HYDERABAD, Dec 16: Discussions between the Andhra Pradesh State Electricity Board (APSEB) and the Hinduja National Power Company Ltd (HNPCL), on the `revised and final' power purchase agreement (PPA) for the 1040 mw Vizag project, may be further delayed. This is due to the firm stance taken by both parties on the `pass through' norm for tax on incentives.

Senior board officials told The Financial Express on Tuesday that the disucssions had been concluded and the final document would be sent to the HNPCL within a day for initialling. Then it will be forwarded to the centre for clearance from the Central Electricity Authority (CEA) and the power ministry and the subsequent counter guarantee for the much delayed "fast track" project. However, the company had a different story to tell.

Asked whether the issue of tax on incentive had been settled, APSEB sources said it would not be a pass through component as per the finalised PPA.

However, the HNPCL managing director A Gavisiddappa gave the contrary impression. "From our point of view the discussions are not yet over and we feel the tax on incentives for better performance has to be a pass through cost", he said.

Under the two part tariff system the independent power producers (IPPs) are eligible for an assured return of 16 per cent up to a plant load factor (PLF) of 68.5 per cent. Beyond this they are to get an incentive ranging from 0.1 per cent to 0.7 per cent depending on how they negotiate with the respective electricity boards.

With both the parties sticking to their stance on the issue the signing of the PPA shows every sign of being delayed further though both express optimism that a decision would be reached soon.

Encouragingly, however the outstanding issue of the idling time for the coal washery being set up at Tacher for the project by Robertson Schaffer of the US has been resolved with the APSEB agreeing to pick up any surplus washed coal for its other projects in the state. The Vijayawada Thermal power stations is likely to benefit from this arrangement, the sources said.

Meanwhile, tripartite negotiation were also currently on at Calcutta to put the finishing touches to the much delayed Fuel Supply and Transport Agreement (FSTA), between the APSEB, HNPCL and CIL. All outstanding issues have more or less have been settled with regard to the FSTA with the CIL.To a question on how they could finalise the PPA while the FSTA remained to be finalised, the board sources said an attempt has been made to keep the interface issues independent of each other so as not to impede the PPA process.

Copyright © 1997 Indian Express Newspapers (Bombay) Ltd.