|
4.
Fixed Charges
The station
comprises of 2 units of 210 MW each, the first unit was
commissioned in September 1996 and the second unit in September
1997. The project cost as admitted by the petitioner in 2007-08
was Rs.1355.58 Crores. In the year 2008-09 assets worth Rs.0.24
Crores were capitalized during the year. An amount of Rs.0.12
Crores has been considered for this year, remaining amount would
be considered in next year.(Details attached in depreciation
schedule). Also, additional capitalization of Rs. 38.Crores on
account of closing of contract with M/s BHEL has been done in
this year hence in total an amount of Rs. 38.12 Crores has been
capitalized during 2008-09.
The details of
funding the project cost are given in Table 16 below:
Table 16:
Project Cost
|
S.No. |
Funding Source |
Amount
(Rs.
Crores) |
|
Phase 1: 2x210 MW |
|
1 |
Project cost at the start of 2008-09 |
1355.58 |
|
2 |
Additional Capitalization in 2008-09 |
38.12 |
|
3 |
Total Project Cost |
1393.70 |
|
5 |
Outstanding Debt Component at the start of 2008-09
|
638.90 |
|
6 |
Debt Component for additional capitalization |
0.084 |
|
7 |
Total Debt |
638.984 |
|
8 |
Equity Component at the start of 2008-09 |
100 |
|
9 |
Equity Component of additional capitalization
|
38.036 |
|
10 |
Total Equity |
138.036 |
The majority of
the Phase 1 of the project was financed by the State
Government while about Rs.158 crores (11.67 % of the
funding) was financed by PFC. The entire loan obtained from
PFC has been repaid completely along with interest. The
outstanding loan is from State Government only. The
Petitioner has requested the State Government to reduce the
interest rate in view of the lower interest rates provided
by banks. Response from the State Government is still
awaited.
The Petitioner is
also planning to extend (Phase 2) the existing generating
project, by adding three new units of 210 MW each, the
capital cost of which for the FY 2007-08 is estimated to be
Rs.354 crores. This is the Phase 2 of the generating project
which will financed by a mix of debt in the form of funds
from PFC and equity in the form of share capital
contribution from Government of Jharkhand. It is expected to
procure about Rs.284 crores from PFC and the remaining from
the Government of Jharkhand. The decision on the expansion
plan is expected early next year.
|
The fixed costs include:
The details are submitted below for
consideration of Honourable Commission
The loan
outstanding as on 31.03.2009 is Rs.83.06 crores. As per the
terms and conditions the State Government loan is repayable in
15 equal installments. But the Petitioner could not meet the
repayment obligation due to insufficient funds on account of
non-payment of electricity charges by the Jharkhand State
Electricity Board (JSEB).
Table 17:
Loan Outstanding and Interest Charges (Rs.Crores)
|
S.No |
Name of the Institution |
Balance at the beginning of the year |
Loan received during the year |
Repayment During the year |
Balance O/S at the end of the year |
Rate of Interest
% |
Interest for the year |
|
|
2005-06 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
- |
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
19.00 |
- |
49.00 |
13.25 |
6.49 |
|
|
Total 2005-06 |
638.90 |
19.00 |
- |
657.90 |
|
85.65 |
|
|
2006-07 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
49.00 |
8.00 |
- |
57.00 |
13.25 |
7.55 |
|
|
Total 2006-07 |
657.90 |
8.00 |
- |
665.90 |
|
86.71 |
|
|
2007-08 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
|
|
30.00 |
13 |
3.9 |
|
|
Total 2007-08 |
638.90 |
|
|
638.90 |
|
83.06 |
|
|
2008-09 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
|
|
30.00 |
13 |
3.9 |
|
|
Total 2008-09 |
638.90 |
|
|
638.90 |
|
83.06 |
|
The Petitioner’s
inability to repay loan is due to non-recovery of dues from JSEB.
Therefore the Petitioner requests the Honourable Commission to
approve the interest charges for 2008-09.
