BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION BHOPAL PETITION NO. 10 OF 2018

Transcription

1 1 BEFORE THE MADHYA PRADESH ELECTRICITY REGULATORY COMMISSION BHOPAL PETITION NO. 10 OF 2018 IN THE MATTER OF : Petition under Section 62 and Section 86(1)(a) of the Electricity Act, 2003 read with Part VII of the Electricity Act, 2003 for determination of Final Tariff of Unit-2 (600 MW) of 2 x 600 MW coal based Anuppur Thermal Power Project (Phase-I) comprising of Unit-1 & Unit-2 (of 600 MW each) at District Anuppur, Madhya Pradesh for the period from the COD of Unit-2 i.e. 07 th April 2016 to 31 st March 2019 (Multi Year Tariff for the control period FY to FY ) under Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for determination of Generation Tariff) Regulations, AND IN THE MATTER OF MB Power (Madhya Pradesh) Ltd., Laharpur, Jaithari, Anuppur, Madhya Pradesh PETITIONER VERSUS 1. MP Power Management Company Ltd., (Erstwhile Madhya Pradesh Power Trading Company Ltd.) Shakti Bhawan, Vidyut Nagar, Rampur, Jabalpur, Madhya Pradesh , India 2. Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd., Shakti Bhawan, Vidyut Nagar, Rampur, Jabalpur, Madhya Pradesh , India 3. Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd., Bijli Nagar Colony, Nishtha Parisar, Govindpura, Bhopal, Madhya Pradesh Madhya Pradesh Paschim Kshetra Vidyut Vitaran Company Ltd., GPH Compound, Polo Ground, Indore, Madhya Pradesh RESPONDENTS The Petitioner humbly submits that:-

2 2 1. The Petitioner herein MB Power (Madhya Pradesh) Limited, hereinafter referred as 'Petitioner', is a 'Generating Company' as defined under Section 2(28) of the Electricity Act, 2003, hereinafter referred as 'Act', and is filing the instant Petition for determination of final tariff for supply of power from Unit-2 (600 MW) of its Project of 1200 MW of installed capacity under Phase-I (comprising of 2 Units of 600 MW each) sub-critical coal based Anuppur Thermal Power Project at District Anuppur, Madhya Pradesh, hereinafter referred as 'Project', for the period commencing from 7 th April 2016 till 31 st March 2019 (Multi Year Tariff for the control period FY to FY ) under Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for determination of Generation Tariff) Regulations, 2015, hereinafter referred as 'Tariff Regulations, 2015'. This is without prejudice to the rights and remedies available to the Petitioner with respect to its contention regarding applicability of Madhya Pradesh Electricity Regulatory Commission (Terms and Conditions for determination of Generation Tariff) Regulations, 2012 for the Project. 2. The Petitioner has entered into two separate Power Purchase Agreements, hereinafter referred as 'PPA', with Madhya Pradesh Power Management Company Ltd., formerly known as Madhya Pradesh Power Trading Company Ltd., hereinafter referred as 'MPPMCL', (Respondent No. 1) as follows: (a) (b) PPA dated as amended on with Respondent No. 1 being the lead procurer for Madhya Pradesh Poorv Kshetra Vidyut Vitaran Company Ltd. (Respondent No. 2), Madhya Pradesh Madhya Kshetra Vidyut Vitaran Company Ltd. (Respondent No. 3) and Madhya Pradesh Pashchim Kshetra Vidyut Vitaran Nigam Limited (Respondent No. 4) for supply of an aggregate of 30% of the installed capacity of the Project for a period of 20 years at the regulated tariff to be determined by the Hon ble Commission, hereinafter referred as 'Non-Concessional PPA'; and PPA dated with Government of Madhya Pradesh, hereinafter referred as 'GoMP', (Respondent No. 1 being the nominated agency of GoMP) for supply of 5% of the net power generated from the Project at the variable charges for the life of the Project, hereinafter referred as 'Concessional PPA'. 3. The Hon ble Commission by its Order dated passed in Petition No. 7 of 2012 and Order dated passed in Petition No. 82 of 2012 has accorded approval to the aforesaid Non-Concessional PPA. 4. The Unit-1 (600 MW) of the Project achieved Commercial Operation Date, hereinafter referred as 'COD', w.e.f Hours of 20 th May 2015 and Unit-2 (600 MW) of the Project achieved COD w.e.f Hours of 07 th April Regulation 8.2 of Tariff Regulations, 2015 provides for determination of separate tariff of Unit-1 and Unit-2 of the Project. Accordingly, the Petitioner is filing the instant Petition for determination of final tariff for supply of power from Unit-2 (600 MW) of its Project under PPA for the period commencing from 7 th April 2016 till 31 st March 2019 (Multi Year Tariff for the control period FY to FY ) under Tariff Regulations, 2015.

