The Central Electricity Authority in a recent letter to the Central Electricity Regulatory Commission has said that the project capacity of the Karcham Wangtoo Hydro Electic Project in Himachal Pradesh will have to be maintained at 1,000 MW.

The project is part of the two hydro plants of Jaiprakash Power Ventures Ltd for which Sajjan Jindal’s JSW Energy had agreed to pay ₹ 9,700 crore. However, the deal’s enterprise valuation was based on the Karcham Wangtoo project having 1,091 MW generation capacity and 300 MW for the Bapsa II Project, both in Himachal Pradesh.

“As a result, for tariff determination of Karcham Wangtoo, the Central Electricity Regulatory Commission would disallow the excess project cost which could have an impact on the Jaiprakash Power Ventures’ deal with JSW Energy,” an industry official said.

The board of JSW Energy and Jaiprakash Power Ventures Ltd had agreed on a base enterprise value of for the two hydro power plants on November 16, 2014.

However, the financial closure of the deal was to take place in 2015-16. The deal value was also subject to mutually agreed adjustments.

JSW Energy did not comment on whether the Central Electricity Authority’s decision will impact the deal.

The Karcham Wangtoo project’s capacity caused an earlier agreement with Reliance Power to break down. While the Jaypee Group has installed a 1,200 MW capacity at the location, its techno-economic clearance was for only 1,000 MW.

Both the CEA and the Himachal Pradesh State Government had expressed safety concerns on allowing the plant to operate at 1,200 MW capacity.

Jaiprakash Power Ventures while submitting the tariff petition for 2014-19 had stated a project cost of ₹ 6,900 crore for 1,091 MW for the Karcham Wantoo project.

An official source said that while the latest development may not lead to a breakdown of the JSW Energy and Jaiprakash Power Ventures’ deal, the valuation may be reworked.