Table 18: Loan Outstanding and Interest Charges for 2008-09 (Rs.Crores)
|
S.No |
Name
of the Institution |
Balance
at the beginning of the year |
Loan
received during the year |
Repayment During the year |
Balance
O/S at the end of the year |
Rate of
Interest
% |
Interest
for the year |
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
- |
- |
30.00 |
13 |
3.9 |
|
|
Total 2008-09 |
657.90 |
- |
- |
665.90 |
|
83.06 |
|
The Petitioner has
calculated the depreciation on its fixed assets on historical
capital cost of the asset. Depreciation is calculated annually
as per the straight line method as per rates of depreciation
prescribed in the schedule attached at Appendix-II of the JSERC
(Terms and Conditions for Determination of Thermal Generation
Tariff) Regulations, 2004, and depreciation cost has been
arrived at accordingly.
Table 19a: Depreciation for the Plant (Rs.
Crores)
|
S.No |
Asset Classification |
Asset value at the beginning of 2008-09 |
Rate of depreciation (%) |
Depreciation
Amount (Rs.Cr.) |
|
1 |
Land |
38.64 |
- |
- |
|
Buildings |
|
|
|
|
1 |
Factory Buildings |
42.10 |
3.60 |
1.52 |
|
2 |
Residential Buildings |
22.82 |
1.80 |
0.41 |
|
3 |
Non Residential Buildings |
17.61 |
1.80 |
0.32 |
|
Roads |
|
|
|
|
1 |
Pucca Roads |
17.77 |
1.80 |
0.32 |
|
2 |
Boundary Wall & Others |
2.23 |
1.80 |
0.04 |
|
Plant and Machinery |
|
|
|
|
1 |
Plant & Machinery |
1072.32 |
3.60 |
38.60 |
|
2 |
D.G.
Set |
2.16 |
6.00 |
0.13 |
|
3 |
Refrigeration |
0.02 |
6.00 |
0.001 |
|
4 |
Internal Wiring |
0.00 |
6.00 |
0.00 |
|
5 |
Overhead line |
48.91 |
3.60 |
1.76 |
|
6 |
Hydraulic works |
79.24 |
1.80 |
1.43 |
|
7 |
Tools and Tackles |
0.41 |
3.60 |
1.48 |
|
8 |
Miscellaneous Equipment |
0.09 |
6.00 |
0.005 |
|
9 |
Air
Conditioners |
0.33 |
18.00 |
0.06 |
|
10 |
Dozers |
2.82 |
18.00 |
0.51 |
|
11 |
Computers |
0.27 |
6.00 |
0.02 |
|
12 |
Furniture and Fixtures |
0.46 |
6.00 |
0.03 |
|
13 |
Office equipment |
0.16 |
6.00 |
0.01 |
|
Total |
1207.19 |
|
45.16 |
|
As per the JSERC
regulations, the residual life of an asset is considered as 10%
and depreciation is allowed upto a maximum of 90% of the
historical capital cost of the asset. Therefore, depreciation is
not calculated on the assets where the cumulative depreciation
has reached 90% of the historical cost of such assets.
Table 19 b :
Depreciation for Head Office (Rs. Crores)
|
S.No |
Asset Classification |
Asset value at the beginning of 2008-09 |
Rate of depreciation (%) |
Depreciation
Amount (Rs.Cr.) |
|
1.
|
Furniture & Fixtures |
0.39 |
6.00 |
0.02 |
|
2.
|
Close Circuit Camera |
0.06 |
6.00 |
0.0035 |
|
3.
|
Photocopy Machine |
0.04 |
6.00 |
0.0023 |
|
4.
|
Refrigerator |
0.064 |
6.00 |
0.004 |
|
5.
|
Miscellaneous Equipment |
0.06 |
6.00 |
0.0035 |
|
6.
|
Telephone & Mobile Sets |
0.076 |
6.00 |
0.0046 |
|
7.
|
EPBX System |
0.06 |
6.00 |
0.0034 |
|
8.