3 3 Summary of Petitions filed & Orders passed by Hon ble Commission 6. A summary of Petitions filed and Orders passed by Hon ble Commission is as hereunder: S. No Petition Particulars 1 19 of 2014 & 31 of 2015 & 06 of 2016 a) Petition No. 19 of 2014 & 31 of 2015 were filed by the Petitioner before this Hon ble Commission for Determination of provisional tariff of the Project for the period commencing from 30 th November, b) Hon ble Commission vide its order dated issued the order in the said Petition allowing provisional tariff for Unit-1 of the Project. c) Subsequently Petition No. 06 of 2016 was filed by the Petitioner for extension of applicability of the above provisional tariff of Unit-1 of the Project for the period starting from till determination of the final tariff of the Unit-1 of the Project. d) Hon ble Commission vide its order dated issued the order in the said Petition allowing the sought extension of applicability of the provisional tariff for Unit-1 of the Project of 2016 & IA Nos. 1 & 2 a) Petitioner had filed Petition No. 14 of 2016 for determination of provisional tariff of the Project based on anticipated COD of Unit-2 as Subsequently, Petitioner filed IA No. 1 & IA No. 2 in Petition 14 of b) Hon ble Commission vide its order dated disposed the IA Nos. 1&2 in the Petition 14 of c) Hon ble Commission vide its order dated disposed the Petition 14 of 2016 granting liberty to the Petitioner to file the Petition after revival of Unit-2 of the Project of 2016 a) Petitioner had filed Review Petition No. 67 of 2016 against the Hon ble Commission s order dated which was subsequently disposed-off by the Hon ble Commission vide its order of 2016 a) Petitioner filed Petition No. 68 of 2016 for determination of final tariff of Unit-1 (600 MW) of the Project for the period from COD of Unit-1 i.e to and Multi Year Tariff from FY to FY b) Hon ble Commission vide its order dated (Published on ) issued the order in the said Petition for determination of final tariff of Unit-1 of the Project of 2017 a) Petitioner filed Petition no. 18 of 2017 for determination of provisional tariff of Unit-2 of the Project for the period from COD if Unit-2 i.e to b) Hon ble Commission vide its order dated issued the provisional tariff for Unit The Petitioner craves liberty of the Hon ble Commission to treat the details, documents and submissions tendered in various aforesaid Petitions as part and parcel of the instant Petition. The same are not being repeated/submitted again herein for the sake of brevity.

4 4 Provisional Tariff of Unit-2 of the Project 8. The Hon'ble Commission vide Order dated in Petition No. 18 of 2017, issued the provisional tariff for Unit-2 of the Project for the period commencing from COD of Unit-2 (i.e ) to , subject to adjustment as per Regulation 8.15 of the Tariff Regulations, 2015 on determination of the final tariff by the Hon ble Commission after submission of the Annual Audited Accounts and all other relevant details/documents and clarifications to the satisfaction of the Hon ble Commission Final Tariff for Unit-1 of the Project 9. The Hon'ble Commission vide Order dated in Petition No. 68 of 2016, issued the Order for final tariff for Unit-1 of the Project. 10. In Petition No. 68 of 2016, based on Annual Audited Accounts for FY , the Petitoner had claimed/ submitted the capital cost of Unit-1 on accrual basis, as on its COD (i.e ) as Rs Crore (inclusive of Short-term FERV loss amounting to Rs Crore and un-amortized finance cost amounting to Rs Crore). And the corresponding Auditor Certified Cash Capital expenditure was Rs Crore (inclusive of Short-term FERV loss amounting to Rs Crore and un-amortized finance cost amounting to Rs Crore). Further, this cash expenditure of Rs Crore was inclusive of Rs Crore corresponding to Railway Siding capitalised post COD of Unit-1. Accordingly, the claimed capital cost (on cash basis) as on COD of Unit-1 was revised to Rs Crore (after reducing the expenditure towards Railway Siding). Further also, the Petitioner had claimed Additional Capital Expenditure, hereinafter referred as 'ACE' amounting to Rs Crore for the period from COD of Unit-1 to (i.e. FY ) considering the Auditor certified cash expenditure of Rs Crore (Corresponding capital cost on accrual basis being Rs Crore) as on pertaining to Unit-1 of the Project. 11. Against the above claims & submissions of the Petitioner, the capital cost considered and not considered by the Hon ble Commission in its Order dated for determination of final tariff of Unit-1 of the Project is as hereunder: Particulars Opening Capital Cost (i.e. as on COD of Unit-1) ACE during FY (for Unit-1) Closing Capital Cost (i.e. as on ) Capital Cost claimed by the Petitioner for Unit-1 Capital Cost considered by the Hon ble Commission for final tariff of Unit-1 (Rs. Crore) Capital Cost not considered by the Hon ble Commission for final tariff of Unit * *: Excluding Un-discharged liabilities amounting to Rs Crore as on Further, while determining the final tariff of Unit-1 for the period from to , the Hon'ble Commission has retained the capital cost of Unit-1 as Rs Crore as on

5 5 COD of the Unit-1 of the Project 13. The PPA dated , executed between the Petitioner and the Respondent No. 1, and duly approved by this Hon'ble Commission vide its order dated through the Article and provides for Scheduled Commercial Operation Date hereinafter referred as 'SCOD' and 'Revised SCOD', respectively as under: Scheduled Commercial Operation Date The Company shall achieve Commercial Operation Date for the first Unit within sixty (60) months from the date of signing of Implementation Agreement (i.e ) and second unit of the power station within six (6) months thereafter Revised Scheduled Commercial Operation Date The Parties may mutually agree to revise the Scheduled COD for commissioning of any Unit or the Power Station (hereinafter referred to as Revised Scheduled Commercial Operation Date or Revised Scheduled COD) and such Revised Scheduled COD shall thereafter be the Scheduled COD. [Emphasis Supplied] 14. It is submitted that as per the PPA, SCOD of Unit-1 was However, due to reasons beyond the control of the Petitioner, COD of Unit-1 could only be achieved on The Petitioner requested MPPMCL to revise the SCOD of Unit-1 as and accordingly MPPMCL, vide its letters and approved and accepted the Revised SCOD of Unit-1 as Hence, in accordance with the above mentioned provisions of the PPA, the SCOD of Unit-1 is Copies of the above referred letters of MPPMCL dated and are already part of records of the Hon ble Commission. However the same are once again attached hereto and marked as ANNEXURE-1(Colly). 15. The Hon ble Commission, under Paragraph 67(e) of its Order dated in Petition 68 of 2016 (for determination of final tariff of Unit-1 of the Project) has noted that the parties have concurrently revised the SCOD in terms of provisions under the PPA and has accordingly acknowledged that the revised SCOD of Unit-1 is COD of the Unit-2/ Project COD 16. As stated above, in accordance with the provisions of the PPA and as also duly approved by this Hon ble Commission in its Order dated in the Petition 68 of 2017, the SCOD of Unit-1 is Accordingly, in terms of the provisions of Article of the PPA, the SCOD of Unit-2 is to be meaningfully read as to be achieved within six months thereafter i.e. by The SCOD of Unit-2 as Nov 2015 has also been acknowledged, accepted and approved by both MPPMCL and the Hon ble Commission in accordance with the provisions of the PPA as evident from the following:

