual

IDC incurred for the actual time duration of completion. While doing so, it

would be prudent to consider the Hard Cost as on COD for the computations of

Base Case IDC. Regarding the same, Hon’ble ATE in its Judgment in Appeal

No. 72 of 2010 ruled as under:


“7.4. The delay in execution of a generating project could occur due to

following reasons:

i) due to factors entirely attributable to the generating

company, e.g., imprudence in selecting the

contractors/suppliers and in executing contractual

agreements including terms and conditions of the

contracts, delay in award of contracts, delay in

providing inputs like making land available to the

contractors, delay in payments to contractors/suppliers

as per the terms of contract, mismanagement of

finances, slackness in project management like

improper co-ordination between the various

contractors, etc.

ii) due to factors beyond the control of the generating

company e.g. delay caused due to force majeure like

natural calamity or any other reasons which clearly

establish, beyond any doubt, that there has been no

imprudence on the part of the generating company in

executing the project.

iii) situation not covered by (i) & (ii) above.

In our opinion in the first case the entire cost due to time over

run has to be borne by the generating company. However, the

Liquidated Damages (LDs) and insurance proceeds on account of

delay, if any, received by the generating company could be retained by

the generating company. In the second case the generating company

could be given benefit of the additional cost incurred due to time over-

run. However, the consumers should get full benefit of the LDs

recovered from the contractors/suppliers of the generating company

and the insurance proceeds, if any, to reduce the capital cost. In the

third case the additional cost due to time overrun including the LDs

and insurance proceeds could be shared between the generating

company and the consumer. It would also be prudent to consider the

delay with respect to some benchmarks rather than depending on the

provisions of the contract between the generating company and its

contractors/suppliers. If the time schedule is taken as per the terms of

the contract, this may result in imprudent time schedule not in

accordance with good industry practices.”


“8.6 ....

We agree with the State Commission that the infusion of debt & equity has to be

more or less on pari passu basis as per normative debt equity ratio. However,

the increase in IDC due to time over run has to be allowed only according to

the principles laid down in para 7.4 above. Accordingly, the State Commission

is directed to re-determine the IDC for the actual period of commissioning of

the project and then work out the excess IDC for the period of time over run

on a prorata basis and limit the disallowance to 50% of the same on account

of excess IDC. This question is answered accordingly.”

4.5.10 As may be observed, the Hon’ble ATE in its Judgment has clearly stipulated

that extra IDC on account of the delay has to be shared between the generating

company and the consumers. In such a case, the extra IDC needs to be

computed considering the impact of the delay in the commissioning of the

project only (i.e., period of construction under base case and under the actual

case).

The Commission has thus recomputed the Base Case IDC considering the

approved Hard Costas on COD. As regards the Debt Equity ratio for

computation of Base Case IDC, the Commission has considered 80:20 as the

same has been approved by GoM while according approval to Khaperkheda

Unit # 5 and initially the Project was envisaged to be funded through

Debt:Equity of 80:20. The Commission has considered the actual interest rates

and proportion of loan amount drawn as submitted by MSPGCL.

4.5.11 As regards the delay in project, due to which the actual IDC has increased,

MSPGCL has elaborated the reasons for delay in execution. MSPGCL also

submitted that the main reasons that contributed to the delay were beyond its

control. MSPGCL submitted that BHEL being the only major supplier of the

equipment in the country at that time could not cope up with the targeted

schedules due to heavy orders. MSPGCL submitted that delays were

experienced at other projects also.

4.5.12 The Commission has gone through MSPGCL’s submission of reasons for

delay. The Commission is of the view that the present case appears to be of

sudden spurt in execution of Power Projects in the country and

consequential increase in demand of equipments and the gestation period

required by the industry in enhancing the manufacturing capacity.


Considering all the facts and documents submitted by MSPGCL, though it

is evident that there was delay on the part of BHEL in supply and

commissioning of the main plant, it is not established beyond doubt that the

entire delay was due to the reasons beyond the control of MSPGCL. In

light of the above, the Commission is of the view that the present case falls

under the category (iii) described in the ruling of Hon’ble ATE stated

above. Accordingly, the Commission allows the cost of time overrun to be

shared equally between MSPGCL and the consumers. Admittedly, there is

no enhancement in cost of the contract price of the equipment as no price

variation escalation was permissible to BHEL beyond the schedule date of

completion of the Project according to terms of the agreement. The impact

of time overrun beyond the contractual schedule is only on IDC.

4.5.13 The Project cost including IDC approved by the Commission is shown in the

Table below:

Table 4.22: Project Cost including IDC approved by the Commission (Rs. Crore)

Particulars MSPGCL Approved

Hard Cost 2709.55 2709.55

Actual IDC 667.35 667.35

Base Case IDC 658.15 594.39

IDC allowable 667.35 630.87

Project cost including

IDC 3376.90 3340.41

4.6 LIQUIDATED DAMAGES

4.6.1 MSPGCL submitted that even after making all diligent efforts within its

purview, towards pursuing the contractor for expeditious commissioning of the

Unit, the Unit could not be commissioned in the envisaged time frame.

MSPGCL submitted that as a last resort, it had withheld some payments against

damages caused on account of delay in supplies and impact of time overruns.


4.6.2 The Commission asked MSPGCL to submit the details of Liquidated Damages

levied and recovered in accordance with the provisions of contracts.


4.6.3 MSPGCL submitted that as per the Contract, in case the Contractor fails to

achieve the trial operation of the Unit within the stipulated time period due to

reasons attributable to him, it shall levy Liquidated Damages on the Contractor

at 1/2% of the Contract Price with applicable price variation per week of delay

or part thereof subject to maximum 10% of the Contract Price with applicable

price variation. MSPGCL submitted that the Liquidated Damages amount shall

be finalised and recovered upon closing of the Contract. MSPGCL submitted

that it had not levied any Liquidated Damages against the Contractors and had

only withheld some payments.

4.6.4 The Commission also asked MSPGCL if Contract Performance Guarantee was

furnished by M/s BHEL and it was encashed due to any reasons. The

Commission also asked MSPGCL to submit if the cost of damages caused by

fire or cost of rectification/delays due to any other equipment as submitted by

MSPGCL has been reimbursed from errant agencies.

4.6.5 MSPGCL submitted that Contract Performance Guarantee has been furnished

by M/s BHEL and it shall be kept valid till 90 days beyond the Guarantee

Period (Defect Liability Period). MSPGCL submitted that the issues related to

project implementation including delay/unsatisfactory progress of the contract

was discussed in Site Movement meetings and Project Review Meetings at

regular intervals with senior officials of the contracting agencies. MSPGCL

submitted that no legal notices were served and performance guarantee was not

encashed against unsatisfactory performance of the contractors.

4.6.6 MSPGCL further submitted that entire cost of damage caused by fire or cost of

rectification is borne by the respective BTG and BoP contractors and delays due

to damages to equipment shall be covered in the Liquidated Damages applicable

to the respective contractor.

4.6.7 In reply to Commission’s query regarding defect liability period, MSPGCL

submitted that the Performance & Guarantee Test in respect of BTG and BoP

has been recently concluded and the reports of the same are being prepared by

the Contractors. MSPGCL submitted that the defect liability period of 12

months of BTG package commenced from 1 April, 2013. MSPGCL submitted

that the defect liability period of BoP package commenced from 17 June, 2012

and no Latent defects have been noticed so far. MSPGCL submitted that Latent

defects could only be identified during the operating life of the Unit as the same

could not get identified during the normal quality checks. MSPGCL submitted


that the deficiencies, if any, regarding poor performance shall be known only

after scrutiny of P&G Test report.

4.6.8 MSPGCL further submitted that the Commission might consider the retention

amount against LD.

The Commission observes that MSPGCL has not yet levied Liquidated

Damages on the contracts as the contracts have not yet been closed. The

Commission therefore at this stage has considered the 50% of retention amount

against the Liquidated Damages and deducted the same from the Capital Cost,

in accordance with the Hon’ble ATE’s Judgment as discussed in Para 4.5.9.

The Commission directs the Petitioner to submit a separate report

regarding the actual amount of the LD recovered from the Contractors

upon finalisation of the Contracts so that the same can be considered while

approving the final Capital Cost after finalisation of Contracts.

4.6.9 Thus, the Capital Cost of Khaperkheda Unit # 5 approved by the Commission as

on COD after deducting the fuel expenses allowed to be recovered separately

and LD amount is shown in the Table below:

Table 4.23: Capital Cost as on COD approved by the Commission (Rs. Crore)

Particulars Approved

Capital Cost including IDC 3340.41

Less Fuel Expenses allowed

to be recovered separately 28.05

Capital Cost as on COD after

deducting fuel expenses 3312.36

LD deducted 115.38

Capital Cost after

deducting LD amount 3196.99

4.7.1 The Commission in this Order has approved the capital cost for Khaperkheda

Unit # 5 on COD as Rs. 3312.36 Crore. The Capital Cost as on COD after

deducting the 50% of LD amount works out to Rs. 3196.99 Crore. Further, the

final Capital Cost as on COD will get revised once MSPGCL submits the final

LD amount recovered from the Contractors upon finalisation of Contracts.


4.7 MEANS OF FINANCE

4.8.1 MSPGCL submitted that the total capital expenditure as on COD is Rs. 3376.90

Crore. MSPGCL submitted that it had tied up long term debt of Rs. 2576 Crore

from Power Finance Corporation (PFC). MSPGCL submitted that out of the

total sanctioned loan of Rs. 2576 Crore, loan amount of Rs. 2283.30 Crore was

drawn till COD. MSPGCL submitted that there was an unfunded liability of Rs.

415.63 Crore (including the retention amount) as on COD in the books of

Accounts. MSPGCL submitted that Government of Maharashtra (GoM)

provided an equity contribution of Rs. 599.37 Crore and the balance funding of

Rs. 78.60 Crore had been met through internal accruals.


4.8.2 The Commission asked MSPGCL to submit the supporting documents

regarding the project financing for Khaperkheda Unit # 5.

4.8.3 MSPGCL has submitted the Loan Agreement executed with PFC, Resolutions

passed by Government of Maharashtra regarding Equity infusion for

Khaperkheda Unit # 5 and details of Internal Accruals.

4.8.4 As regards the Equity infusion by GoM, the Commission observed some

discrepancies in amounts of Equity submitted by MSPGCL in excel formats and

equity granted in the Government Resolutions. In this regard, the Commission

asked MSPGCL to reconcile the data. In reply, MSPGCL submitted that the

amounts of Equity submitted in the excel formats is the actual utilisation for the

project while the Government Resolutions depict the sanctioned amounts.

MSPGCL submitted that there had been a time lag of 2-3 days between the date

of sanction by GoM and receipt of funds by MSPGCL. MSPGCL submitted that

in the period from FY 2010-11 to FY 2012-13, the sanctions took place on the

last 2-3 days of financial year and the actual amount was received by MSPGCL

in the next financial year.

4.8.5 As regards the Internal Accruals, MSPGCL submitted that the internal accruals

used for funding the project were from internal profits of the company.