|
Fax Machine |
0.006 |
6.00 |
0.0004 |
|
9.
|
Typewriter |
0.005 |
6.00 |
0.0003 |
|
10.
|
Television |
0.001 |
6.00 |
0.0011 |
|
11.
|
Computer & Accessories |
0.16 |
6.00 |
0.0097 |
|
12.
|
Generator |
0.025 |
6.00 |
0.0015 |
|
13.
|
Air Conditioner & Coolers |
0.17 |
18.00 |
0.03 |
|
14.
|
Car |
0.14 |
18.00 |
0.026 |
|
15.
|
Cycle |
0.00 |
6.00 |
0.00 |
|
16.
|
V.Set |
0.005 |
6.00 |
0.00 |
|
17.
|
Capital Work in Progress |
0.52 |
- |
- |
|
Total |
1.74 |
|
0.11 |
|
Table 19 c : Depreciation on Additional Capitalization (Rs.
Crores)
|
S.No |
Asset Classification |
Asset value at the beginning of 2008-09 |
Rate of depreciation (%) |
Depreciation
Amount (Rs.Cr.) |
|
1.
|
Plant & Machinery |
0.00 |
0.00 |
0.00 |
|
2.
|
New EPABX |
0.00 |
0.00 |
0.00 |
|
3.
|
New Dozer |
0.00 |
0.00 |
0.00 |
|
4.
|
Air Compressor
for TH |
0.00 |
0.00 |
0.00 |
|
5.
|
New Engine for
Dozer |
0.00 |
0.00 |
0.00 |
|
6.
|
Pay Loader |
0.00 |
0.00 |
0.00 |
|
7.
|
Electronic Weigh
Bridge |
0.04 |
0.00 |
0.00 |
|
8.
|
Airconditioner |
0.01 |
0.00 |
0.00 |
|
9.
|
Air Compressor
for CHP |
0.00 |
0.00 |
0.00 |
|
10.
|
Lift |
0.00 |
0.00 |
0.00 |
|
11.
|
High Mast towers |
0.00 |
0.00 |
0.00 |
|
12.
|
Furniture &
Fixtures |
0.09 |
0.01 |
0.01 |
|
13.
|
Computer & other
office equip |
0.02 |
0.00 |
0.00 |
|
14.
|
Office Equipment |
0.08 |
0.00 |
0.00 |
|
15.
|
Land
|
0.00 |
0.00 |
0.00 |
|
16.
|
Ambassdor
car/Jeep |
0.00 |
0.00 |
0.00 |
|
17.
|
Mobile Sets |
0.00 |
0.00 |
0.00 |
|
18.
|
Tools & Tackles |
0.00 |
0.00 |
0.00 |
|
19.
|
Miscellaneous
Equipment |
0.00 |
0.00 |
0.00 |
|
20.
|
V-Sat |
0.00 |
0.00 |
0.00 |
|
Total |
0.24 |
|
0.02 |
|
Table
19: Total Depreciation
|
|
S.No |
Item |
Depreciation
Amount (Rs.Cr.) |
|
1.
|
Deprectaion
for Plant |
45.17 |
|
2.
|
Depreciation
for HO |
0.11 |
|
3.
|
Depreciation
for Additional Capitalization |
0.00 |
|
Total |
45.28 |
|
It is requested
that the Honourable Commission may kindly approve
the depreciation at Rs. 45.28 crores for the year
2008-09.
|
|
|
4.5 Operation and Maintenance (O&M)
Expenses
The O&M expenses include expenditure
incurred in the operation and maintenance of the generating
station, including employee cost, repairs and maintenance,
consumption of stores and spares, water charges, ash disposal,
pollution control cess, insurance and other administrative and
general expenses of the Petitioner corporate office at Ranchi.