6 6 a) MPPMCL vide its letter dated to the Petitioner (attached hereto and marked as ANNEXURE-2) has duly acknowledged that SCOD of Unit-2 as Nov b) Hon ble Commission in its Order dated in the Petition 18 of 2017 (i.e. determination of provisional tariff for Unit-2 of the Project) has duly approved SCOD of Unit-2 as Nov On the Page No. 65 of this Order, the Hon ble Commission has noted the following: it is observed that the scheduled CoD of the Unit No. 2 was 29th November' 2015 in terms of PPA executed between the parties whereas, the actual CoD of the unit is 7th April However, despite best efforts of the Petitioner, COD of Unit-2 was slightly delayed from its SCOD of Nov 2015 due to reasons/factors beyond the control of the Petitioner. Anticipating this minor delay, the Petitioner duly kept MPPMCL informed in advance about this delay and the reasons thereof for such delay vide various communications from time to time starting from (i.e. before the SCOD of Unit-2). The various communications between the Petitioner and MPPMCL are attached hereto and marked as ANNEXURE-3(Colly). Vide these communications, the Petitioner had also offered to supply power (corresponding to power from Unit-2) to MPPMCL from alternative generation sources as per the terms of the PPA for the period corresponding to delay in COD of Unit-2. However, MPPMCL did not exercise its option to procure such power. 19. COD of Unit-2 was achieved on and the same was duly accepted and approved by MPPMCL vide its letter dated (attached hereto and marked as ANNEXURE-2). It may be noted that vide its letter dated , MPPMCL has considered the request of Petitioner for revision of SCOD of Unit-2 in terms of the provisions of the PPA and has duly accepted and approved the SCOD of Unit-2 as Delay in achieving COD of Unit-2 from its earlier SCOD of Nov 2015 to its Actual/Revised SCOD of As brought out above, vis-à-vis it s Scheduled COD of Nov 2015, Unit-2/Project achieved COD on , which has been duly approved and accepted as Revised SCOD of Unit-2/Project by MPPMCL. Despite adhering to Prudent Utility Practices and despite the best efforts of the Petitioner, there was a minor delay of around 4 Months in achieving the COD of Unit-2/ Project due to the external factors/ reasons beyond the control of the Petitioner. 21. The detailed reasons for delay in achieving COD of the Unit-2/ Project along with the supporting documents/justifications have already been submitted by the Petitioner as under: a) Petitioner s reply on affidavit submitted in the Hon ble Commission on in response to the Hon ble Commission s Query Letter dated

7 in the Petition 68 of Page Nos. 7 to 14 of this reply may kindly be referred. b) Petitioner s Petition 18 of 2017 filed before the Hon ble Commission on for determination of provisional tariff of Unit-2 of the Project. Page Nos. 3 to 7 of the Petition 18 of 2017 may kindly be referred. c) Petitioner s reply on affidavit submitted in the Hon ble Commission on in response to the Hon ble Commission s Query Letter dated in the Petition 18 of Page Nos. 12 to 21 of this reply may kindly be referred. 22. Nonetheless, these external factors/ reasons beyond control of the Petitioner leading to the minor delay of around 4 months in COD of Unit-2/ Project are classified in three categories as under:- A. Category-1: External Factors/Reasons leading to delay in overall Project Implementation. B. Category-2: External Factors/Reasons leading to delay in implementation of Unit-2. C. Category-3: External restrictions/constraints imposed on the Petitioner leading to delay in declaration of COD of Unit-2. Category-1: External Factors/Reasons leading to delay in overall Project Implementation. 23. These External Factors/Reasons led to delay in COD of Unit-1 and consequently delayed the COD of Unit-2/Project as the cumulative delay on account of these factors spilled over during the construction and implementation of Unit-2. These are summarized herein below: (a) Delay in grant of Stage-II Forest Clearance by Ministry of Environment and Forest (hereinafter referred as 'MoEF'); (b) Delay on account of unwarranted Public Interest Litigations (hereinafter referred as 'PILs') by meddlesome interlopers for personal gains; (c) Disturbances/unrest at Project Site by miscreants and motivated elements; (d) Unseasonal and unprecedented rains/ Floods; (e) Delay in barrage construction. (f) Delay due to other external factors. 24. A brief explanation on each of the above stated reasons for delay is set out herein below for consideration of the Hon ble Commission:- (a) Delay in grant of Stage-II Forest Clearance by MoEF:

8 8 25. It is submitted that certain portion of forest land falls within the main plant area. The Stage-I Forest Clearance for the said land was granted by MoEF on Thereafter the Stage-II Forest Clearance was granted by MoEF on , i.e., after more than 14 months from the date of grant of Stage-I Forest Clearance. As per the existing industry practices, Stage-II Forest Clearance is generally granted within 5 to 6 months of Stage-I Forest Clearance. Accordingly, the Petitioner anticipated grant of Stage-II Forest Clearance within the year 2010 and hence on , awarded the EPC Contract for Main Plant Activities to M/s LITL. However this Stage-II Forest Clearance was granted by MoEF to the Petitioner only on It is further submitted that, there was delay on account of the fact that MoEF vide letter dated imposed a stay on Stage-II Forest Clearance in the wake of several PILs filed before the Hon ble High Court of Madhya Pradesh. These PILs were eventually disposed of by the Hon ble High Court of Madhya Pradesh in favor of the Petitioner. Accordingly, MoEF vide letter dated vacated the stay and reinstated Stage-II Forest Clearance. Thereafter, the forest land was transferred to the Petitioner. Copies of the Stage-I and Stage-II Forest Clearance and MoEF letters dated and are attached hereto and marked as ANNEXURE-4(Colly). A table demonstrating the above unwarranted delays is provided herein below for this Hon ble Commission s ease of reference: Period From To Total Days Details Delay in commencement of construction works 439 days Period elapsed between (Against the general timelines Grant of Stage-I and Stage-II Forest Clearance ~ 8 months of ~ 180 days.) by MoEF days Stay on the granted Stage-II Forest Clearance. ~ 6 months Total delay in transfer of forest land on account of above Delay in commencement of construction works due to above delay in transfer of forest land ~ 14 months ~ 10 months 27. As is evident from the above table, grant of Stage-II Forest Clearance was delayed by MoEF by around 8 months (vis-à-vis general timelines between grant of Stage-I and Stage-II Forest Clearance). Further a period of another 6 months was lost due to the stay imposed on this Forest Clearance by MoEF. Thus, transfer of forest land was delayed by a period of more than 14 months (8 months + 6 months), which consequently delayed the commencement of various Project construction activities including those at Coal Handling Plant Area and IDCT Area by around 10 months. This delay was beyond the Petitioner s control and is attributable to the Government agencies. (b) Protests/Agitations/Demonstrations at the Project Site: 28. The Petitioner respectfully submits that during the construction period, the Project witnessed constant disturbances/unrest at the Project Site on account of protests/

9 9 demonstrations/ agitations carried out by residents/ villagers. These protests/ demonstrations/ agitations were politically motivated and were carried out at the instance of external and unscrupulous elements for personal gains and these resulted in intermittent closure of Project Site, thereby severely interrupting the ongoing construction activities. The major events which resulted in interruption/stoppage of construction works at the Project Site from time to time and delayed the commissioning of the Project are detailed in the table below:- From Period To Reasons for Work Interruption No. of Days Area Affected Documentary Evidence Labour Unrest; Local Villagers intruded the plant; fatal attacks 9 days Complete Site was closed News Articles in local dailies from to Local Villagers Unrest on petty wage issues; committed fatal attacks; Work re-commenced after days Complete Site was closed News Articles in local dailies from to Agitation by Bhartiya Kisan Union at Plant Main Gate 2 days Complete Site was closed News Articles in local dailies from to Agitation by Bhartiya Kisan Union at Main Gate 6 days Complete Site was closed News Articles in local dailies from to Political Rally by Bhartiya Kisan Union (Distt. SP and others were injured) at Main Gate 4 days Complete Site was closed News Articles in local dailies from to Agitations and threat to labour by political motivated elements 3 days Complete halt of works Petitioner s letter dated to the Collector and SP, Anuppur Agitation by local miscreants for the part of the land for Railway Siding; Several Police officials injured; labour at plant stopped the work for two days 3 days Complete Site was closed News Articles in local dailies from to TOTAL SITE CLOSURE ON ACCOUNT OF ABOVE: 42 Days 29. Copies of news articles/ clippings in the local newspapers and letter of the Petitioner substantiating the afore-stated delays are attached hereto and marked as ANNEXURE-5(Colly). The Petitioner submits that on account of aforementioned reasons, the Project implementation works were severely affected for around 65 days during the construction phase, i.e., 42 days direct delay on account of Project Site closure and an indirect delay of 3-4 days per interruption (totaling to around 23 days for such 7 interruptions) on account of resource and manpower re-mobilization/ re-deployment and restart of work.