MSPGCL submitted the details of internal accruals as shown in the Table

below:


Table 4.24: Details of Internal Accruals submitted by MSPGCL (Rs. Crore)

Particulars FY

2005-06

FY

2006-07

FY

2007-08

FY

2008-09

FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

Profit After Tax 113.00 234.00 300.00 84.00 203.00 309.00 200.00

Cumulative Profit After Tax 113.00 347.00 647.00 731.00 934.00 1,243.00 1,443.00 1,443.00

Fu

nd

ing

of

New

Pro

ject

s th

rou

gh

Inte

rnal

Acc

rual

s

Paras-3 38.35 75.91 191.18

Parli-6 47.36 148.27 110.86

Paras-4 - 3.57 18.46 35.14 23.07

Parli-7 1.73 11.42 45.93 86.82 48.77

Total Funding of New

Projects through Internal

Accruals

85.71 225.91 317.03 64.38 121.96 71.84 -

Cumulative Funding of New

Projects through Internal

Accruals

85.71 311.62 628.65 693.04 815.00 886.84 886.84 886.84

Cumulative Balance of

Internal Accruals 27.29 35.38 18.35 37.96 119.00 356.16 556.16 556.16

Funding of Khaperkheda

Unit-5 through Internal

Accruals

0.40 5.12 16.27 23.81 26.08 6.92

Cumulative Funding of

Khaperkheda Unit-5

through Internal Accruals

0.40 5.53 21.79 45.60 71.68 78.60

4.8.6 As regards Undischarged Liabilities as on COD, MSPGCL submitted that it had

an Undischarged Liability of Rs. 415.63 Crore (including retention amount) as

on COD in its books of accounts. MSPGCL submitted that out of Rs. 415.63

Crore, Rs. 401.21 Crore is towards retention money from suppliers, which also

includes the retention amount towards Liquidated Damages. MSPGCL

submitted that assets have been considered against this amount in the ARR

computation but no funding had been shown against this amount as on COD.

MSPGCL submitted that post COD, Rs. 117.34 Crore has been replaced by part

of loan drawal in FY 2012-13. MSPGCL submitted that the funding against the

Undischarged Liabilities would be submitted as and when payments would be

paid against the same in future.

4.8.7 The Commission observed that the Undischarged Liabilities of Rs. 415.63 Crore

is inclusive of retention amount against LD of Rs. 230.75 Crore. The

Commission observed that out of the balance Undischarged Liabilities of Rs.


184.88 Crore, MSPGCL has proposed to replace Rs. 117.34 Crore of this

amount with portion of Loan drawal during FY 2012-13.

4.8.8 The proportion of Debt and Equity as on COD submitted by MSPGCL is shown

in the Table below:

Table 4.25: Debt and Equity as on COD submitted by MSPGCL

Particulars MSPGCL

Rs. Crore %

Debt 2283.30 77.11%

GoM Equity 599.37 22.89%

Internal Accruals 78.60

Sub-Total 2961.27 100.00%

Add: Undischarged Liabilities 415.63

Total 3376.90

Less: Retention Amount 0.00

Capital Cost as on COD 3376.90

4.8.9 The Commission has considered the Means of Finance for total Capital Cost as

approved by the Commission on COD of the project before deduction of

Liquidated Damages on proportionate basis based on the Means of Finance and

Undischarged Liabilities as on COD as submitted by MSPGCL. As the retention

amount towards Liquidated Damages is part of Undischarged Liabilities, the

Commission has reduced the Liquidated Damages from the Undischarged

Liabilities. The Means of Finance as on COD approved by the Commission is

given in Table below

Table 4.26: Means of Finance as on COD (Rs. Crore)

Particulars Approved

Debt 2239.66

GoM Equity 587.92

Internal Accruals 77.10

Undischarged Liabilities 292.31

Total 3196.99


4.8.10 The Commission has considered the funding of Undischarged Liabilities of Rs.

117.34 Crore with Loan availed by MSPGCL in FY 2012-13. Further, the

Commission on provisional basis has considered the funding of balance

Undischarged Liabilities excluding retention amount towards LD in the same

proportion of Debt, Equity and Internal Accruals as submitted by MSPGCL as

on COD of the Project. The Commission will approve the revised Project Cost

and carry out the truing up including funding of Undischarged Liabilities based

on actual LD amounts and actual funding of Undischarged Liabilities.

5 Tariff of Khaperkheda Unit # 5 for FY 2012-13

5.1 ENERGY CHARGES

Fuel Supply Agreement

5.1.1 MSPGCL submitted that domestic coal is the primary fuel for Khaperkheda

Unit # 5. MSPGCL submitted that it had signed MoU with MCL for supply of

2.312 MMT of coal to Khaperkheda Unit # 5, which was valid up to 31 March,

2013. MSPGCL submitted that as per the communication received from CEA

vide letter dated 24 May, 2012, MCL is directed to supply 70% of LoA to

MSPGCL. MSPGCL submitted that FSA had been executed with MCL for

supply of 2.312 MMT of coal to Khaperkheda Unit # 5 on 31 January, 2013.

MSPGCL submitted that as per the Presidential directives to Coal companies,

MCL has to adhere to at least 80% of FSA quantity.

5.1.2 MSPGCL submitted that as the quantum of domestic coal available is

insufficient to run the unit at normative level, it procured imported coal.

MSPGCL submitted that it had entered into agreements with MMTC and

Knowledge Infrastructure for supply of 0.150 MMT and 0.486 MMT of

imported coal for the period April, 2012 to June, 2012 and November, 2012 to

March, 2013 respectively. MSPGCL submitted the delivery schedule of

imported coal by MMTC and Knowledge Infrastructure as shown in the Table

below:

Table 5.1: Imported Coal supply schedule submitted by MSPGCL

S.

No. Month

Quantity

(MMT)

MMTC Delivery Schedule


S.

No. Month

Quantity

(MMT)

1 April, 2012 0.030

2 May, 2012 0.061

3 June, 2012 0.059

Sub-Total (MMTC) 0.150

Knowledge Infrastructure Delivery Schedule

1 18 to 30, November, 2012 0.045

2 December, 2012 0.111

3 January, 2013 0.110

4 February, 2013 0.110

5 March, 2013 0.110

Sub-Total

(Knowledge Infrastructure) 0.486

Total 0.636


5.1.3 The Commission asked MSPGCL to submit a copy of MoU executed with

MCL, FSA executed with MCL and other coal supply agreements for imported

coal.

5.1.4 MSPGCL submitted that it procures imported coal through International

Competitive bidding on yearly basis to meet the shortfall in supply of domestic

coal. MSPGCL submitted the FSA executed with MCL. MSPGCL also

submitted the Coal Supply Agreements executed with MMTC and Knowledge

Infrastructure.

5.1.5 Further, the Commission asked MSPGCL to submit the domestic coal

requirement to be able to run the Unit at normative performance parameters and

procurement methodology intended to be followed to fulfil the shortfall in

supply of domestic coal.

5.1.6 MSPGCL submitted that considering the normative PLF of 85%, SHR of 2425

kcal/kWh and domestic coal CV of 3400 kcal/kg, the coal quantity required

would be 2.655 MMT per annum. MSPGCL submitted that it had signed FSA

with MCL for 2.312 MMT of coal with a CV of 3400 kcal/kg. MSPGCL

submitted that the 2.312 MMT per annum would ensure a PLF of around 59%.


MSPGCL submitted that considering the actual realisation of coal, the shortfall

in coal can be met through 0.806 MMT of domestic coal of CV 3400 kcal/kg or

0.589 MMT of imported coal of CV 4650 MMT.

5.1.7 MSPGCL further submitted that it is analysing the possibility of shifting

domestic coal to the new Unit and maximising the usage of imported coal in the

older Units, which have higher design GCV subject to the technical constraints.

MSPGCL submitted that the optimal usage of domestic and imported coal will

be used for the overall Station by meeting the requirement with imported coal to

the extent feasible in both the Units. MSPGCL submitted that any balance

requirement would be met through e-auction coal. MSPGCL submitted that the

possibility of loss in generation due to non-realisation of such options or

prolonged shortages by domestic coal companies could not be fully ruled out

even after making all sincere efforts to maximise the availability of coal.

5.1.8 MSPGCL submitted that as per the presidential directives, MCL had agreed to

supply 80% of FSA quantity. MSPGCL submitted that as per FSA,

compensation for shortfall in delivery of domestic coal is applicable below 80%

of FSA quantity (1.850 MMTPA). MSPGCL submitted that this includes 65%

of domestic coal by quantity (1.503 MMTPA) and 15% of imported coal on

GCV basis for FY 2012-13, FY 2013-14 and FY 2014-15, 70% of domestic

coal by quantity (1.618 MMTPA) and 10% of imported coal on GCV basis for

FY 2015-16 and 75% of domestic coal by quantity (1.734 MMTPA) and 5% of

imported coal on GCV basis from FY 2016-17 onwards. MSPGCL submitted

that the quantity of imported coal will be on GCV parity basis. MSPGCL

submitted that as per this option, the possible PLF during FY 2013-14 to FY

2016-17 would be around 59%.

5.1.9 In view of repetitive concern raised by MSPGCL regarding the poor quality and

inadequate quantity of coal received from Coal India Limited, the Commission

in the second TVS directed MSPGCL to submit the summary of proceedings in

the Case filed in Competition Commission of India against Coal India Limited.

The Commission also directed MSPGCL to submit the study conducted by its

Fuel Management Cell regarding the usage of different types of coal in

Khaperkheda Unit # 5. The Commission also directed MSPGCL to submit a

note on the current status of coal washery proposed to be set up at Chandrapur,

Maharashtra.


5.1.10 MSPGCL submitted the summary of proceedings in the Case filed with

Competition Commission of India. MSPGCL also submitted the study done by

its Fuel Management Cell regarding the usage of various types of coal at

Khaperkheda Unit # 5 as shown in the Table below:

Table 5.2: Study on usage of coal submitted by MSPGCL

S.

No. Particulars Formula Scenario-1 Scenario-2 Scenario-3 Scenario-4

Scenario-

5

Scenario-

6

1 Gen. Capacity (MW) 500 500 500 500 500 500

2 Design CV (kcal/kg) 3400 3400 3400 3400 3400 3400

3 Coal Heat Rate

(kcal/kWh) 2,415 2,415 2,415 2,415 2,415 2,415

4 Target Availability

(%) 85 85 85 85 85 85

5 Target Generation

(MU) 3,723 3,723 3,723 3,723 3,723 3,723

6 Target heat input

(Mkcal) 3x5 89,91,045 89,91,045 89,91,045 89,91,045 89,91,045 89,91,045

7 Received CV of raw

coal (kcal/kg) 2,800 2,800 2,800 2,800 2,800 2,800

8 Raw coal quantity

(Th.MT) 3,212 2,725 2,292 1,902 1,550 1,232

9 Raw coal quantity % 100% -

13 100 90 80 70 60 50

10 Raw coal Heat input

(Mkcal) 7 x 8 89,93,600 76,30,000 64,17,600 53,25,600 43,40,000 34,49,600

11 GCV of Imported

coal (kcal/kg) 4,500 4,500 4,500 4,500 4,500 4,500

12 Qty. of import coal

(Th.MT) 13 x(8/9) 0 303 573 815 1,033 1,232

13 Import coal blending

qty (%) 0 10 20 30 40 50

14 Import coal Heat

input (Mkcal) 11 x 12 0 13,62,500 25,78,500 36,68,143 46,50,000 55,44,000

15

Total Heat input

(raw+import)

(Mkcal)

10 + 14 89,93,600 89,92,500 89,96,100 89,93,743 89,90,000 89,93,600

16

Total Qty

(Raw+Import)

(Th.MT)

8 + 12 3,212 3,028 2,865 2,717 2,583 2,464

17 Avg.Price of Raw 2053.31 2053.31 2053.31 2053.31 2053.31 2053.31


S.

