Cancelling of March 30 date to hit RPower revenues as it loses a fiscal

In a setback to the Anil Ambani group, the Central Electricity Regulatory Commission has cancelled the commissioning date of the Sasan Power Ltd’s ultra mega power project on the ground that the company has flouted norms.

The norms say that, to be declared ‘commissioned’, a power unit must operate for 72 consecutive hours at, or above, 95 per cent of its contracted capacity. But the data available with Western Regional Load Despatch Centre show that the 3,960 MW Sasan Power generated only 153 MW and hit a maximum of 165 MW on March 30, 2013 — the date of commissioning — against the required 660 MW (or 95 per cent of that level).

This development is likely to impact revenue generation for Sasan Power’s promoters Reliance Power Ltd, as the first financial year of operation will now stand pushed back by a year, to 2013-14. According to the norms, the company’s first fiscal of operations is considered based on the date of commissioning. And from the third year, the power tariff will increase by 70 per cent.

The project was commissioned after independent engineers certified the commissioning date. Sasan is the first coal-based UMPP in the country, with six units of 660 MW each.

“Since the tested capacity was only 101.38 MW, against the required tested capacity (95 per cent of the contracted capacity) of the unit, we direct Sasan Power to carry out fresh testing in accordance with the power purchase agreement to achieve the unit tested capacity of not less than 95 per cent of the contracted capacity as existing on the effective date,” said the Commission in its order dated June 20. The order by CERC Members M. Deena Dayalan and V.S. Verma and Chairperson of the Central Electricity Authority A.S. Bakshi said that failure to achieve at least 95 per cent of the contracted capacity shall be considered as failure in the commissioning test and the seller is required to re-take the test with notice to the procurers and independent engineers.

“We take a serious view of the lapse on the part of the independent engineer in issuing a certificate for the commercial operation date without adhering to the express provision of the power purchase agreement,” the Commission said.

Power generated from Sasan UMPP is sold to 14 distribution utilities across seven States at 70 paise /unit. This tariff was for the first and second year of operations.

RPower to knock at Appellate Tribunal’s door

RPower has said that it will approach the Appellate Tribunal against the Central Electricity Regulatory Commission’s order.

A company spokesperson told Business Line that the “Western Region Load Dispatch Centre’s order is not tenable in law. Sasan Power is approaching the Appellate Tribunal to quash the untenable order of the Commission.”

The spokesperson said the load dispatch centre has no locus standi to question the date of commercial operation declared by the company.

“The first unit of 660 MW, of the 4,000 MW Sasan UMPP, achieved commercial operations, as certified by the independent engineer, appointed jointly by the procurers and Sasan Power,” the spokesperson said, adding that the certification was duly accepted in writing by all the 14 buyers.

The petition filed by the load dispatch centre was listed before the Commission on May 23 for hearing on maintainability only, the spokesperson said.

He added: “It is surprising that CERC, vide order dated June 20, chose to deal with the merits of the independent engineer’s certificate without even hearing Sasan Power or the independent engineers.”

(This article was published on June 26, 2013)
XThese are links to The Hindu Business Line suggested by Outbrain, which may or may not be relevant to the other content on this page. You can read Outbrain's privacy and cookie policy here.