10 10 (c) Unconventional heavy rainfall during non-monsoon period/ floods: 30. The Petitioner respectfully submits that the Project witnessed unusually heavy rainfalls/ floods repeatedly in non-monsoon months during the implementation phase of the Project, which severely affected the construction works. The rainfall data for District Anuppur by the Indian Meteorological Department for the years from 2010 to 2014 is summarized hereunder and is also attached hereto and marked as ANNEXURE-6. Average Rainfall Data (mm) % Departure from long term average for the respective month Year January % 147% -88% -70% February % -90% 184% 180% March % -100% -100% -83% 41% April % -100% -95% 179% -100% May % -82% -99% -100% June % 45% -71% 28% -33% July % -47% 20% -32% -18% August % 5% -23% -14% -20% September % 90% -39% -45% 20% October % -100% -65% 336% 295% November % -100% 636% -100% -100% December % -100% -66% -100% -85% *Source: India Meteorological department ( ) for District Anuppur, Madhya Pradesh 31. The Table above makes it abundantly clear that the Project had witnessed unconventional heavy rainfall/ floods in the months of September 2011, January 2012, November 2012, February 2013, April 2013, October 2013, February 2014 and October 2014 i.e. a total period of 8 months during the construction phase of the Project, thereby severely affecting the construction works at the Site during the peak time. Further, during the month of August 2014, sudden and abrupt cloud outbursts were experienced leading to flash floods in the entire region for around days, due to which the entire movement of material and labour came to a standstill. As a result the construction activities were severely affected for the month of August Copies of news articles/ clippings in the local newspapers reporting the torrential rainfall and floods are attached hereto and marked as ANNEXURE-7(Colly). 32. In this background, it is submitted that due to unseasonal and unconventional heavy rain falls and floods during these 9 months, the construction works slowed down significantly causing a delay of days during each such month, resulting in overall delay of around 100 days during the construction phase of the Project. (d) Delay in Barrage construction: 33. The barrage construction activities were severely affected primarily on account of two factors as under:-

11 11 (i) Hindrance by local villagers, labour strikes etc. leading to stoppage of barrage construction works from time to time. The cumulative stoppage of works on account of such agitations, strikes etc. is estimated to be around 139 days. (ii) As already mentioned above, sudden cloud burst and torrential rains were witnessed during August, 2014, which led to a flash flood in Son River. During this period, the barrage was under advanced stage of construction. This flash flood in River Son on caused severe damage to the trunnions of Gate Nos. 2 and 3 of the barrage. It would be worthwhile to mention here that the trunnion is embedded in the concrete and acts as a hinge for opening and closing of the barrage gate. These trunnions and other embedded parts were removed and sent to works of OEM s casting agency in Punjab. After casting, these were then dispatched to OEM works at Kota for machining and finishing and finally these were received back at the Project Site on , subsequent to which, their restoration to the original condition in the barrage was completed on Thus a total delay of 181 days from to is attributable to heavy rain and flash flood in River Son which caused delay in barrage construction. 34. A detailed breakup of a total delay of 320 days in the construction of barrage on account of reason (i) and (ii) above (i.e. 139 days days) is attached hereto and marked as ANNEXURE-8. (e) Delay due to other External Factors: 35. Additionally, the Project witnessed unwarranted delays on account of external reasons beyond control of the Petitioner, which inter alia, included: (i) Strikes, agitations and power shutdowns in Seemandhra region during September-October 2013 on the state bifurcation issue. Due to this, the Government offices and Banks in this region followed BANDH, thereby impairing and delaying the custom clearance for the offshore supplies received at Vizag/ Ganagavaram Port. (ii) Major fire broke-out in Mumbai Mantaraya on , due to which permission for loading/ unloading the material received at Mumbai Port and movement of the same was delayed for around seven (7) days. 36. It is further submitted that the cumulative delay on account of the above impediments is of the order of almost months. The Hon'ble Commission in its order dated in Petition 68 of 2017 has duly acknowledged and endorsed that due to the reasons beyond control of the Petitioner, the Project construction activities were delayed by more than 14 months and maintained that delay in achieving COD of Unit-1 is not attributable to the Petitioner. The relevant extracts of the said order dated are reproduced hereunder: 68. On perusal of the reasons and documents submitted by the petitioner on record for delay in achieving CoD of Unit No.1, it is observed that the delay is primarily on account of obtaining Stage-II Forest Clearance from MoEF and certain portion of forest land falls within the Main Plant Area. As submitted by

12 12 the petitioner with the copy of correspondence with Ministry of Environment & Forest, Govt. of India regarding Stage I & Stage II forest clearance, there has been further delay in handing over of forest land to the petitioner on account of certain litigations before Hon ble High Court. Thus, the commencement of various main construction activities of the power plant was delayed by more than 14 months. It is observed that CoD of Unit No.1 was further delayed on account of various protests/ agitations carried out by residents/ villagers during the construction period. The chronology of all such events have been placed on record by the petitioner. Besides, the petitioner has submitted some other reasons also for delay in achieving CoD of Unit No In view of the above mentioned facts and the reasons enumerated by the petitioner alongwith the documents placed on record in support of all such reasons, the delay in achieving commercial operation of Unit No.1 is not attributable to the petitioner. 37. In order to minimize the impact of this external cumulative delay of around 14 months on COD of Unit-1, the Petitioner was compelled to reallocate/divert the material, manpower and resources deployed against Unit-2 for expeditious COD of Unit-1. As such, reasons for delay which affected the COD of Unit-1 cannot be looked in isolation as they have consequential effect on COD of Unit-2. Consequently, the above external factors/ reasons beyond the control of Petitioner which affected COD of Unit-1, did affect the COD of Unit-2 as well and the aforesaid cumulative delay spilled over during the construction and implementation of Unit-2. Category-2: External Factors/ Reasons leading to delay in implementation of Unit-2/ Project post COD of Unit-1: 38. It is submitted that in addition to above, the Petitioner witnessed other external factors beyond its control, which led to the delay in COD of Unit-2. These include:- (a) Devastating earthquake of April 2015 originating in Nepal and spreading up to parts of China, severely disrupted the various manufacturing facilities in China. This earthquake resulted in slow down/ delays in manufacturing of various main and other equipment associated with Unit-2 of the Petitioner s Project. This slow down/ delays by manufacturing facilities in China resulted in cascaded delays in supply and logistics, erection and testing, and commissioning activities of Unit-2 of the Petitioner s Project. (b) Change in piping lay-out of the plant: At the time of commissioning of Unit-1, certain modifications were carried out in piping lay-out of the Petitioner s Project. This was done in the best interest of the Project with a view to ensure smooth project operation and maintenance in the longer run. This modification in the piping layout necessitated arranging additional piping for Unit-2 from other/ alternate vendors. Since this piping material was not readily available, hence arranging and sourcing of the same from other vendor(s) delayed the other serially associated project commissioning activities. Supporting Documents in