No. Particulars Formula Scenario-1 Scenario-2 Scenario-3 Scenario-4

Scenario-

5

Scenario-

6

coal (Rs./MT)

18 Cost of Raw coal

(Rs. Lakhs) 8 x 17 65,952 55,953

47,062 39,054 31,826 25,297

19 Price of Import coal

(Rs./MT) 5552.56 5552.56 5552.56 5552.56 5552.56 5552.56

20 Cost of Import coal

(Rs. Lakhs) 12 x 19 0 16,812 31,816 45,261 57,376 68,408

21

Total cost of

received coal

(Rs.Lakhs)

18 + 20 65,952 72,765 78,878 84,315 89,203 93,704

22

GCV of blended coal

at bunker

(kcal/kg)

15/16 2800 2970 3140 3310 3480 3650

23

Specific Coal

Consumption

(kg/kWh)

16/5 0.863 0.813 0.770 0.730 0.694 0.662

24 Energy Charge

(Rs./kWh) 21/5 1.77 1.95 2.12 2.26 2.40 2.52

5.1.11 MSPGCL submitted that the approval for installation of 12 MTPA coal washery

at Chandrapur was accorded by its Board vide Board Resolution MSPGCL/BR-

111/Item 111.18 dated 19 December, 2011. MSPGCL further submitted that the

DPR of coal Washery was submitted by M/s Desein Pvt. Ltd., Delhi on 21 May,

2013 and is under review.

5.1.12 The Commission has taken note of MSPGCL’s submissions. While the

Commission acknowledges the efforts of MSPGCL to operate the Unit at target

performance parameters, the Commission also advises MSPGCL to optimise the

usage of coal of varying calorific value so as to avoid adverse long term effect

on the performance of the Unit.

Calorific Value and Price of Fuel

5.1.13 MSPGCL submitted that the CV and landed price of coal and secondary oil for

FY 2012-13 as shown in the Table below:

Table 5.3: Calorific Value and Price of Fuel submitted by MSPGCL

Fuel

Stabilisation Period

( 16/04/2012 to 12/10/2012)

(Actuals)

Post-Stabilisation Period

( 13/10/2012 to 31/03/2013)


Calorific Value

(kcal/kg)

Landed Price

(Rs./MT)

Calorific Value

(kcal/kg)

Landed Price

(Rs./MT)

Domestic Coal 2941.00*

1895.60 3033.63*

1935.03

Imported Coal 7317.25 5554.56

FO 10196.41 43511.33 10100.82 43623.20

LDO 10603.00 48548.97 10596.29 58430.15

*Bunkered CV


5.1.14 The Commission asked MSPGCL to submit the actual calorific value and

landed fuel cost for FY 2012-13. The Commission also asked MSPGCL to

submit calorific value of Domestic Coal and Imported Coal separately.

5.1.15 MSPGCL submitted the actual calorific value and landed fuel cost for FY 2012-

13. MSPGCL has also submitted the calorific value of Domestic Coal and

Individual Coal separately.

5.1.16 The Commission, for the purpose of computation of Energy Charge for FY

2012-13, has considered the landed price of all fuels as submitted by MSPGCL.

The landed price and calorific value considered by the Commission is shown in

the Table below:

Table 5.4: Landed Price and Calorific Value of Fuel considered by the Commission

Fuel

Stabilisation Period

( 16/04/2012 to 12/10/2012)

Post-Stabilisation Period

( 13/10/2012 to 31/03/2013)

Calorific Value

(kcal/kg)

Landed Price

(Rs./MT)

Calorific Value

(kcal/kg)

Landed Price

(Rs./MT)

Bunkered Coal 2941.00 - 3033.63 -

Domestic Coal 2991.42 1895.60 2744.27 1935.03

Imported Coal 5452.00 7317.25 4500.00 5554.56

FO 10196.41 43511.33 10100.82 43623.20

LDO 10603.00 48548.97 10596.29 58430.15

5.1.17 Further, the Commission observed that there are significant variations between

the bunkered Calorific Value of blended coal and weighted average Calorific

Value of blended coal as submitted by MSPGCL. The variations in the two

Calorific Values is shown in the Table below:


Table 5.5: Comparison of Bunkered Calorific Value and Weighted Average Calorific

Value

S. No. Particulars

FY 2012-13

Stabilisation

Period

Post Stabilisation

Period

1 Bunkered Calorific Value 2941.00 3033.63

2 Weighted average Calorific

Value 3157.37 3274.79

3=2-1 Difference 216.37 241.16

4 % Difference 7.36% 7.95%

5.1.18 In this regard, the Hon’ble ATE in its Judgement dated 14 December, 2012 in

Appeal No. 47 of 2012 observed as under:

“13. Before we consider the next issue we would like to express our concern

over loss of CV and vast difference between calorific value of fuel ‘as received’

and ‘as fired’. The coal looses calorific value when stored for very long time in

the open due to presence of oxygen in atmosphere. It is understood that

presently, due to country wide shortage of coal; power stations have fuel stock

for few days only. Any loss of CV in such a short duration needs proper

explanation.”

5.1.19 Further, the Commission would like to highlight the observation made by CPRI

in its study conducted during FY 2008-09 on stacking loss:

“…there is no methodology for computing stacking loss and the best available

as on date is the CERC/MoP norm of reducing receipt coal GCV by 150kcal/kg

(100kcal/kg+1% moisture)”. Hence it is recommended to use this method for

computing the stacking loss.”

5.1.20 As evident from the above Table, the variation in Calorific Value of coal is

higher than 150 kcal/kg and the Commission directs MSPGCL to take suitable

measures to restrict such losses within 150 kcal/kg.

Operational Parameters

5.1.21 MSPGCL submitted that as per Regulation 33.1.5 of MERC Tariff Regulations,

2005, the stabilization period for new Units shall be reckoned from the date of


commissioning and shall be 180 days for coal based stations. MSPGCL

submitted that the Tariff Regulations stipulates relaxed norms for operations

during such stabilization period as compared to the norms applicable after the

stabilization of the Unit. MSPGCL submitted that Khaperkheda Unit # 5 was

commissioned on 16 April, 2012 and achieved stabilization on 12th October

2012 within 180 days as per the Regulations.

5.1.22 MSPGCL submitted that it was not able to achieve normative parameters during

the stabilization period due to:

i) Consistent low load unstable operation mainly due to Poor Coal

receipt, Poor Coal Quality, Wet coal problems and CHP problems.

Total coal received during the period was only 42 % of required

coal quantity.

ii) Consistent low load unstable operation resulted in increased Fuel

Oil Consumption. Average load during stabilization period was

only 248 MW. To avoid unit tripping on flame failure oil support is

necessary for such low load operation.

iii) Consistent low load unstable operation resulted in increased

auxiliary consumption.

5.1.23 MSPGCL submitted that as per Regulation 33.1.1 of MERC Tariff Regulations,

target availability for full recovery of Annual Fixed Charges shall be 80 percent.

MSPGCL submitted that the Unit has achieved actual availability of 32.85%

during the stabilization period and 73.67% availability post stabilization period.

MSPGCL submitted that the availability achieved during stabilization period

was lower than the target availability due to poor coal receipt and CHP

Problems. MSPGCL submitted that a major part of stabilization period is

coming in rainy season and hence, the performance in the stabilization period is

below norms.

5.1.24 MSPGCL submitted that it had signed a MoU with MCL for supply of 2.312

MMT of coal to Khaperkheda Unit # 5, which was valid up to 31 March, 2013.

MSPGCL submitted that as per the communications received from CEA (letter

dated 24 May, 2012), MCL was directed to supply 70% of LOA quantity, i.e.,

1.618 MMT of coal. MSPGCL submitted that monsoon had a significant impact

on the performance of the Unit. MSPGCL submitted that the actual availability

of the Unit had been low during the months of June, July and August due to the


impact of monsoon. MSPGCL submitted that with the usage of imported coal,

the availability of the Unit is likely to improve.

5.1.25 MSPGCL submitted a PLF of 32.85% during the stabilization period and

73.64% thereafter. MSPGCL submitted that loss in PLF during stabilization

period was mainly due to coal quantity and quality related issues.

5.1.26 MSPGCL submitted that as per Regulation 33.1.2, auxiliary consumption for

coal based generating stations with cooling tower is 8.0% during stabilization

period and 7.5% post stabilization period. MSPGCL submitted that during the

stabilization period, the auxiliary consumption has been reckoned at 3.45%

more than the norm of 8.0%. MSPGCL submitted auxiliary energy consumption

of 11.45% during the stabilization period and 6.58% post stabilization period

for FY 2012-13.

5.1.27 MSPGCL submitted that as per Regulation 33.1.3, gross station heat rate for

coal based generating stations with 500 MW sets during stabilization period is

2550 kcal/kWh and for the subsequent period it is 2450 kcal/kWh. MSPGCL

submitted that it had considered station heat rate in its tariff calculations as per

actuals (2814 kcal/kWh) which is more than the normative value due to low

load operation, coal shortages and CHP issues in the stabilization period.

MSPGCL submitted that for the period beyond stabilization period it had

considered the station heat rate of 2450 kcal/kWh in its tariff calculations.

5.1.28 MSPGCL submitted that as per Regulation 33.1.6, allowable Transit Loss for

coal based generating stations, as a percentage of quantity of coal dispatched by

the coal supply company during FY 2012-13, shall be 0.8% for non-pit head

generating stations. MSPGCL submitted transit losses of 0.8% during the

stabilization period and post stabilization period for FY 2012-13.

5.1.29 MSPGCL submitted that as per Regulation 33.1.4, allowable secondary oil

consumption for coal based generating stations during stabilization period is 4.5

ml/kWh and for subsequent period it is 2.0 ml/kWh. MSPGCL submitted that

the secondary fuel oil consumption during the stabilization period is higher than

the normative due to low load operation, coal shortages, CHP issues, unstable

operation and more forced outages during rainy season in the stabilization

period. MSPGCL submitted that it had considered the actual specific oil

consumption for the stabilization period in FY 2012-13 in its tariff calculations.


5.1.30 MSPGCL submitted that it had considered the charges for water, chemicals and

lubricants, which is Rs. 8.76 crore during stabilization period and Rs. 7.39 crore

for the period beyond stabilization period in a similar manner as considered by

the Commission for the existing stations in its past Orders.


5.1.31 The Commission has scrutinised the submissions of MSPGCL. The

Commission has observed that the main reasons stated by MSPGCL are coal

related problems.

5.1.32 The Commission has observed that MSPGCL stated the poor quality of coal as

the reason for lower generation of Khaperkheda Unit # 5 in FY 2012-13. The

Commission has also observed that the operational parameters of the Unit have

improved post stabilisation period.

5.1.33 As regard the poor quality of coal received, Hon’ble ATE in its judgement dated

19 April, 2012 in Review Petition No. 9 of 2011 in Appeal No. 199 of 2011 has

opined as under:

“We do not accept that the quality of coal is totally beyond the control of the

appellant. If the quality of raw coal supplied by the coal companies is poor, the

appellant has to make arrangements for washing of coal and blending with

superior quality of coal”

5.1.34 As per Hon’ble ATE’s Judgment, quality of coal is not totally beyond the

control of MSPGCL and MSPGCL can take other steps such as utilisation of

washed coal, imported coal, etc., to improve the performance and MSPGCL has

already taken some of these steps to a certain extent.

5.1.35 The Commission further asked MSPGCL to substantiate its claims for not

achieving the normative operational parameters as per MERC Tariff

Regulations, 2005. MSPGCL replied that it had entered into an MoU with M/s

MCL for supply of 2.312 MMT of domestic coal with GCV of around 3400 to

3700 kcal/kg to Khaperkheda Unit # 5, which was valid up to 31 March, 2013.

MSPGCL submitted that as per the said MoU, MCL had agreed to supply at

least 70% of the MoU quantity. MSPGCL submitted that it had subsequently

signed an FSA with MCL for supply of 2.312 MMT of coal to Khaperkheda

Unit # 5 on 31 January, 2013. MSPGCL submitted that as per the Presidential


directives to Coal Companies, MCL has to adhere to at least 80% of FSA

Quantity.

