Before the MAHARASHTRA ELECTRICITY REGULATORY COMMISSION World Trade Centre, Centre No.1, 13th Floor, Cuffe Parade, Mumbai 400 005 Tel. No. 022 22163964/65/69 Fax. 022 221639761 E-mail: mercindia@merc.gov.in Website: www.merc.gov.in / www.mercindia.org.in Case No. 47 of 2018 In the matter of Petition of Jawaharlal Nehru Port Trust (JNPT) for taking on record its deemed Distribution Licensee status and for specifying the applicable Specific Conditions of its Distribution Licence CORAM Shri. Anand B. Kulkarni, Chairperson Shri. Mukesh Khullar, Member Jawaharlal Nehru Port Trust (JNPT) Petitioner Appearance For Petitioner Shri. Varun Sethi (Rep.) Shri. Arvind Pradhan (Rep.) ORDER Date: 14 June, 2018 1. Jawaharlal Nehru Port Trust (JNPT), Admin Building, Sheva, Uran, Navi Mumbai 400 707, has filed a Petition on 12 January, 2018 under Sections 14, 16 and 181 of Electricity Act, 2003 (EA, 2003) for taking on record its deemed Distribution Licensee status for the SEZ being developed at Village Sheva, Navi Mumbai and for issuing the Specific Conditions of Distribution Licence applicable to it. 2. JNPT s prayers are as follows: i) To take on record the Deemed Distribution Licensee status of the Petitioner, M/s. Jawaharlal Nehru Port Trust, under Section 14 of the Electricity Act, 2003 and Section 49 of SEZ Act, 2005. Order in Case No. 47 of 2018 Page 1 of 6
ii) To Issue Specific Conditions of Distribution License applicable to the Petitioner, M/s. Jawaharlal Nehru Port Trust. iii. To approve the provisional tariff equivalent to MSEDCL tariff for its area of supply. iv) To initiate the proceedings at the earliest to allow Petitioner to commence business operation from December 2018 onwards. v) Condone any inadvertent omissions/errors/shortcomings and permit the Petitioner to add/change/modify/alter this filing and make further submissions as may be required at a future date. vi).pass such orders as the Hon'ble Commission may deem fit as per the facts of the present case. 3. The Petition states that: 3.1 JNPT is a major port notified under Major Port Trusts Act, 1963 having its registered office at Jawaharlal Nehru Port Trust, Admin Building, Sheva, Uran, Navi Mumbai 400 707. 3.2 JNPT is developing a Port based multi product SEZ on 277.387 Hectares of land at JNPT along the Panvel Uran Road connecting the cargo terminals to State highways. The focus of the SEZ is on collaborating upcoming sectors of India such as logistics, engineering goods, electronics, apparels and textiles and multi services sector among others. 3.3 JNPT has been notified as a Developer of said SEZ by the Ministry of Commerce and Industry, Government of India on 11 August, 2014. The SEZ is being developed over an area of 277.38 Hectares situated in the villages of Savarkahar, Karal, Sonari and Jaskhar of Uran Taluka, Distt. Raigad of the Maharashtra. 3.4 Presently, JNPT SEZ is under various stages of development. Civil and electrical infrastructure work like development of internal distribution network and roads etc. has been allotted to EPC contractor through competitive bidding process and expected to be completed in December, 2018. The SEZ is expected to be operational by FY 2018-19. 3.5 Vide Notification dated 3 March, 2010 under Section 49(1) (b) of the SEZ Act, 2005, the Ministry of Commerce and Industry (Department of Commerce), Government of India has specified that the developer of a SEZ is deemed to be a Distribution Licensee under the provisions of the EA, 2003. 3.6 The SEZ has also received environmental clearance on 5 December, 2014 by State level Expert Appraisal Committee, Government of Maharashtra. 3.7 JNPT intends to expand its footprint by transforming itself into a global hub through creation of more value added services. The SEZ has been planned to be developed within the port area to ensure end-to-end facilities for export based industries including manufacturing, warehousing, assembly, packaging and finally shipment. The proposed SEZ is conceived to have all the integrated facilities. Order in Case No. 47 of 2018 Page 2 of 6