13 13 this regard (Copy of the received from the Petitioner s EPC Contractor enclosing list of additional piping material for Unit-2. Also enclosed is a copy of order placed by the Petitioner s EPC Contractor to an alternate vendor for additional piping material) are attached hereto and marked as ANNEXURE-9. (c) Cannibalization of Control and Instrumentation ('C&I') Items: During commissioning activities of Unit-1, certain C&I items were damaged/ required replacement. To expedite commissioning of Unit-1, such C&I items procured for Unit-2 were used for Unit-1. Thus fresh sourcing of such C&I items for Unit-2, being a time consuming process, resulted in delay in COD of Unit-2. Supporting documents in this regard (Copy of the received from the Petitioner s EPC Contractor enclosing list of cannibalized C&I items for Unit-2) are attached hereto and marked as ANNEXURE-10. (d) Delay in dispatch of Turbine Spacers due to extended Chinese holiday: Extended holiday of around 12 days during the month(s) of September-October 2015 resulted in delay in dispatch of Turbine Spacer from the Petitioner s vendor in China, which in turn resulted in delay of commissioning activities of Unit-2. A Copy of Chinese Calendar for the year 2015, highlighting Chinese holidays is attached hereto and marked as ANNEXURE-11. Category-3: External restrictions/ constraints imposed on the Petitioner leading to delay in declaration of COD of Unit It is submitted that in addition to the above factors adversely affecting the construction activities of Unit-2, the Petitioner experienced a further delay of around 15 days in declaring the COD of Unit-2 on account of the following external constraints:- (a) Grid restrictions imposed by the system operator, Western Regional Load Despatch Centre ('WRLDC') from to ; and (b) The concurrent restraint on account of hotline stringing works by Power Grid Corporation of India Ltd. ('PGCIL') affecting the 400 kv Anuppur - Jabalpur Transmission Line from to This is the only transmission line available for evacuation of the power generated from the Petitioner s Project to the Jabalpur Pooling Point of PGCIL. 40. It is submitted that the requirement of 72 hours trial run was insisted by MPPMCL de hors the statutory requirements at the time of COD of Unit-1, which has been uniformly followed by the Petitioner during COD of Unit-1 as well as during COD of Unit-2. It is due to the restraints imposed by WRLDC and PGCIL and the insistence by MPPMCL to undertake 72 hours trial run, that despite having achieved full load commissioning on of Unit-2, the Petitioner could declare the COD of Unit-2 only on A copy of letter dated to this effect, issued by the Superintending Engineer, Madhya Pradesh Power Generation Company Limited (authorized on behalf of MPPMCL for witnessing and monitoring the commissioning

14 14 tests of both Unit-1 and Unit-2 of the Petitioner s Project in compliance with Article 5.3 of the PPA) is attached hereto and marked as ANNEXURE Thus, as amply evident, all the above reasons leading to a marginal delay of around 4 months in COD of Unit-2/ Project were beyond the control of the Petitioner. This marginal delay in COD of Unit-2/ Project has been primarily due to cascading effect of the delay experienced in delay in COD of Unit-1 and partly due to above mentioned external factors specific to Unit-2. As mentioned above, the Hon ble Commission in its order dated in Petition 68 of 2017 (for determination of final tariff of Unit-1 of the Project) has duly acknowledged and endorsed that due to the reasons beyond control of the Petitioner, the Project construction activities were delayed by more than 14 months. This delay of 14 months in Project construction activities, for the reasons beyond control of the Petitioner delayed the COD of Unit-1 by almost 6 months and cascadingly led to delay of around 4 months in COD of Unit-2 /Project. 42. It may kindly be appreciated that the overall Project construction activities were delayed by more than 14 months on account of the external reasons/ factors beyond control of the Petitioner and the same has also been duly acknowledged and endorsed by the Hon ble Commission. However, with the efficient and meticulous Project planning, management and execution skills, and judicious allocation and utilization of manpower and resources the Petitioner has been able to mitigate and minimize this delay to only around 10 months in overall Project execution (i.e. delay of ~5.5 Months for Unit-1 and ~4.5 Months in Unit-2). 43. The Hon'ble Commission has duly acknowledged that above factors were beyond the control of the Petitioner has accordingly condoned delay in COD of Unit-1 in its said order dated in Petition 68 of 2016 (for determination of final tariff of Unit-1 of the Project). 44. The Petitioner prays the Hon ble Commission to duly appreciate and acknowledge that marginal delay in Unit-2/ Project was primarily due to cascading effect of the external reasons beyond control of the Petitioner causing delay in Project construction activities by months and partly due to above mentioned external factors specific to Unit-2. In light of the same, the Petitioner prays the Hon ble Commission to kindly condone the marginal delay of around 4.5 months in COD of Unit-2/ Project. Capital Cost of the Project as on COD of Unit-2 (i.e ) 45. The Hon'ble Commission vide its Order dated for determination of provisional tariff for Unit-2 has directed the Petitioner as hereunder: 195. The Petitioner is directed to file the final tariff at the earliest along with the Audited Annual Accounts and all other required details/documents. The Unit-wise break-up of the figures in the audited accounts be also submitted by the petitioner with the final tariff petition in favour of its claims. All discrepancies and information gaps observed by the Commission in this order be eliminated while filing the final tariff petition.