5.1.36 MSPGCL submitted the achievable PLF under different coal scenarios

assuming normative performance parameters including the usage of oil as

follows:

i) MSPGCL submitted that if the entire MoU/ FSA quantity (2.312 MMT)

of coal was realized during the year, the PLF could have been around

76% in FY 2012-13.

ii) MSPGCL submitted that if the agreed quantity of 70% of MoU quantity

(from 16 April, 2012 to 31 January, 2013) and subsequently 80% of

FSA quantity (from 1 February, 2013 to 31 March, 2013) of coal was

realized during the year, the PLF could have been around 55%.

iii) MSPGCL submitted that considering the actual realization of domestic

coal of 1.447 MMT, the PLF could have been only around 41% in FY

2012-13.

iv) MSPGCL submitted that it had used 0.402 MMT of imported coal.

MSPGCL submitted that considering the aforesaid imported coal

quantity and realized domestic coal of 1.447 MMT, the overall

achievable PLF could have been around 59% in FY 2012-13.

5.1.37 MSPGCL submitted that it was able to achieve a PLF of 52% in FY 2012-13.

MSPGCL submitted that the PLF of 59% is based on normative performance

parameters considering no seasonal variations (monsoon related issues)

throughout the period of operation. MSPGCL submitted that under real time

operations shortage of coal leads to partial load operations, higher usage of oil

for flame stabilization and issues of wet coal during monsoon season ultimately

leading to higher station heat rate (higher coal utilization).

5.1.38 MSPGCL submitted that during the stabilization period, the performance of the

Unit was significantly influenced by the poor realization of coal from CIL.

MSPGCL submitted that the effective realization of coal was insufficient to

operate the Unit at normative PLF. MSPGCL submitted the details of the actual

receipt of coal in FY 2012-13 as shown in the Table below:


Table 5.6: Actual Realisation of coal during FY 2012-13 submitted by MSPGCL

Month

Linkage (MT) Realisation (MT) Possible

PLF at

normative

parameters

Domestic

coal

Imported

coal

Domestic

coal

Imported

coal

April,

2012 66509.59 30000 44,300 578 28.17%

May, 2012 137453.15 61000 1,14,616 9,838 42.94%

June, 2012 133019.18 59000 61,554 29,617 32.68%

July, 2012 137453.15 0 1,01,497 5,083 35.30%

August,

2012 137453.15 0 1,13,638

- 36.43%

September,

2012 133019.18 0 1,16,136

- 33.81%

October,

2012 137453.15 0 1,63,563

- 49.13%

November,

2012 133019.2 45000 1,87,888 16,727 65.82%

December,

2012 137453.2 111000 1,41,571 95,727 82.68%

January,

2013 137453.2 110000 1,53,558 70,425 79.52%

February,

2013 141887.1 110000 1,17,405 56,601 63.45%

March,

2013 157089.3 110000 1,31,442 1,17,032 84.94%

Total 1589262.50 636000 14,47,167 4,01,629 54.79%

5.1.39 MSPGCL submitted that the realization of coal during the stabilization period

was roughly around 35%. MSPGCL submitted that on an annual basis, the

realized quantum of coal from various sources demonstrates that the overall

PLF that could have been achieved at normative performance could have been

around 54% (considering bunkered CV). MSPGCL submitted that accordingly

the average load during stabilization period was only 248 MW and the overall

PLF that could be achieved by the Unit on an annual basis was around 51%.

5.1.40 MSPGCL submitted that significant shortages in coal especially during the

stabilization period impacted the stable operations of the Unit resulting in

partial load operations, higher outages, increase in secondary oil consumption,

lower generation and higher auxiliary consumption. MSPGCL submitted that


another important consideration during the stabilization period was that the said

period had fallen under the monsoon season, which aggravated the coal quality

related issues leading to issues associated in Coal Handling Plant and hence, a

higher usage of secondary oil.

5.1.41 MSPGCL submitted that the performance of Khaperkheda Unit # 5 was in close

convergence to the normative performance during the post stabilization period.

MSPGCL submitted that the PLF of the Unit during the months of December,

2012, January, 2013 and March, 2013 had been around 81.60%, 87.16% and

87.96%, respectively, which had exceeded the normative PLF of 80%.

MSPGCL submitted that the overall average auxiliary consumption during the

post stabilization period was at around 6.58%, which is significantly lower than

the normative auxiliary consumption of 8.5%. MSPGCL submitted that the key

elements that supported the performance of the Unit during the aforesaid period

were relatively better realization of domestic coal supported by the availability

of imported coal during these months. MSPGCL submitted that improvement in

coal quality lead to stable operations of the Unit lowering the outages and also

reducing the consumption of secondary oil. MSPGCL submitted that the

consumption of oil also got lowered significantly to less than the normative

value of 2 ml/kWh in certain months.

5.1.42 MSPGCL submitted the impact on performance parameters during stabilisation

period and post stabilisation period, as shown in the Table below:

Table 5.7: Impact on performance parameters submitted by MSPGCL

Parameters

16

April,

2012 to

30

April,

2012

May-

12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12 Nov-12 Dec-12 Jan-13 Feb-13 Mar-13

No of Outages 3 7 6 6 3 4 2 1 3 2 2 1

Generation Loss (MU) due to

Poor coal quality and poor coal

receipt

129.82 230.2 251.23 258.38 247.67 241.77 196.43 132.26 71.15 74.23 129.55 66.61

SFOC (ml/kWh) 20.61 12.26 15.19 17.01 14.22 19.52 7.23 1.88 2.39 1.99 4.4 1.19

Auxiliary

consumption (%) 13.23% 11.57% 12.06% 11.95% 11.10% 11.14% 9.36% 7.73% 6.07% 6.07% 6.81% 5.73%

SHR (kcal/kWh) 2653.57 2985.32 2793.55 3001.88 2816.8 2713.86 2613.12 2544.48 2509.74 2434.84 2548.08 2528.49


5.1.43 MSPGCL submitted that despite the fact that requisite quantum of coal has been

tied up with MCL under a MoU/FSA for supply of coal, significant coal

shortages are the key factors leading to lower generation and deviation from the

normative parameters.

5.1.44 MSPGCL, considering the supply shortages of coal as a national issue,

requested the Commission to consider the performance deviation appropriately,

and approve the actual cost of generation for FY 2012-13.

5.1.45 Further, MSPGCL has submitted that the Performance & Guarantee Test in

respect of BTG and BoP has been concluded and the reports of the same are

being finalised. The Commission directs MSPGCL to submit the

Performance & Guarantee Test Reports after finalisation of the same.

5.1.46 In view of the above, the Commission at this stage has not carried out the

detailed analysis of the reasons of variation in performance parameters with

respect to norm approved in Regulations in FY 2012-13. The Commission is of

the view that it will be more appropriate to analyse the reasons of variation in

performance parameters once the P&G Test reports are available for assessing

the reasons of variation in performance parameters under controllable and

uncontrollable factors. The Commission while carrying out the truing up for FY

2012-13 based on audited accounts will analyse the reasons of variation in

performance parameters and accordingly assess the sharing of gains and losses

on account of controllable and uncontrollable factors as per provisions of

MERC Tariff Regulations, 2005.

5.1.47 Considering the submissions of MSPGCL regarding substantial shortfall in coal

availability and other factors, which affected the performance during

stabilisation period, the Commission on provisional basis has considered the

actual performance parameters during the stabilisation period, which shall be

subject to final truing up. As regards post stabilisation period, the Commission

observed that the variation in performance parameters as compared to norms is

marginal and in some of the months, the actual performance was even better

than the normative parameters. Considering the marginal variation in

performance parameters during post stabilisation period, it is more important to

analyse the P&G Test reports for proper assessment of variation in performance

parameters. The Commission, therefore at this stage has provisionally approved

the performance parameters as per the norms specified in MERC Tariff


Regulations, 2005 for post stabilisation period subject to final Truing up for FY

2012-13.

5.1.48 Further, the Commission has considered the Gross Generation as submitted by

MSPGCL during the stabilisation period and post stabilisation period. The

performance parameters approved by the Commission are shown in the Table

below:

Table 5.8: Performance parameters approved by the Commission

Particulars Units

FY 2012-13

Stabilisation period Post stabilisation

period

MSPGCL Approved MSPGCL Approved

No. of days Days 180 180 170 170

Installed Capacity MW 500 500 500 500

Availability % 32.85% 32.85% 73.67% 80.00%

Gross Generation MU 737.08 737.08 1433.62 1433.62

Auxiliary

Consumption

% 11.45% 11.45% 6.58% 7.50%

Net Generation MU 652.71 652.71 1339.22 1326.10

Station Heat Rate kcal/kWh 2814 2814 2519 2450

SFOC ml/kWh 15.32 15.32 2.39 2.00

Transit Loss % 0.80% 0.80% 0.80% 0.80%

5.1.49 The Commission has considered the consumption of FO and LDO in the same

proportion as submitted by MSPGCL. The Commission has also considered the

consumption of domestic coal and imported coal in the same proportion as

submitted by MSPGCL. The Commission has further considered the other

variable charges as submitted by MSPGCL. Based on above, the summary of

energy charges as submitted by MSPGCL and as approved by the Commission

for FY 2012-13 is shown in the Table below:

Table 5.9: Energy Charge approved by the Commission for FY 2012-13

Particulars Units

FY 2012-13

Stabilisation period Post stabilisation period



Particulars Units

FY 2012-13

Stabilisation period Post stabilisation period


Energy Charge Rs./kWh 3.21 3.21 2.84 2.78

5.2 ADDITIONAL CAPITALISATION

5.2.1 MSPGCL submitted additional capitalization of Rs. 82.07 Crore in FY 2012-13

and Rs. 103.06 Crore in FY 2013-14 for balance works. MSPGCL submitted

that the entire Additional Capitalisation shall be funded by loan from PFC.


5.2.2 As regards additional capitalisation, Regulation 30.2 of MERC (Terms &

Conditions of Tariff) Regulations, 2005 specifies as follows:

“Additional Capitalisation: The following capital expenditure within the

original scope of work actually incurred after the date of commissioning and up

to the cutoff date may be allowed by the Commission for inclusion in the

original cost of project, subject to prudence check:

(i) Deferred liabilities;

(ii) Works deferred for execution;

(iii) Procurement of initial capital spares in the original scope of work,

subject to ceiling specified in Regulation 30.1;

(iv) Liabilities to meet award of arbitration or for compliance of the order

or decree of a court; and

(v) On account of change in law.

Provided that original scope of work along with estimates of expenditure shall

be submitted along with the application for determination of tariff:

Provided further that a list of the deferred liabilities and works deferred for

execution shall be submitted along with the application for determination of

tariff after the date of commissioning of the generating station.”

5.2.3 The Commission asked MSPGCL to submit the break-up of proposed additional

capitalisation in accordance with MERC Tariff Regulations, 2005.


