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Power regulator Central Electricity Regulatory Commission (CERC) has deferred its order on a petition by Reliance Power seeking a mechanism to take care of the Rs 4,000 crore increase in costs in the construction and operation of its Sasan Ultra Mega Power Project.
CERC listed the case for next hearing on April 17 and asked the company to furnish additional information including date of bid, assumptions for bid of Rs 1.19 per unit, increase in project cost, savings due to purchase of equipment from China and the Return on Equity (RoE) envisaged. Reliance Power had last year filed three petitions, which were clubbed to form the current petition, with CERC seeking.
"Economic restitution" due to rupee depreciation, change in law during the construction period, and change in law impacting revenues and costs during the operation period.
It has sought CERC’s intervention under Section 79 of the Electricity Act, stating the compensatory mechanism set out under Article 13 of the power purchase agreement (PPA) was unable to restore "the same economic condition as if the change in law had not occurred".
The company has claimed the capital cost with respect to seven items exceeded the indicative costs provided by the procurers to the bidders for the power project in 2006. Besides, there has been an increase in the capital cost on account of Customs and excise duty on cement, steel and mining equipment.
In another petition, the company has claimed Rs 2,800-crore increase in capital cost due to a rupee devaluation of six% annually against 0.74% permitted by CERC in 2007. When RPower bid for the project in 2007, the rupee was Rs 40.27 a dollar but has since depreciated.