15 The Petitioner hereby humbly submits that the Annual Audited Accounts for FY of the Petitioner s company are now been placed on record for the consideration of the Hon'ble Commission, a copy of which is attached hereto and marked as ANNEXURE The Petitioner submits that the Annual Audited Accounts for previous periods upto i.e. (FY to FY ) have been already placed on record with the Hon ble Commission in the Petitioner s reply dated under Petition No. 68 of 2016 (i.e. Annexure-1(Colly) at Page Nos. 18 to 222 of the Petitioner s reply dated ). These financial statements had been prepared in accordance with the Generally Accepted Accounting Principles in India', hereinafter referred as 'Indian GAAP' to comply with Accounting Standards notified under Section 133 of the Companies Act, 2013, read with Paragraph 7 of the Companies (Accounts) Rules, However, it is pertinent to bring to the kind notice of the Hon ble Commission that the Petitioner has adopted for the first time Indian Accounting Standards hereinafter referred as 'Ind AS' notified under the Companies (Indian Accounting Standards) Rules, 2015 under Section 133 of the Companies Act, 2013, while preparing the Annual Audited Accounts for FY This was done to comply with the Gazette Notification dated issued by Ministry of Corporate Affairs, a copy of the relevant extracts of the same is attached hereto and marked as ANNEXURE-14. For the purpose of comparatives, Balance sheet as on and the Annual Audited Accounts for year ended have also been prepared based on Ind AS. 49. The reconciliation of the details of fixed assets as on based on transition S. No from Indian GAAP to Ind AS has been clearly explained in Note No. 50 of the Annual Audited Accounts for FY attached hereto and marked as ANNEXURE-13 and summarized as hereunder: Particulars Fixed Assets as per Ind AS Fixed Assets as per Indian GAAP * Variance 1 Freehold Land Leasehold Land (Rs. Crore) Methodology as per Ind AS 1. Using effective interest/ amortization cost method under IND AS, provisions for future R&R payments are discounted at effective interest rate of long term debt through the expected life of the liability to bring to the fair value on the date of recognition 2. Provision of inclusion of annual diversion payments to GoMP for change of land use (from agriculture to industrial) - discounted at effective interest rate of long term debt throughout the expected life of the financial liability. Being operating lease, classification of Leasehold changed for Fixed Assets to Prepaid Expenses (Current Assets) under IND AS

16 16 S. No Particulars Fixed Assets as per Ind AS Fixed Assets as per Indian GAAP * Variance Methodology as per Ind AS 3 Plant & Machinery Due to difference in treatment of Finance cost to borrowings from Indian GAAP to IND AS Indian GAAP - Cost incurred in raising funds are amortized equally over the period for which the funds are acquired or within five years, whichever is less; 4 Buildings & Civil Works IND AS - Cost incurred in raising funds are amortized equally over the period for which the funds are acquired or tenure of the long term debt; 5 Capital Spares Furnitures & Fixtures Vehicles Office Equipments EDP Equipments (including software) Total Fixed Assets *As per Note 4 & Note 6 of Annual Audited Accounts of FY attached as ANNEXURE It has been the practice of the Hon ble Commission of allowing tariff based on historical cost of assets rather than on revalued cost. As such, for the sake of consistency, the Petitioner has considered the capital cost reconciled on the basis of Indian GAAP as against Ind AS. The reconciliation of accounts for FY of Indian GAAP as against Ind AS duly certified by the Auditor is attached hereto and marked as ANNEXURE The Petitioner further submits that the estimated capital cost of the Project (comprising of Unit-1 and Unit-2) was considered at Rs Crore on accrual basis in its Petition No. 68 of 2016 as well in Petition No. 18 of 2017, which was calculated on the basis of capitalized assets/expenditures as on COD of Unit-1 ( ), capitalized assets & capital work-in-progress and balance commitments/provision of expenditures till the COD of Unit-2 ( ) as reflected in the Annual Audited Accounts of FY This cost also includes the FERV losses of Rs Crore charged to P&L as well as unamortized finance cost to borrowings amounting to Rs Crore booked under Current Assets in the Annual Audited Accounts of FY However, the Petitioner further submits that based on the Annual Audited Accounts for FY , the capital cost of the Project has been re-estimated and reconciled as follows: Particulars (Rs. Crore) Amount Gross Fixed Assets as on (based on Indian GAAP) Capital Work-in-progress as on (based on Indian GAAP) Actual Balance Commitment as on