5.2.4 MSPGCL submitted the details of proposed additional capitalisation as shown

in the Table below:

Table 5.10: Details of Additional Capitalisation submitted by MSPGCL

Package

Capitalisation in

FY 2012-13

(Rs. Crore)

Justification

Capitalisation

in FY 2013-14

(Rs. Crore)

Justification

BTG

Steam Generator

Island

3.00 Works Deferred

for execution 1.15

Works Deferred

for execution

20.00 Spares 8.46 Spares

Turbine

Generator Island

6.01 Works Deferred

for execution

23.62 Spares

BOP

Mechanical

External water

supply system

0.02 Works Deferred

for execution


CW system 0.07

Works Deferred

for execution

0.66 Spares

DM water Plant 1.08

Works Deferred

for execution


Work shop

equipments 6.08

Works Deferred

for execution

Fuel Handling &

Storage system

0.24 Works Deferred

for execution


Ash Handling

System

1.01 Works Deferred

for execution 1.40

Works Deferred

for execution


Coal Handling

Plant

2.13 Works Deferred

for execution

1.96 Spares

Air Compressor

System

0.52 Works Deferred

for execution

0.20 Spares 0.05

Air Condition &

Ventilation

System

0.28 Works Deferred

for execution

0.73 Spares

Fire fighting 0.35 Works Deferred


Package

Capitalisation in

FY 2012-13

(Rs. Crore)

Justification

Capitalisation

in FY 2013-14

(Rs. Crore)

Justification

System Fire stop for execution

0.27 Spares

HP/LP Piping 0.55 Works Deferred

for execution

BoP

Electrical

Switch gear

Package 0.07

Works Deferred

for execution

Cables, Cable

facilities &

grounding

0.18 Works Deferred

for execution

0.50 Spares

C&I

Package

Control and

Instrumentation

Package

0.03 Spares

Communication

& Lab

Equipment

0.26

BoP Civil

MGR and

Marshalling Yard 5.52

Works Deferred

for execution 24.37

Works Deferred

for execution

Ash Disposal

Area

Development

9.72 Works Deferred

for execution 31.35

Works Deferred

for execution

BoP 12.16 Works Deferred

for execution

Township &

Colony 0.83

Works Deferred

for execution

Miscellaneous 16.61 Works Deferred

for execution

Total 82.07 103.06

5.2.5 Based on the details submitted by MSPGCL, the Commission observed that the

total initial spares including spares to be capitalised in FY 2012-13 and FY

2013-14 exceeds the ceiling of 2.5% of Capital Cost as on Cut-off date. The

Commission has allowed the actual spares as on COD as the same was within

the ceiling norm as specified in MERC Tariff Regulations, 2005. The

Commission has limited the total quantum of spares to the ceiling limit of 2.5%

of Capital cost as on Cut off date in accordance with MERC Tariff Regulations,

2005. Further, the Commission has considered the entire allowable spares in


addition to the spares as on COD, in the additional capitalisation for FY 2012-

13.

5.2.6 As regards the works deferred for execution in Additional Capitalisation,

MSPGCL submitted that certain works in BTG, BoP Electrical and Mechanical

and BoP Civil, which were supposed to be completed within COD are now in

progress beyond COD. MSPGCL submitted that these balance works are now

proposed to be completed within the cutoff date and capitalized under additional

capitalization. The Commission at this stage has considered the additional

capitalisation submitted by MSPGCL for FY 2012-13 and FY 2013-14

(excluding spares) for arriving at Capital Cost as on Cut-off date. The

Commission will carry out the truing up of additional capitalisation for FY

2012-13 and FY 2013-14 once the actual additional capitalisation details are

submitted by MSPGCL. Accordingly, the additional capitalisation approved by

the Commission is shown in the Table below:

Table 5.11: Quantum of Spares after COD and upto cut-off date approved by the

Commission (Rs. Crore)


Capital Cost as on COD (before deducting 50% of LD amount) 3376.90 3312.36

Initial Spares as on COD 59.31 59.31

Works Deferred for execution in FY 2012-13 submitted by MSPGCL 31.01 31.01

Works Deferred for execution in FY 2013-14 submitted by MSPGCL 93.94 93.94

Spares after COD and up to Cut-off date 60.19 27.31

Capital cost as on Cut-off date (before deducting 50% of LD

retention amount) 3562.03 3464.62

Total spares upto Cut-off date 119.50 86.62

% of Total spares of Capital Cost as on Cut-off date 3.35% 2.50%

5.2.7 The Commission has also considered the entire Additional Capitalisation to be

funded through loan as submitted by MSPGCL.

Table 5.12: Additional Capitalisation for FY 2012-13 approved by the Commission


Additional Capitalisation

Works deferred for execution 31.01 31.01

Spares 51.07 27.31

Total Additional 82.07 58.31


Capitalisation for FY 2012-

13 (Rs. Crore)

Debt (Rs. Crore) 82.07 58.31

Debt (%) 100.00% 100.00%

Equity (Rs. Crore) 0.00 0.00

Equity (%) 0.00% 0.00%

5.3 ANNUAL FIXED CHARGES

Operation and Maintenance Expenses

5.3.1 MSPGCL submitted that as per Regulation 34.6.2 of MERC (Terms &

Conditions of Tariff) Regulations 2005, the O&M expenses for the base year

commencing from 1 April, 2005 for a 500 MW new Unit is allowed as Rs 9.73

lakh/MW. MSPGCL submitted that these expenses were to be escalated at the

rate of 4% per annum to arrive at permissible operation and maintenance

expenses for the relevant year of tariff period. MSPGCL submitted that it had

accordingly escalated the same to arrive at the O&M expenses for FY 2006-07.

MSPGCL submitted that to arrive at the normative O&M expenses for FY

2007-08, it had further escalated the expenses in FY 2006-07 at the rate of

5.38%, which was determined by the Commission in the MYT Order dated 25

April, 2007 based on CPI and WPI ratios.

5.3.2 MSPGCL submitted that the Pay revision in FY 2008-09 had an impact of Rs.

95 Crore on the employee expenses. MSPGCL submitted that this impact is

approximately 21% of the actual employee expense for FY 2007-08. MSPGCL

submitted that employee expenses for FY 2007-08 were escalated by 21% to

capture the impact of pay revision and after capturing the impact of pay

revision, normal escalation of 5.29% was applied to work normative expenses

for FY 2008-09. MSPGCL submitted that to arrive at the O&M expenses for FY

2012-13 escalation rates of 5.48%, 7.02%, 8.31% and 8.45% were applied in

FY 2009-10, FY 2010-11, FY 2011-12 and FY 2012-13, respectively, over the

normative expenses for FY 2008-09. MSPGCL submitted that it had considered

the impact of pay revision in the other new Units, i.e., Paras Unit # 4 and Parli

Unit # 7 and the Commission had accepted the approach and allowed the O &M

expenses as projected in the petition. MSPGCL submitted the methodology of

projecting O&M expenses as shown in the Table below:


Table 5.13: O&M expenses for FY 2012-13 submitted by MSPGCL

Particulars FY

2005-06

FY

2006-07

FY

2007-08

FY

2008-09

FY

2009-10

FY

2010-11

FY

2011-12

FY

2012-13

Rs Lakh/MW 9.73 10.12 10.66 12.27 12.94 13.85 15.00 16.27

Escalation rate

over previous year

4% 5.38% 15.08%1 5.48% 7.02% 8.31% 8.45%

O&M Expenses

(Rs. Crore)

*78.01

1- Impact of Pay Revision is also considered along with normative O&M expenses

*Calculated only for 11.5 operational months


5.3.3 The Commission asked MSPGCL to submit the justification for the escalation

rates considered. Further, the Commission asked MSPGCL to submit the

backup calculations for the escalation rate of 15.08% considered for FY 2008-

09.

5.3.4 The computation of escalation rate of 15.08% submitted by MSPGCL is shown

in the Table below:

Table 5.14: Computation of escalation rate for FY 2008-09 submitted by MSPGCL

Particulars

Actuals for

FY 2007-08

(Rs. Crore)

%

Normative for FY

2007-08

(Rs. Lakh/MW)

Escalation due to

impact of Pay

revision

Normative

escalation

Expenses for FY

2008-09

(Rs. Lakh/MW)

O & M expenses 967.66 100.00% 10.66 - - 12.27

Employee expenses 428.24 44.26% 4.72 21% 5.29% 6.01

A&G expenses 57.72 5.96% 0.64 - 5.29% 0.67

R&M expenses 481.70 49.78% 5.31 - 5.29% 5.59

Escalation over FY

2007-08 15.08%

5.3.5 MSPGCL submitted that the escalation rates of 5.48%, 7.02% and 8.31% on

O&M Expenses for FY 2009-10, FY 2010-11 and FY 2011-12, respectively, are

the escalation rates approved by the Commission for the respective years.

MSPGCL submitted the details of the Commission’s Orders in which these

escalation rates are approved, as shown in the Table below:


Table 5.15: Basis for Escalation rates submitted by MSPGCL

Year Escalation rate

Considered MERC Order

FY 2009-10 5.48% Case 107 of 2011

FY 2010-11 7.02% Case 6 of 2012

FY 2011-12 8.31% Case 6 of 2012

5.3.6 MSPGCL submitted that the escalation rate of 8.45% considered for FY 2012-

13 is based on the CPI-WPI indices for the period April to October 2012 in FY

2012-13. MSPGCL submitted the computation of escalation rate of 8.45% for

FY 2012-13 as shown in the Tables below:

Table 5.16: WPI data submitted by MSPGCL

WPI April May June July Aug Sept Oct Nov Dec Jan Feb March Average

2012-13 163.5 163.9 164.7 165.8 166.6 168.4 165.5

2011-12 152.1 152.4 153.1 154.2 154.9 156.2 157.0 157.4 157.3 158.7 159.3 161.0 156.1

2010-11 138.6 139.1 139.8 141.0 141.1 142.0 142.9 143.8 146.0 148.0 148.1 149.5 143.3

2009-10 125.0 125.9 126.8 128.2 129.6 130.3 131.0 132.9 133.4 135.2 135.2 136.3 130.8

Table 5.17: CPI data submitted by MSPGCL

CPI April May June July Aug Sept Oct Nov Dec Jan Feb March Average

2012-13 205.0 206.0 208.0 212.0 214.0 215.0 210.0

2011-12 186.0 187.0 189.0 193.0 194.0 197.0 198.0 199.0 197.0 198.0 199.0 201.0 194.8

2010-11 170.0 172.0 174.0 178.0 178.0 179.0 181.0 182.0 185.0 188.0 185.0 185.0 179.8

2009-10 150.0 151.0 153.0 160.0 162.0 163.0 165.0 168.0 169.0 172.0 170.0 170.0 162.8

Table 5.18: WPI Inflation submitted by MSPGCL

Upto Date September-13 March-12 March-11 March-10

WPI 165.48 156.13 143.33 130.82

Escalation 5.99% 8.94% 9.56%

Average (March 11-September

13)

8.16%

Table 5.19: CPI Inflation submitted by MSPGCL

Upto Date September-13 March-12 March-11 March-10

CPI 210.00 194.83 179.75 162.75

Escalation 7.78% 8.39% 10.45%

Average (March 11-Sept 13) 8.87%


Table 5.20: Computation of escalation rate for FY 2012-13 submitted by MSPGCL

Particulars Percentage

Average WPI 8.16%

Average CPI 8.87%

WPI weightage 60%

CPI Weightage 40%

Average Escalation Rate 8.45%

5.3.7 The Commission has considered the O&M expenses on normative basis for FY

2005-06 as Rs. 9.73 Lakh/MW as specified in Regulation 34.6.2 of MERC

Tariff Regulations, 2005. Further, the Commission has considered an escalation

rate of 4% per annum to arrive at the O&M expenses for FY 2006-07. The

Normative O&M expenses for FY 2007-08, FY 2008-09, FY 2009-10 and FY

2010-11 have been considered based on the escalation rate approved by the

Commission in the respective Orders for those years in accordance with the

increase in WPI and CPI.