3.8 The proposed development is envisaged to be a port based multi product SEZ. The following sectors have been shortlisted for inclusion in the overall development plan based on their export potential and linkages to port: i. Engineering cluster ii. Textiles and apparel iii. Electronic manufacturing iv. Renewable energy v. Logistic Centre vi. Multi services/ ITES/Healthcare 3.9 The project area has been proposed to be developed with the optimal mix of export oriented sectors which will boost JNPT s overall objective of EXIM trade and a world class infrastructure. 3.10 To meet the obligations under Rule 5A of SEZ Rules, 2006 regarding providing 24X7 uninterrupted power supply within the area of supply, JNPT will have to undertake distribution activities under the provisions of the Electricity Act, 2003. 3.11 The consumer base of a typical distribution licensee would be inclusive of diverse consumer categories i.e. residential, industrial, commercial, agriculture, public lighting, public works, railways etc. However, the SEZ at JNPT is unlikely to include the entire consumer mix of a typical distribution licensee and may be limited to residential, commercial, industrial and public services. 3.12 As per Sections 16 and 181 of the EA, 2003 and Regulation 8.16.2 of the MERC (General Conditions of Distribution Licence) Regulations, 2006, the Commission is empowered to issue Specific Conditions of Licence to a Licensee or a class of Licensees, and these conditions shall be deemed to be the conditions of such Licence. 3.13 The Commission is requested to issue Specific Conditions of Distribution Licence applicable to JNPT SEZ. The notified SEZ area for JNPT may be specified as an area of supply in its Specific Conditions of Distribution Licence. Also, the term of Licence may be specified as 25 years from 11 August, 2014 i.e. the date of SEZ notification. 3.14 Regulation 5 of MERC (Multi Year Tariff) Regulations, 2015 allows the deemed Distribution Licensee whose Tariff is yet to be determined, to recover provisional Tariff in its area of supply as follows: Provided that, in case of a Deemed Distribution Licensee whose tariff is yet to be determined by the Commission till March 31, 2016, the Commission may relax the timelines for submission of the Multi-Year Tariff Petition, Midterm Review Petition and Truing-up Petitions, in case such specific relaxation is sought by such Distribution Licensee: Order in Case No. 47 of 2018 Page 3 of 6
Provided further that such Deemed Distribution Licensee may be permitted to first file a Petition for approval of a ceiling or other provisional tariff in its area of supply, followed by a Petition for approval of Power Purchase Agreement or arrangement, after which the Multi-Year Tariff Petition may be filed : 3.15 JNPT shall submit separate Petitions as per the above provisions of MYT Regulations, 2015 for approval of power procurement and determination of Tariff. 3.16 However, till filing the specific Petition for Tariff determination, JNPT requests the Commission to allow to charge provisional Tariff equivalent to the Tariff of MSEDCL in its area of supply for the first year and any difference in the revenue may be adjusted at the time of filing of the MYT Petition. 4. The hearing in the matter was held on 10 June, 2018. At the hearing, representative of JNPT reiterated its submission in the Petition and requested the Commission to take on record its deemed Distribution Licensee status. 5. Vide its submission dated 10 June, 2018, JNPT informed that it is in process of engaging M/s. PTC India Ltd. as a consultant for preparation of the power purchase plan and other relevant documents. PTC will be assisting JNPT in preparation of Network Roll-out Plan, Business Plan, Power Purchase Plan, Detailed Project Report including consumer related details, load profiling etc. With this approach, JNPT would be able to submit all the required documents and comprehensive reports of power distribution business. Commission s Ruling:- 6. The Commission notes that, vide Gazette Notification No. S.O. 2047(E) dated 11 August, 2014, the Ministry of Commerce and Industry (Department of Commerce), Government of India has notified JNPT as the developer for the SEZ on 277.387 Hectares of land at JNPT along the Panvel Uran Road in the villages of Savarkahar, Karal, Soneri and Jaskhar, Taluka Uran, District Raigad in the State of Maharashtra. 