Financial Daily from THE HINDU group of publications
Monday, Jan 28, 2002
Financial Daily from THE HINDU group of publications Monday, Jan 28, 2002 |
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Government
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States Directive to KPTCL may lead to reopening of PPA C. Shivkumar
BANGALORE, Jan. 27 THE Karnataka Government's directive to the Karnataka Power Transmission Corporation Ltd (KPTCL) to honour fixed charge commitments of Tanir Bhavi Power Company Ltd (TBPCL) is now finally expected to lead to the reopening of the power purchase agreement (PPA) by the regulatory commission. Sources said the directive would imply that KPTCL would have to revise its original tariff filing before the State Electricity Regulatory Commission. KPTCL had sought a tariff increase in its application before SERC last month. But in making this application, the fixed charge component of power from TBPCL had been estimated at 2.8 US cents per unit as against 4 US cents a unit demanded by TBPCL. TBPCL's demand was contested by the power utility. The State Government had intervened in December 2001 and directed KPTCL that the charges would have to be made at 4 US cents a unit, as demanded by the IPP. In acceding to the State Government's directive, KPTCL would have to further revise the tariff filing to SERC upwards, sources said. TBPCL is joint venture between the GMR Vasavi group and PSEG of the US and is operating a 200-MW barge mounted combined cycle power plant near Mangalore. As per the PPA obtained by Business Line, KPTCL is committed to meeting fixed charges at 85 per cent plant load factor (PLF) which translates into 1489.2 million units per annum. Under the PPA between KPTCL and TBPCL, the dollar denominated fixed charges was capped at 4 US cents per unit (clause 7.4 of the PPA). The fixed charges for the first year as mentioned in the PPA is $42.6 million and progressively comes down to $30.6 million towards the seventh year. This number assumes a dollar denominated 16 per cent return on foreign equity, principal repayment of $20 million on a (debt component of $140 million) and an interest of $13 million. Accordingly, the foreign currency denominated fixed charge should work to 2.8 US cents in the first year, 2.7 cents in the second year, 2.59 cents the third year, 2.45 cents in the fourth year, 2.32 cents in the fifth year, 2.19 cents in the sixth year and 2.05 cents in the seventh year. The progressive reduction in fixed charges is in line with amortisation of the capital costs. This, accordingly, implies that the foreign currency denominated fixed charges should progressively come down. However, TBPCL has charged a flat 4 cents a unit fixed charge for the entire seven years, instead of it progressively coming down to reflect the amortisation payments.
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