5.3.8 The Commission in line with its earlier approach in Case No. 69 of 2011 has

considered the impact of pay revision in FY 2008-09. The Commission has

arrived at the normative O&M expenses of Rs. 10.66 Lakh/MW for

Khaperkheda Unit # 5 for FY 2007-08 after applying the escalation rate of

5.38% on the normative O&M expenses for FY 2006-07. The Commission has

arrived at the normative Employee expenses, A&G expenses and R&M

expenses of Khaperkheda Unit # 5 for FY 2007-08 (in Rs. Lakh/MW)

considering the proportion of the same in the actual O&M expenses of

MSPGCL for FY 2007-08. The Commission has then escalated the normative

Employee expenses by 21% to factor in the impact of pay revision and then

escalated by 5.29%, which is the escalation rate approved by the Commission

for FY 2008-09. The Commission has escalated the normative A&G expenses

and R&M expenses by 5.29%. The Commission thus has arrived at the

normative O&M expenses of Rs. 12.27 Lakh/MW for FY 2008-09.

5.3.9 For FY 2011-12, the Commission has considered the escalation rate of 8.31% as

approved by the Commission in Case No. 6 of 2012. For FY 2012-13, the

Commission has recomputed the escalation rate as 8.35%, on account of

inflation over the approved level of O&M expenses for FY 2011-12, based on

the increase in WPI and CPI. The Commission has considered the point to point

inflation over WPI numbers (as per Office of Economic Advisor of Govt. of


India) and CPI numbers for Industrial Workers (as per Labour Bureau,

Government of India) for a period of five years from FY 2008-09 to FY 2012-

13 (upto March, 2013). The Commission has considered a weight of 60% to

WPI and 40% to CPI, based on the expected relationship with the cost drivers.

These escalation rates have been applied over the approved O&M expenses in

FY 2011-12 for projecting the O&M expenses for FY 2012-13. The O & M

expenses approved by the Commission are shown in the Table below:

Table 5.21: O&M expenses approved by the Commission for FY 2012-13 (Rs. Crore)


Operation &

Maintenance Expenses

for new

Generating Units of 500

MW sets for FY 2011-12

(Rs. Lakh/MW)

15.00 15.00

Escalation Rate (%) for

FY 2012-13 8.45% 8.35%

O&M expenses for FY

2012-13 (350 days) 78.01 77.94

Depreciation

5.3.10 MSPGCL submitted that for the purpose of depreciation, it had considered the

opening GFA as the original cost of the asset as on COD. MSPGCL submitted

that depreciation has computed annually based on the straight line method at the

rates prescribed in the MERC (Terms & Conditions of Tariff) Regulations,

2005. MSPGCL submitted that it had classified its assets as per the depreciation

schedule in the MERC Regulations and has applied the rates prescribed therein

to work out the depreciation. MSPGCL submitted that depreciation has been

computed on the opening level of GFA (11.5 operational months) and also on

the assets added during the year in line with the approach pursuant to the

Hon’ble ATE’s Judgment in Appeal No. 137 of 2008 dated 15 July, 2009.


5.3.11 The Commission has prorated the approved opening GFA under various heads

in the same proportion as submitted by MSPGCL. The Commission has


considered the disallowance in additional capitalisation submitted by MSPGCL

towards Spares under the head of Plant and Machinery. The Commission has

allowed the additional capitalisation under the other heads as submitted by

MSPGCL. The Commission observed that MSPGCL has claimed depreciation

on opening GFA as well as additional capitalisation during the year for the full

year of operation in FY 2012-13. In this regard, Hon’ble ATE in its Judgement

dated 15 July, 2009 in Appeal No. 137 of 2008, 138 of 2008 and 139 of 2008

has ruled as under:

“In view of the provisions of the Tariff Regulations the Companies Act and the

Accounting Standard-6, we find full justification and rationale in the

contention of the appellant that proportionate depreciation has to be allowed

even for part of the year when the assets have been put to use. The asset once

put to use will be exposed to wear and tear which will not wait to depreciate

till the start of the new financial year. We, therefore, allow the appeal in this

view of the matter also.”

5.3.12 In line with Hon’ble ATE’s Judgment, the Commission has allowed

depreciation on opening GFA for full operational period in FY 2012-13 and on

additional capitalisation for half of operational period in FY 2012-13. Further,

the Commission has considered the rates of depreciation for various classes of

assets as submitted by MSPGCL. The Commission has computed depreciation

for 350 days of operation both on opening GFA and on additional capitalisation

in FY 2012-13.

Table 5.22: Depreciation for FY 2012-13 approved by the Commission

Asset

Classification

Capital Cost as on COD

(Rs. Crore)

Additional Capitalization

(Rs. Crore)

Depreciation

(Rs. Crore)

MSPGCL Approved MSPGCL Approved MSPGCL Approved

Land 0.00 0.00 - - 0.00 0.00

Building 32.45 30.72 - - 1.12 1.06

Cooling Towers

& CWS 277.86 263.06 - - 9.59 9.08

Hydraulic works 3.31 3.13 3.08 3.08 0.16 0.12

Plant &

Machinery 2631.31 2491.12 63.07 39.31 93.01 86.67

Batteries 13.25 12.55 - - 2.29 2.17

Air conditioning 31.51 29.83 - - 1.81 1.72

Overhead Lines,

cables &

networks

81.29 76.96 0.68 0.68 2.83 2.67

Vehicles 0.84 0.80 - - 0.15 0.14


Asset

Classification

Capital Cost as on COD

(Rs. Crore)

Additional Capitalization

(Rs. Crore)

Depreciation

(Rs. Crore)

MSPGCL Approved MSPGCL Approved MSPGCL Approved

Furniture &

fixtures 1.10 1.05 - - 0.06 0.06

Office

equipments 0.74 0.70 - - 0.04 0.04

Civil works

(Roads and

Railway sidings)

303.23 287.07 15.24 15.24 5.50 5.09

Total 3376.90 3196.99 82.07 58.31 116.56 108.81

Interest on Long Term Loan

5.3.13 MSPGCL submitted that it had taken long term loan from Power Finance

Corporation (PFC) for funding the capital expenditure for Khaperkheda Unit #

5. MSPGCL submitted that Rs. 2576 Crore of loan from PFC has been

sanctioned for Khaperkheda Unit # 5 and Rs. 2283.30 Crore has been drawn till

CoD. MSPGCL submitted that the loan was drawn with a moratorium period of

4 years 10 months and a repayment period of 15 years. MSPGCL submitted that

the interest rate for the post COD period varied from 11% to 12.50%.

5.3.14 MSPGCL submitted that an additional loan drawl of Rs. 197.39 Crore has been

envisaged in FY 2012-13 post COD for replacing the internal accrual as on

COD with the loan, funding a reduction of Rs. 4.02 Crore in undischarged

liabilities and funding the additional capitalization post COD. MSPGCL

submitted that it is claiming interest on the internal accrual amount getting

replaced by loan post COD. MSPGCL submitted that the total interest expenses

recoverable from the ARR are Rs. 260.64 Crore for FY 2012-13.


5.3.15 The Commission observed that the sum of Internal Accruals, Additional

Capitalisation in FY 2012-13 and Rs. 4.02 Crore of undischarged liabilities as

submitted by MSPGCL sums up to only Rs. 164.49 Crore while MSPGCL has

submitted a loan drawal of Rs. 197.39 Crore for the same in FY 2012-13. The

Commission also observed that in the excel format F5, MSPGCL has submitted

a loan drawal of Rs. 245.63 Crore in FY 2012-13. Regarding the same, the

Commission in the data gaps asked MSPGCL to reconcile the data.


5.3.16 MSPGCL submitted that there had been an inadvertent error in the Petition and

the actual loan drawal in FY 2012-13 is Rs. 245.63 Crore as submitted in the

excel format F5.

5.3.17 Further, the Commission observed that MSPGCL has claimed interest for entire

FY 2012-13 on the amount of internal accruals of Rs. 78.60 Crore while the

same is being proposed to be replaced by loan drawal during FY 2012-13. The

Commission in the data gaps asked MSPGCL to submit the justification for the

same.

5.3.18 MSPGCL submitted that the internal accruals at the time of COD was Rs. 78.60

Crore and was considered as Equity as on COD. MSPGCL submitted that

ideally, RoE should have been claimed on this opening internal accrual at the

time of COD but MSPGCL has not claimed any RoE on this internal accrual as

this amount is envisaged to be replaced by loan post COD. MSPGCL submitted

that it had claimed interest expense on internal accrual in the following manner:

i. MSPGCL submitted that interest on Rs. 78.60 Crore for half period of

the period post COD in FY 2012-13 was being claimed as part of

interest on Rs. 245.63 Crore on average basis.

ii. MSPGCL submitted that interest on Rs. 78.60 Crore for the remaining

period was being claimed as an additional entitlement.

5.3.19 The Commission, on observing that MSPGCL has not explained the difference

between the proposed loan drawal of Rs. 245.63 Crore and Rs. 167.69 Crore,

which is the sum of the amounts under the heads for which the loan drawal is

proposed to be utilised, again asked MSPGCL to reconcile the data. MSPGCL

replied that subsequent to CoD, there was a loan drawal of Rs. 245.63 crore in

FY 2012-13. MSPGCL submitted that the loan drawal in FY 2012-13 has been

utilised for replacing internal accruals of Rs. 46.22 Crore, funding the additional

capitalisation of Rs. 82.07 Crore and towards meeting the Undischarged

Liabilities of Rs. 117.34 Crore.

5.3.20 The Commission has considered the replacement of internal accruals with

portion of loan drawal in FY 2012-13 in the same proportion as submitted by

MSPGCL. The Commission has considered the funding of entire approved

Additional Capitalisation in FY 2012-13 with loan as submitted by MSPGCL.

The Commission has also considered Rs. 163.29 Crore (Rs. 117.34 Crore + Rs.


45.95 Crore) as part of loan drawal towards funding of Undischarged Liabilities

during FY 2012-13. The loan drawal considered by the Commission during FY

2012-13 is shown in the Table below:

Table 5.23: Loan Drawal considered by the Commission for FY 2012-13 (Rs. Crore)

Particulars

MSPGCL

Approved Petition

Revised

submission

Internal Accruals

proposed to be replaced

by Loan in FY 2012-13

78.60 46.22 45.34

Additional Capitalisation 82.07 82.07 58.31

Undischarged Liabilities 4.02 117.34 163.29

Total Loan Drawal 164.69 245.63 266.94

5.3.21 MSPGCL submitted a loan repayment of Rs. 120.34 Crore in FY 2012-13. The

Commission in the datagaps asked MSPGCL to submit the computations of

arriving at repayment of Rs. 120.34 Crore considering the opening balance of

Rs. 2283. 30 Crore.

5.3.22 MSPGCL submitted that as per the loan agreement with PFC, the loan is

repayable in sixty (60) quarterly instalments commencing from July, 2012.

MSPGCL submitted that the loan instalments to be repaid have been arrived at

by dividing the outstanding loan as on the due date of repayment with number

of instalments to be paid, as shown in the Table below:

Table 5.24: Loan repayment submitted by MSPGCL

S.

No.

Due date of

payment

Outstanding loan

as on due date

Number of

instalments to be paid

Repayment

instalment

1 16 July, 2012 2285.24 60 38.09

2 15 October, 2012 2420.89 59 41.03

3 15 January, 2013 2401.77 58 41.41

Total 120.53

5.3.23 MSPGCL submitted that repayment amount considered in the Petition was

based on actual loan drawal till 30 November, 2012 and hence, there is a

difference of Rs. 0.19 Crore.


5.3.24 The Commission has scrutinised the submissions of MSPGCL. The

Commission computed the loan repayment as per the same methodology as

submitted by MSPGCL. Further, the Commission has considered the interest

rate as submitted by MSPGCL.