The maintenance expenditure has increased substantially due to
the age of the plant and numerous outages experienced. In the
previous tariff order for FY 2007-08 the Honourable Commission
had approved the normative O&M expenses as per the JSERC (Terms
and Conditions for Determination of Thermal Generation Tariff)
Regulations, 2004 for plants set prior to 01.04.2004 that is
2.5% of the capital cost escalated at 6% per annum from the year
of commissioning and also an amount of Rs.9.23 crores on account
of overhaul of unit 1. This year due to higher R&M costs the
petitioner has incurred expense on account of O&M of Rs.84.12
Crores.
Table 20: O&M Expenses
|
Item |
(Rs. Crores) |
|
Employee Cost
|
15.32 |
|
A&G Expenses |
10.59 |
|
R&M |
11.26 |
|
O&M including Capital
Expenditure |
46.85 |
|
Total |
84.12 |
|
|
The major
components of the O&M expenses have been explained below:
a) Employee cost:
The actual employee cost for FY 2007-08 was Rs.13.27 crores
The employee cost increases continuously on account of
inflation, increment in salaries and wages,
honorarium/incentives and increased demand for trained
manpower on account of increased development in
infrastructure sectors. For the year 2008-09 the employee
cost is at Rs. 15.12 Crores. Additional Rs. 20 Lakhs has
been made on the account of Fringe Benefit Tax on the
necessary employee expenses. This has been added in the
employee cost hence total employee cost is Rs.15.32 Crores
b) Repairs and Maintenance (R&M):
The Petitioner has to carry out regular repairs and
maintenance of its generating plant to ensure maximum
generation by optimum utilization of generating assets. The
Petitioner undertakes preventive maintenance activities for
all critical assets in addition to breakdown maintenance.
The actual R&M costs in the year 2007-08 are Rs.4.30 crores.
The Petitioner requests the Honourable Commission to approve
Rs.11.25 crores for FY 2008-09 inclusive of R&M expenditure
and other maintenance expenditures to keep its plant
running. This is on account of civil works in the
non-residential buildings and power house road and drains.
c) Administrative and General (A&G) Expenses:
A&G expenditure represents cost of general administration
such as rent, rates, taxes, legal expenses, professional
fees, conveyance and traveling expenses, printing and
stationery, bank charges, etc. In the year 2007-08 A&G
expenses was Rs.6.88 Crores. For the FY 08-09 the Petitioner
has incurred an expense of Rs.10.58 Crores
d) O&M Expenses:
The petitioner has incurred an amount of Rs. 8.98 Crores on
account of Annual Maintenance Contract and Other Operation
and Maintenance Contract.
e) Capital Maintenance:
The Petitioner had incurred Rs. 86.82 crores towards capital
maintenance during the last 5 years period, that is 2002-03
to 2006-07, including towards
spares. These charges are being treated as deferred
revenue expenses and proposed to be charged to revenue
account in 5 annual installments. The year wise details of
capital maintenance expenses and the amounts proposed to be
charged to revenue account are detailed in the table below: |
Table 21:
Year wise Capital Maintenance Expenditure (Rs. Lakhs)
|
|
Year |
Amount |
Proposed to be charged to Revenue in 5 annual
installments |
|
|
|
2002-03 |
2003-04 |
2004-05 |
2005-06 |
2006-07 |
2007-08 |
2008-09 |
|
2002-03 |
886.45 |
177.29 |
177.29 |
177.29 |
177.29 |
177.29 |
|
|
|
2003-04 |
45.46 |
- |
9.09 |
9.09 |
9.09 |
9.09 |
9.09 |
|
|
2004-05 |
1209.48 |
- |
- |
241.90 |
241.90 |
241.90 |
241.90 |
241.9 |
|
2005-06 |
3267.00 |
- |
- |
- |
653.40 |
653.40 |
653.40 |
653.4 |
|
2006-07 |
2856.29 |
- |
- |
- |
- |
571.26 |
571.26 |
571.26 |
|
2007-08 |
5519.20 |
- |
- |
- |
- |
- |
1103.84 |
1103.84 |
|
2008-09 |
6134.86 |
|
|
|
|
|
|
1226.97 |
|
Total |
|
177.29 |
186.39 |
428.28 |
1081.68 |
1652.94 |
2579.49 |
3797.37 |
|
The amount proposed to be charged
during 2008-09 is Rs.37.97 crores.
