Promoters' stand on tariff delays Hirma project

Promoters' stand on tariff delays Hirma project

NEW DELHI, OCT 2: Further delays are in store for the 3,960-mw Hirma mega power project as the promoters have sought a review of the final generation tariff for the project, announced recently by the Central Electricity Regulatory Commission (CERC).

A review petition seeking revision in the final tariff will soon be filed before the commission by the promoters.

It is to be noted here that the agreement signed between the promoters and the Power Trading Corporation (PTC), during the Prime Minister's visit to the US, did not have any mention of generation tariff.

Senior power ministry officials said earlier a commercial agreement was proposed to be signed between PTC and the promoters in US, what was actually signed was a mere development agreement which had no tariff-related details.

Power ministry sources said these details were omitted from the agreement at the last minute, following reservations expressed by the promoters over the commission-fixed tariff.

A formal acceptance of the commission's tariff order, by the promoters, would have paved the way for inking of the power purchase agreement (PPA) with PTC. However, with the final tariff unacceptable to the promoters, the signing of PPA will suffer more delays.

The regulator has carried out a 5.1 per cent reduction in the original tariff offer of the promoters and has reduced three paise on the consultants' (SBI Caps) tariff figure. This is expected to translate into an annual savings of around Rs 100 crore and Rs 3,000 crore for the 30-year-period.

Asked to comment on Hirma's tariff, CERC chairman SL Rao said the commission had determined the final tariff after hearing all the parties, which include the promoters, the PTC and the consultants (SBI Caps and Black and Vetach in this case) and after comparisions with other projects. However, under the law, the promoters have the right to file a review petition, he added.

In a letter to SBI Caps, the lawyer of Southern Electric has also pointed out that the tariff determined by CERC will have serious implications for the economic viability of the project.

The recent CERC's order sets the price of power over the 30-year life of the project, besides the minimum guaranteed offtake by the purchasing entities. While determining the final tariff, the commission had adopted a comparision approach to determine the fixed charge under which various projects such as NTPC's Simadhari, Videocon's North Chennai II and the Cuddalore power project was arrived at.

Whatever be the agreed tariff for this project, the final tariff that the consumer would have to pay will incorporate the PTC's trading charges margins as well as the transmission charge. These have, however, not been disclosed. The (6x660 mw) coal-fired pit-head project would supply power to five states - Haryana, Punjab, Rajasthan, Gujarat and Madhya Pradesh.