5.3.25 The Commission observed that MSPGCL has considered internal accruals as

part of Equity as on COD and accordingly arrived at a Debt:Equity ratio. The

Commission also observed that MSPGCL is proposing to replace some portion

of internal accruals with loan drawn during FY 2012-13. The Commission has

allowed interest for full period for the loan availed to replace internal

accruals post COD in FY 2012-13 as proposed by MSPGCL. The interest

on loan approved by the Commission is shown in the Table below:

Table 5.25: Interest on Loan approved by the Commission (Rs. Crore)


Opening Balance 2283.30 2239.66

Addition to Loan including

Undischarged Liabilities 245.63 266.94

Repayment 120.34 121.03

Closing Balance 2408.58 2385.57

Average 2345.94 2312.62

Interest Rate 11.04% 11.04%

Interest 263.31 257.79

Advance Against Depreciation

5.3.26 MSPGCL submitted that Regulation 32.3 of MERC (Terms & Conditions of

Tariff) Regulations, 2005 provides for AAD:

“Where, in respect of a generating station, the actual amount of loan repayment

in any financial year exceeds the amount of depreciation allowable under

Regulation 34.4.1, the Generating Company shall be allowed an advance

against depreciation for the difference between the actual amount of such

repayment and the allowable depreciation in respect of such generating station,

for such financial year:

Provided also that such advance against depreciation shall be restricted to

1/10th of the principal amount of loans minus the amount of depreciation”


5.3.27 MSPGCL submitted that it had computed AAD as per MERC Tariff

Regulations, 2005 and the same works out to Rs. 3.78 Crore.


5.3.28 The Commission has computed AAD in accordance with MERC Tariff

Regulations, 2005 considering the approved loan repayment and depreciation

for FY 2012-13 as shown in the Table below:

Table 5.26: Advance Against Depreciation approved by the Commission (Rs. Crore)

S.

No. Particulars MSPGCL Approved

1 1/10th of the Loan(s) 228.33 223.97

2 Repayment of the Loan(s) as considered for

working out Interest on Loan 120.34 121.03

3 Minimum of the Above 120.34 121.03

4 Less: Depreciation during the year 116.56 108.81

5 (A*) (3-4) 3.78 12.23

6 Cumulative Repayment of the Loan(s) as

considered for working out Interest on Loan 120.34 121.03

7 Less: Cumulative Depreciation 116.56 108.81

8 (B*) (6-7) 3.78 12.23

9 Advance Against Depreciation (Minimum

of A & B) 3.78 12.23

Return on Equity

5.3.29 MSPGCL submitted that as per Regulation 34.1 of MERC Tariff Regulations

2005, RoE has to be computed on the equity capital determined in accordance

with Regulation 31 at the rate of 14 per cent per annum in Indian Rupee terms.

MSPGCL submitted that it had considered a rate of return of 14% on the equity

as on COD pertaining to Government of Maharashtra equity.



5.3.30 The Commission has computed Return on Equity at the rate of 14% as specified

in MERC Tariff Regulations, 2005 on Equity as on COD pertaining to

Government of Maharashtra equity.

5.3.31 Further, MSPGCL submitted that there has been Equity infusion of Rs. 32.38

Crore by Government of Maharashtra in FY 2012-13. MSPGCL submitted that

this equity amount has been utilised to replace internal accruals of Rs. 32.38

Crore.

5.3.32 The Commission has considered the replacement of internal accruals with

equity in the same proportion as submitted by MSPGCL. The Commission has

also allowed Return on Equity on this amount as this amount is a part of Equity.

The Commission has also considered Rs. 11.56 Crore towards funding of

portion of balance Undischarged Liabilities with Equity.

5.3.33 The Return on Equity approved by the Commission for FY 2012-13 is shown in

the Table below:

Table 5.27: Return on Equity for FY 2012-13 approved by the Commission (Rs. Crore)

Particulars

MSPGCL

Approved Petition

Revised

submission

GoM Equity 599.37 599.37 587.92

Equity toward Additional Capitalisation 0.00 0.00 0.00

Internal Accruals replaced by Equity 0.00 32.38 31.66

Equity towards funding of remaining

Undischarged Liabilities excluding LD in

FY 2012-13

0.00 0.00 13.64

Closing Equity 599.37 631.75 633.22

Rate of Return 14% 14% 14%

Return on Equity 80.46* 80.46* 83.18

*Only on Equity of Rs 599.37 Crore

Income Tax

5.3.34 MSPGCL submitted that it had calculated the Income Tax by applying the MAT

rate of 20.01% on RoE for FY 2012-13. MSPGCL submitted that the total

Income Tax payable works out to be Rs. 16.10 Crore for FY 2012-13.



5.3.35 The Commission has computed the Income Tax on RoE at the rate of tax as

submitted by MSPGCL for FY 2012-13.

Table 5.28: Income Tax approved by the Commission for FY 2012-13 (Rs. Crore)


RoE 80.46 83.18

MAT Rate 20.01% 20.01%

Income Tax 16.10 16.64

Interest on Working Capital

5.3.36 MSPGCL submitted that the working capital has been calculated in line with

Regulation 34.5 of MERC Tariff Regulations 2005, wherein the following has

been considered:

a. Cost of coal for two months;

b. Cost of oil for two months;

c. Cost of secondary fuel oil for two months;

d. Operation and Maintenance expenses for one month;

e. Maintenance spares @ 1 per cent of the historical cost; and

f. Receivables for sale of electricity equivalent to two months of the sum of

annual fixed charges and energy charges calculated on target availability;

minus

g. Less: Payables for fuel (including oil and secondary fuel oil) to the extent of

one month of the cost of fuel calculated on target availability.

5.3.37 MSPGCL submitted that the same tariff principle has been adopted in FY 2012-

13 as well. MSPGCL submitted that the short-term Prime Lending Rate of State

Bank of India as on the date of filing this application, i.e., 14.50%, has been

considered for calculation of interest on working capital. MSPGCL submitted

that the total interest on working capital for post COD period works out to be

Rs. 38.95 Cr for FY 2012-13 (11.5 operational months).



5.3.38 The Commission has considered SBI PLR as on date of filing of the Petition (22

March, 2013) for computation of IWC. The Commission has computed the

interest on Working Capital in accordance with MERC Tariff Regulations, 2005

as shown in the Table below:

Table 5.29: Interest on Working Capital approved by the Commission for FY 2012-13

(Rs. Crore)

Particulars Norm MSPGCL Approved

Cost of Coal/Lignite 2 months 47.58 85.61

Cost of Secondary Fuel Oil 2 months 11.17 10.74

O&M expenses one month 6.69 6.68

Maintenance Spares 1% of GFA 33.77 31.97

Receivables 2 months 203.33 198.53

Less Payables for fuel 1 month 29.37 48.17

Total Working Capital

requirement 273.16 285.35

Computation of IWC

Interest Rate (%) SBI PLR 14.50% 14.45%

IWC 37.98 39.54

5.3.39 The significant variation in cost of coal in the Table above is because of the

reason that MSPGCL in its computations has not considering the cost of

imported coal.

Non Tariff Income

5.3.40 MSPGCL has not projected any Non Tariff Income for FY 2012-13. The

Commission directs MSPGCL to submit the details of actual Non Tariff

Income for FY 2012-13 at the time of truing up for FY 2012-13 based on

audited accounts.

Annual Fixed Charges

5.3.41 Based on the above, the Annual Fixed Charges of Khaperkheda Unit # 5

approved by the Commission is shown in the Table below:


Table 5.30: AFC approved by the Commission for Khaperkheda Unit # 5 for FY 2012-

13 (Rs. Crore)


Depreciation 116.56 108.81

Advance Against Depreciation 3.78 12.23

Operation & Maintenance Expenses 78.01 77.94

Interest on Loan 263.32 257.79

Return on Equity 80.46 83.18

Interest on Working Capital 37.98 39.54

Income Tax 16.10 16.64

AFC 596.21 596.12

5.3.42 Out of the above approved Annual Fixed Charges for FY 2012-13, the AFC

for stabilisation period of 180 days works out to Rs. 306.58 Crore and for

post stabilisation period of 170 days, AFC works out to Rs. 289.55 Crore.

The Commission allows MSPGCL to recover AFC at Availability approved

by the Commission as mentioned in Table 5.8 separately for stabilisation

period and post stabilisation period. As discussed earlier, the Commission

will consider the reasons for variation in actual performance with respect

to norms specified in MERC Tariff Regulations, 2005 while carrying out

the final truing up for FY 2012-13.

5.3.43 The summary of tariff approved by the Commission for FY 2012-13 is shown in

the Table below:

Table 5.31: Tariff approved by the Commission for FY 2012-13


Annual Fixed Charges (Rs. Crore) 596.21 596.12

Variable Charge (Rs./kWh)

Stabilisation Period 3.21 3.21

Post Stabilisation Period 2.84 2.78

5.3.44 The Commission has approved the Annual Fixed Charges for FY 2012-13

as Rs 596.12 Crore. The Commission has approved the Energy Charges of

Rs 3.21 kWh for stabilisation period and Rs 2.78/kWh for post stabilisation

period.


5.3.45 The Commission has accordingly approved the Capital Cost and Tariff of

Khaperkheda Unit # 5 for FY 2012-13. As FY 2012-13 is already

completed, the Commission allows MSPGCL to recover the difference in

revenue recoverable in accordance with the Tariff approved in this Order

vis-a-vis the Tariff charged by MSPGCL in 6 equal monthly instalments

from October 2013 onwards. The Commission shall carry out the truing up

for FY 2012-13 in accordance with MERC Tariff Regulations, 2005.

5.3.46 The Commission allows MSPGCL to recover fixed cost and energy charges

as per the tariff approved in this Order from MSEDCL till tariff for FY

2013-14 is approved as a part of MSPGCL’s Multi Year Tariff Petition for

the second Control Period for FY 2013-14 to FY 2015-16.

5.3.47 As the variation in cost of generation is ultimately to be passed on to

consumers, the Commission hereby allows the MSEDCL to recover the

variation in energy charge component of the amount billed by MSPGCL to

MSEDCL as approved by the Commission from the consumers through the

FAC mechanism. Similarly, the Commission allows MSEDCL to recover

the variation in fixed charge component of the amount billed by MSPGCL

to MSEDCL as approved by the Commission from the consumers in

proportion to Average Billing Rate of respective consumer categories,

under intimation to the Commission.

Summary of our findings:

i) The Commission has gone through the submissions of MSPGCL and

observed that the actual cost under land and site development as claimed

by MSPGCL is the cost incurred by MSPGCL in addition to the site

development work awarded to M/s BGR under the BoP Civil package

order. Hence, the Commission has approved the cost of Rs. 29.00 Crore

for Land and Site Development as on COD as submitted by MSPGCL.

ii) As MSPGCL has awarded the BTG Contract after following the

competitive bidding process and cost increase is on account of the price

variation for various components as per the formulae prescribed in the

contract, the Commission has allowed the actual cost of BTG package as

on COD.


iii) The Commission has gone through the submissions of MSPGCL and is of

the view that it has followed prudent utility practices in the award of BoP

Package as the same was awarded after the competitive bidding process.

Further, the actual cost of BoP Electrical and Mechanical as on COD is

lower than the Ordering Cost. The Commission has hence, approved the

cost of BoP Electrical and Mechanical as on COD as submitted by

MSPGCL.

iv) The Commission observes that MSPGCL has capitalised the amount of

fuel costs less revenue, on account of infirm generation of power.

