However, Reliance has received a major set back as the CEA has rejected its demand on the issue of installed capacity for calculation of tariff. CEA has made it categorically clear that the installed capacity will be 447mw and not 410mw as suggested by the Reliance. It had argued that to deliver 410mw of power under varying conditions, a plant with capacity of 447mw would require to be set up and added that the installed capacity of 447mw was not the contractual capacity.

Reliance had pleaded that as per the terms of the PPA, it was obliged to give power continuously underconditions of varying temperatures, change of fuel, varying system plant load factor for the whole term of the PPA. The company had said that as such it was necessary for it to have adequate provision to meet this contracted obligation of 410mw constant generation from this project and contractually it was not possible for any plant to deliver installed capacity output continuously for 20 years.

Hence the Reliance had said that the installed capacity has to be more than the contractual capacity to take care of variation in system parameter, ambient condition and ageing effect of plant due to normal wear and tear.

Joshi told reporters that the state cabinet has also delegated necessary powers to the Maharashtra State Electricity Board to make amendments in the power purchase agreement (PPA) with Reliance signed on August 3, 1996. Improvised PPA will be necessary in view of above changes, he added.

MSEB chairman Asoke Basak said that a revised PPA will be signed between MSEB and Reliance soon in view ofthese changes.

As per the CEA consent the levlised capacity charges were originally given at Rs 1.55 per unit which were reduced to Rs 1.41 per unit. However, the company had argued that the project would become financially unviable following a major slide in the internal rate of return from 18.35 per cent to 15.92 per cent (a reduction by 2.83 per cent).

Basak said the cabinet upheld the company's stand and allowed to increase the levelised capacity charges to Rs 1.48 per unit. With this the company's IRR would remain at 17.25 per cent instead of 18.75 per cent.