Interest on
Working Capital:
In accordance with
clause (v) of Regulation 21 of the JSERC (Terms and Conditions
for Determination of Thermal Generation Tariff) Regulations,
2004, working capital in case of coal based fired generation
stations shall cover:
-
Cost of coal for 1½ months for
pithead generating stations and 2 months for non-pithead
generating stations, corresponding to the target availability
-
One month stock of secondary fuel
oil
-
O&M expenses for 1 month
-
Maintenance spares @ 1% of plant
and equipment cost as on 01.04.2004 or the date of commercial
operation, whichever is later; and
-
Receivables equivalent to 2 months
of fixed and variable charges for sale of electricity
calculated on target availability
The interest on
working capital is estimated at Rs.15.75 crores for the year
2008-09 as detailed in the Table 22 below:
Table 22: Interest on Working Capital (Rs. Lakhs)
|
S.No |
Particulars |
2008-09
|
|
1 |
Cost
of Coal for 1½ months |
2582.21 |
|
2 |
Secondary Fuel Oil for 1 month |
201.08 |
|
3 |
Operation & Maintenance Expenses for 1 month |
701.01 |
|
4 |
Maintenance Spares @ 1% of Plant and Equipment |
1172 |
|
5 |
Receivables Equivalent to 2 Months of Fixed and Variable
Charges |
7899.82 |
|
6 |
Total Working Capital |
12556.12 |
|
7 |
Interest on Working Capital @ 12.5% |
1569.51 |
|
For the last so many years, the
Petitioner has been asking return on its initial equity
contribution of Rs.100 Crores. The petitioner had also not asked
any return on the additional capitalization during these years.
In the year 2007-08 the petitioner
made the contract settlement and paid Rs.38 Crores to M/s BHEL
Limited. This amount was a part of project cost but as this was
not settled, the petitioner in the larger interest of consumer
did not include the amount in project cost.
Petitioner has closed this contract
and paid the required amount and hence now request Hon’ble
Commission to admit this cost. Also Petitioner would like to
request the Hon’ble Commission to treat the total amount as
equity contribution as complete payment has been made through
its reserves and also no return or interest has been charged
earlier. Petitioner would also like to draw the point that its
equity contribution is much lower than the capped percentage of
30% as investments made through its reserves has not been added
in equity component.
Petitioner has also capitalized
assets worth Rs. 0.24 Crores during the year, of which Rs.0.12
Crores has been capitalized in this year. Applying normative
debt equity ratio of 70:30, an additional equity contribution of
Rs. 0.036 Crores has been considered. The total equity
contribution is Rs.138.036 Crores. Petitioner requests Hon’ble
Commission to kindly approve the return of Rs.19.32 Crores as
Return on equity for the FY 2008-09.
Table 23:
Return on Equity (Rs.Crores)
|
Particular |
Proposed for 2008-09 (Rs.Crores) |
|
Equity |
138.036 |
|
Return
on Equity (%) |
14% |
|
Return
on Equity |
19.32 |
|
There is no
assessable income for Income tax purpose and hence no tax on
income is proposed for the year 2008-09.
The fixed
costs for the year 2008-09 are summarized below:
Table 24:
Summary of Fixed Costs (Rs.Crores)
|
Particular |
2008-09 |
|
Interest on Loan |
83.06 |
|
Depreciation |
45.28 |
|
O&M
Expenses |
84.12 |
|
Interest on Working Capital |
15.70 |
|
Return
on Equity |
19.32 |
|
Income
Tax |
- |
|
Total |
247.48 |
|
The proposed fixed charges of
Rs.247.48Crores and expected net generation of 2037 MUs the
Petitioner requests the Honourable Commission to kindly approve
this. |