However, as fuel cost is a revenue expense, whether incurred during

infirm generation or firm generation, the Commission is of the view that

the same needs to be recovered directly for the power supplied during the

period instead of capitalising it as a part of Capital Cost. Accordingly, the

Commission hereby allows MSPGCL to recover the under-recovered fuel

cost, i.e., Rs. 28.05 Crore for infirm power supplied to MSEDCL in three

monthly instalments after the issue of this Order and MSEDCL can

recover this cost through Fuel Adjustment Cost Adjustment (FAC)

mechanism.

v) The Commission observed that the overheads as on COD are

approximately 3% of hard cost, which seems reasonable as per the

industry practices. Hence, the Commission has approved the overheads as

on COD as submitted by MSPGCL.

vi) The Commission observed that the cost of spares procured till COD is

1.80% of Capital Cost as on COD, which is within 2.5% of project cost as

stipulated in Regulation 30.1 of MERC (Terms and Conditions of Tariff),

Regulations, 2005. Hence, the Commission has approved the cost of

spares as on COD as submitted by MSPGCL.

vii) Based on the Base Case IDC computations submitted by MSPGCL, the

Commission observed that the Hard Cost as well as Loan amount


considered by MSPGCL for computation of Base Case IDC is higher than

the actual Hard Cost and actual Loan amount as on COD respectively.

MSPGCL in its submissions also submitted that the capital cost approved

by its Board was indicative in nature and should not be considered as

base cost.

viii) The Commission observes that the purpose of Base Case IDC is to

determine the impact of time overrun on IDC, i.e., to determine the

difference in IDC if the Project had been completed in the stipulated time

duration and the actual IDC incurred for the actual time duration of

completion.

ix) The Commission has thus, recomputed the Base Case IDC considering

the approved Hard Cost as on COD. As regards the Debt Equity ratio for

computation of Base Case IDC, the Commission has considered 80:20 as

the same has been approved by GoM while according approval to

Khaperkheda Unit # 5 and initially the Project was envisaged to be

funded through Debt:Equity of 80:20. The Commission has considered

the actual interest rates and proportion of loan amount drawn as

submitted by MSPGCL.

x) The Commission has gone through MSPGCL’s submission of reasons for

delay in execution of the Project. The Commission is of the view that the

present case appears to be of sudden spurt in execution of Power Projects

in the country and consequential increase in demand of equipments and

the gestation period required by the industry in enhancing the

manufacturing capacity. Considering all the facts and documents

submitted by MSPGCL, though it is evident that there was delay on the

part of BHEL in supply and commissioning of the main plant, it is not

established beyond doubt that the entire delay was due to the reasons

beyond the control of MSPGCL. Accordingly, the Commission has

allowed the cost of time overrun to be shared equally between MSPGCL

and the consumers. Admittedly, there is no enhancement in cost of the

contract price of the equipment as no price variation escalation was

permissible to BHEL beyond the schedule date of completion of the


Project according to terms of the agreement. The impact of time overrun

beyond the contractual schedule is only on IDC.

xi) As the Commission has allowed only 50% of the incremental IDC

(Difference of Actual IDC and Base Case IDC), the Commission has

deducted 50% of retention amount towards Liquidated Damages from

Capital Cost at this stage. The Commission directs the Petitioner to

submit a separate report regarding the actual amount of the LD

recovered from the Contractors upon finalisation of the Contracts so that

the same can be considered while approving the final Capital Cost after

finalisation of Contracts.

xii) The Commission in this Order has approved the capital cost for

Khaperkheda Unit # 5 as Rs. 3340.41 Crore. The Commission has allowed

MSPGCL to recover the unrecovered fuel expenses of Rs. 28.05 Crore

towards infirm power supply separately and hence, the Capital Cost as on

COD after deducting the fuel expenses and 50% of LD amount works out

to Rs. 3196.99 Crore. Further, the final Capital Cost as on COD will get

revised once MSPGCL submits the final LD amount recovered from the

Contractors upon finalisation of Contracts.

xiii) Considering the submissions of MSPGCL regarding substantial shortfall

in coal availability and other factors, which affected the performance

during stabilisation period, the Commission on provisional basis has

considered the actual performance parameters during the stabilisation

period, which shall be subject to final truing up. As regards post

stabilisation period, the Commission observed that the variation in

performance parameters as compared to norms is marginal and in some

of the months, the actual performance was even better than the normative

parameters. Considering the marginal variation in performance

parameters during post stabilisation period, it is more important to

analyse the P&G Test reports for proper assessment of variation in

performance parameters. The Commission, therefore at this stage has

provisionally approved the performance parameters as per the norms


specified in MERC Tariff Regulations, 2005 for post stabilisation period

subject to final Truing up for FY 2012-13.

xiv) The Commission observed that the total initial spares including spares to

be capitalised in FY 2012-13 exceeds the ceiling of 2.5% of Capital Cost as

on Cut-off date. The Commission has allowed the actual spares as on

COD as the same was within the ceiling norm as specified in MERC

Tariff Regulations, 2005. The Commission has limited the total quantum

of spares to the ceiling limit of 2.5% of Capital cost as on Cut off date in

accordance with MERC Tariff Regulations, 2005.

xv) The Commission has allowed depreciation on opening GFA for full

operational period in FY 2012-13 and on additional capitalisation for half

of operational period in FY 2012-13.

xvi) The Commission has approved the Annual Fixed Charges for FY 2012-13

as Rs 596.12 Crore. The Commission has approved the Energy Charges of

Rs 3.21/kWh for stabilisation period and Rs 2.78/kWh for post

stabilisation period.

xvii) As FY 2012-13 is already completed, the Commission allows MSPGCL to

recover the difference in revenue recoverable in accordance with the

Tariff approved in this Order vis-a-vis the Provisional Tariff charged by

MSPGCL in 6 equal monthly instalments from October 2013 onwards.

The Commission shall carry out the truing up for FY 2012-13 in

accordance with MERC Tariff Regulations, 2005.

xviii) The Commission allows MSPGCL to recover fixed cost and energy

charges as per the tariff approved in this Order from MSEDCL till tariff

for FY 2013-14 is approved as a part of MSPGCL’s Multi Year Tariff

Petition for the second Control Period for FY 2013-14 to FY 2015-16.

xix) As the variation in cost of generation is ultimately to be passed on to

consumers, the Commission hereby allows MSEDCL to recover the


variation in energy charge component of the amount billed by MSPGCL

to MSEDCL as approved by the Commission from the consumers

through the FAC mechanism. Similarly, the Commission allows

MSEDCL to recover the variation in fixed charge component of the

amount billed by MSPGCL to MSEDCL as approved by the Commission

from the consumers in proportion to Average Billing Rate of respective

consumer categories, under intimation to the Commission.

With this Order, the Commission disposes off MSPGCL’s Petition in Case No. 44 of

2013.

Sd/- Sd/- Sd/-

(Chandra Iyengar) (Vijay L. Sonavane) (V.P. Raja)

Member Member Chairman


6 APPENDIX

Appendix-1

List of Persons who attended Technical Validation Session-1 in Case No.44 of

2013 held on 17.4.2013

Sr. No Name of Person Name of Institution

1 Shri. Ashish Sharma, MD MSPGCL

2 Shri J.K Srinivasan MSPGCL

3 Shri. V.P.Singh MSPGCL

4 Shri. C.S Thotawe MSPGCL

5 Shri L N Margade MSPGCL

6 Shri B.K Yadhav MSPGCL

7 Shri. A.A Harne MSPGCL

8 Shri. M.V Deshmukh MSPGCL

9 Shri. V.P Rathode MSPGCL

10 Shri. D.C.Patil MSPGCL

11 Shri .P M Nikhare MSPGCL

12 Shri. S.K. Labde MSPGCL

13 Shri. S.A.Nikalje MSPGCL

14 Shri.R.G Varpe MSPGCL

15 Shri.S.V.Bedekar MSPGCL

16 Shri Rashish Sakharkar MSPGCL

17 Shri Svio Rego MSPGCL

18 Shri.R.T Age MSPGCL

19 Shri. G.S Puranik MSPGCL

20 Ramandeep Singh Deloitte

21 Ms. Swati Kedia Deloitte


Appendix-2

List of Person who attended Technical Validation Session-2in Case No.44 of 2013

held on 9.5.2013





4 Shri Anil Nandanwar MSPGCL


6 Shri B.Y Yadhav, MSPGCL

7 Shri. A .A.Harne MSPGCL




11 Shri.V.L Sonavane MSPGCL

12 Shri J.M.Pohekar MSPGCL

13 Ms Vaishali Patil MSPGCL

14 Shri R R Kulkarni MSPGCL

15 Shri N N Bishare MSPGCL

16 Shri S A M Naqvi MSPGCL

17 Shri Promad Koparde MSPGCL


19 Shri.M.M.Abhyankar MSPGCL

20 Shri Arvind Parate MSPGCL



23 Shri Svio Rego MSPGCL

24 Shri.R.T Age MSPGCL


26 Shri. Ramandeep Singh Deloitte


28 Shri.Sanjay S. Kurhade MSPGCL

29 Shri. Suresh Gehani ABPS

30 Shri Namala K.M Choudhary ABPS


Appendix-3

List of Person who attended Technical Validation Session- 3 of Case No.44 of

2013 held on 23.5.2013












11 Shri J.M.Pohekar MSPGCL

12 Shri R R Kulkarni MSPGCL

13 Shri N N Bighane MSPGCL

14 Shri.S.V.Bedekar MSPGCL




18 Shri. V S Patil MSPGCL

19 Shri K.P.Tujar MSPGCL

20 Shri Arvind Parate MSPGCL

21 Shri.Avinash Tikle MSPGCL




25 Shri Sanjay S. Kurhade MSPGCL

26 Shri Ajay Bamne MSPGCL

28 Shri N.M Valvi MSPGCL

29 Shri. S.P.Rekhade MSPGCL

30 Shri Tilok Kumar MSPGCL





33 Shri. Suresh Gehani ABPS

34 Shri. Raman Gulali ABPS

35 Shri Chirag Gandhi R R Associates

36 Shri Viral Soni R.R. Associates

37 Dr..Ashok Pendse TBI Consumers’ Assn


Appendix-4

List of Persons who attended Public Hearing of Case No.44 of 2013 on 16.7.2013

Sr.

No Name of Person Name of Institution


2 Shri Ashok Pendse Thane Belapur Industries Association

3

Shri Baban Chawane Maharashtra Chamber of Commerce

4 Shri Jagdish/Kiran Vishnupant

Paturkar

Consumer Representative

5 Shri Shridhar Vasant

Vyawahare

Consumer Representative

6 Shri Pratap Hogade Maharashtra Veej Grahak Sanghtana

7 Shri Raksh Pal Abrol Bhartiya Udhami Avam Upbhokta Sangh

8 D.M.Kadale Exe Engineer MSPGCL ,Bhusawal TPS

9 V.N Patil, JE MSPGCL, Bhusawal TPS

10 Mahesh Aphale MSPGCL

11 Shri A.D Pimple MSPGCL



14 Shri S.B.Ghale MSPGCL



17 Shri Sanjay S. Kurhade MSPGCL




22 Shri A.A.Bapat MSPGCL

23 Shri Vijay Singh MSPGCL

24 Shri M M Abhayankar MSPGCL


26 Shri V R Hedaoo MSPGCL


Sr.

No Name of Person Name of Institution

27 Shri A.D.Sonkusare MSPGCL

28 Shri S.P Fegade MSPGCL

29 Shri. R.A.Muthane MSPGCL

30 Shri.Y.K.Dhamarkar MSPGCL

31 Shri J.A Khandale MSPGCL



34 Shri Savio Rego MSPGCL

35 Shri Amar Nimbalkar MSPGCL

36 ShriUmakant Salunkhe MSPGCL

37 Shri Ravi Singh Sayam MSPGCL

38 Shri S.K.Maraskolhe MSPGCL

39 Shri D.R Rane MSPGCL

40 Shri V.L Sonawane MSPGCL


42 S.Trilok Kumar Deloitte

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