7. The EA, 2003 was amended through Notification dated 3 March, 2010 to add a proviso to Section 14 (b): 14. Grant of Licence The Appropriate Commission may, on an application made to it under section 15, grant a licence to any person a. To transmit electricity as a transmission licensee: or b. To distribute electricity as a Distribution Licensee; or : Provided that the Developer of a Special Economic Zone notified under sub-section (1) of Section 4 of the Special Economic Zones Act, 2005, shall be deemed to be a licensee for the purpose of this clause, with effect from the date of notification of such Special Economic Zone; " Order in Case No. 47 of 2018 Page 4 of 6
8. JNPT has also submitted the map of the SEZ area, certified by the Office of the Development Commissioner, SEEPZ SEZ, Mumbai. 9. Considering the proviso introduced to Section 14(b) of the EA, 2003, the Commission hereby confirms the status of JNPT as the deemed Distribution Licensee for this SEZ area under Section 14 of the EA, 2003. 10. As deemed Distribution Licensee, JNPT shall have to adhere to the following: (1) The relevant provisions of the EA, 2003 and the applicable Rules, Regulations and Orders issued thereunder; (2) Guidelines of the Commission for in-principle approval of its proposed capital investment schemes; (3) The provisions of the SEZ Act, 2005 and SEZ Rules, 2006. 11. The Commission notes that JNPT has no Power Purchase Agreement (PPA) in place, for fulfilling its Universal Service Obligation. In order to do so in accordance with Section 43 of the EA, 2003, JNPT must make necessary filings for PPA approval and subsequent approval of its Aggregate Revenue Requirement (ARR) and Tariff to be paid by its consumers. JNPT has sought approval of a provisional Tariff to be levied to its consumers till the Petitions for PPA and ARR are filed by it and the respective approvals are in place. JNPT has sought the provisional Tariff for the first year equivalent to MSEDCL s Tariff for respective category of consumers. 12. Considering JNPT s proposal in this regard, the Commission is of the view that provisional Tariff may be allowed as an interim arrangement till the approval of ARR and Tariff are in place for JNPT. Licence area of JNPT overlaps with that of MSEDCL, which is the incumbent Distribution Licensee. The proviso to Section 62(1)(d) of the EA, 2003 provides that, in case of distribution of electricity in the same area by two or more Distribution Licensees, the Appropriate Commission may, for promoting competition among them, fix only the maximum ceiling of Tariff for retail sale of electricity. Accordingly, as an interim arrangement, the Commission allows JNPT to charge consumers in its Licence area the Tariff applicable to the respective categories of MSEDCL s consumers, as the ceiling Tariff. This provisional Tariff shall be valid for one year from the date of this Order. 13. JNPT has stated that it would submit a comprehensive report on its proposed distribution business. Same shall be submitted within 2 months of the Order. 14. JNPT is directed to submit its proposed timelines for further activities such as PPA filing, ARR filing, CGRF establishment etc. within fifteen days of the Order. 15. Under Section 16 of the EA, 2003, the Commission may specify general or specific conditions applicable to a Licensee, and these conditions shall be deemed to be conditions of its Licence. In view of the definition of the term specified in Order in Case No. 47 of 2018 Page 5 of 6
Section 2(62) of the Electricity Act, 2003, the specific conditions applicable to JNPT are required to be laid down by way of Regulations framed after previous publication, and the same cannot be stipulated through this Order. Accordingly, the Commission shall separately notify the Regulations specifying the specific conditions of Licence applicable to JNPT. Sd/- (Mukesh Khullar) Member Sd/- (Anand B. Kulkarni) Chairperson Order in Case No. 47 of 2018 Page 6 of 6