Anil Sasi

New Delhi, Aug. 24

THE Central Electricity Regulatory Commission (CERC) on Wednesday announced that it would grant in-principle approval to the estimated financial cost of thermal power projects. The move is aimed at expediting financial closure of generation projects, a CERC release said.

As independent power producers (IPPs) are required to achieve financial closure before commencing projects, the central regulator plans to extend comfort in the form of upfront in-principle acceptance on estimated project cost to help them complete the task expeditiously. "The Commission has decided to amend existing tariff regulations to provide for in-principle acceptance of the capital cost of the project before commencement of construction," CERC said in a statement here.

Once the CERC grants in-principle approval to the estimates of project capital cost and financing plan, the same shall be treated as the guiding factor for applying prudence check on the actual capital expenditure, it said. However, the tariff shall be determined on the basis of actual audited expenditure for the project found prudent by the Commission, the statement added.

Request for grant of "in-principle" acceptance to project capital cost and financing plan would have to be made in the form of a petition with requisite details and a copy served to all prospective beneficiaries of the project. The projects can continue to come under regulated tariff regime. Accordingly, applications have been made before the Commission by IPPs for determination of tariff prior to commencement of construction of the generation station since it would give them a level of comfort.

(This article was published in the Business Line print edition dated August 25, 2005)
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