17 17 Particulars Amount Sub Total Add: FERV Losses charged to P&L Add: Unamortized Finance Cost to Borrowings Add: Provision for Custom Duty/Excise duty less Rs Crore already capitalized Total Hence, the Petitioner submits that the estimated capital cost of the Project is now reduced to Rs Crore from the earier submitted estimated capital cost of Rs Crore as mentioned in Paragraph 51 of the instant Petition. 54. The item wise details of the revised estimated capital cost vis-à-vis the earlier S. No submitted estimated capital cost is as hereunder: Particulars Earlier submitted estimated Project capital cost as per Petition 18 of 2017 Revised estimated Project capital cost (Rs. Crore) Variance 1 Freehold Land Lease hold Land Plant and Machinery Building and Civil Works Pre-operative Expenditure IDC/Finance Charges Custom Duty/Excise duty Sub Total Add: FERV Losses charged to Revenue Add: Unamortized Finance Cost to Borrowings Grand Total Reasons for Variance in Capital Cost 55. The reasons/justifications for the item wise variances in capital cost are detailed as hereunder: (a) Cost of Freehold land (Increase by Rs Crore) The Variance in cost of Freehold land is on account of provisioning of following expenditures: 1. Diversion rent amounting to Rs Crore in the Annual Audited Accounts for FY (on Indian GAAP accounting standards) required to be paid to Revenue Department, GoMP for the change of use of land (from agriculture to commercial/industrial) acquired for setting up of the Project under Section 172 of MPLRC Act The total land diverted from agriculture use to commercial/industrial use is Hectare (Ha) for which the Petitioner has already paid one time premium of Rs Crore to GoMP Revenue Department. In addition to this one-time premium, the Petitioner is liable to pay annual diversion rent for the diverted land throughout the life of the Project.

18 18 2. Impact of Rs.8.22 Crore on account of reinstatement of R&R expenditures on the basis of actuarial valuation (where mortality is involved e.g. Widow pension, Old age pension) and actual liabilities including Rehabilitation grant, Special economic grant, dairy for project affected people etc. as a conventional practice at the year end. In view of the above, the Petitioner has now made a provision in the Annual Audited Accounts for FY for Rs Crore towards total liability for diversion rent for the whole plant life including the current liabilities & additional R&R expenses on account of reinstatement at the year-end as on (b) Pre-operative Expenditure & IDC/Finance Charges (Increase by Rs.3.45 Crore) The variance under the head is an account of actual capitalization in the Annual Audited Accounts as on COD of Unit-2 for FY based on Indian GAAP. (c) Provision for Customs Duty/Excise Duty (Decrease of Rs Crore) The variance under the head is an account of reduction of provision of Customs and Excise Duty on account of Ministry of Power (MoP), Government of India letter dated regarding proportionate release (67.175%) of total Bank Guarantees/FDRs in terms of the Guidelines/mechanism for provisional mega power projects issued vide MoP letter No. A-3/2015-IPC dated The copy of MoP letter dated is attached hereto and marked as ANNEXURE With regard to estimated provision of Rs Crore, the Petitioner has incurred Rs Crore in terms of Bank Guarantees and Cash payments against Customs & Excise duty as follows: (Rs. Crore) Particulars BG Value Payment in Cash Total Customs Duty Excise Grand Total In terms of the above referred MoP letter, the BGs amounting to Rs Crore (67.175% of the total BGs against Customs and Excise duty) is due for release and the balance BG amount of Rs Crore is kept as provision in capital cost. Additionally, an amount of Rs Crore has been paid by the Petitioner in cash towards Custom and Excise Duty for equipment procured for the Project in the initial period i.e. from to Out of this amount of Rs Crore, an amount of Rs Crore was paid in cash by the Petitioner towards Custom Duty prior to the issuance of the provisional Mega Power Certificate dated by the Ministry of Power. This amount was paid for import of foundation bolts on merit rate to enable start of construction as per the schedule. The balance amount of Rs Crore comprises of two components i.e. Rs.9.48 Crore towards Custom Duty and Rs.4.48 Crore towards Excise Duty, which was paid post issuance of

19 19 provisional Mega Power Certificate pending registration of the Project with the appropriate authorities. The Petitioner further submits that there is no process/provision for refund of this amount of Rs Crore paid in cash by the Petitioner towards Custom and Excise Duty as the material has already been assessed on merit rate. Further even the above referred MoP letter dated only provides for release of BGs to the extent of % of the total BG Value and does not provide for proportionate refund of the cash amount of Rs Crore. As such the Petitioner humbly requests the Hon ble Commission to kindly consider Rs Crore as a part of the Project cash expenditure for the purpose of tariff determination. Nonetheless, in the event of receiving any refund against this amount, the Petitioner would duly approach the Hon ble Commission for suitable adjustment in the Project capital cost. Henceforth, the total against this head of Rs Crore (Rs Crore under BGs + Rs Crore, already paid in cash) has been kept in the revised capital cost of the Project. Unit wise Estimated Capital Cost of the Project as on COD of Unit The Petitioner further submits that the Unit-wise capital cost of the Project as S. No submitted earlier in Petition No. 18 of 2017 as on date of COD of Unit-2 ( ) is now revised in light of Paragraph(s) of the instant Petition as under: Particulars Estimated Capital Cost Unit-1 (Rs. Crore) Estimated Capital Cost Unit-2 1 Land and Site Development Plant and Machinery Building and Civil Works Pre-operative Expenditure* Finance Charges/IDC a) Custom duty/excise duty b) Provision against Custom / Excise duty Capital Expenditure Add: FERV Losses charged to Revenue Add: Unamortized Finance Cost to Borrowings Total Capital Cost *net of other incomes and includes the pre-commissioning expenses (net of infirm power) Unit wise Cash Expenditure as on COD of Unit-2 as per Auditor Certificate 58. In regard to unit-wise cash expenditure as on COD of Unit-2 ( ), the Petitioner had already submitted Auditor Certificate dated certifying unit-wise cash expenditure as on and on the COD of Unit-2 (i.e ) in Petition No. 18 of 2017 as Annexure 11 (Page Nos ). A copy of the same is attached hereto and marked as ANNEXURE The details of Unit-wise cash expenditure & revised liabilities for Unit-2 as on its COD (i.e ) is as under: (Rs. Crore)