6. Fixed Charges
6.1. Project Cost
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.
Hon’ble Commission in its Tariff Order dated 5 March, 2010
considered the project cost as Rs.1395.37 Crores for FY
2009-10. The petitioner has taken this as the starting point
for FY 2010-11. In the earlier petition of FY 2009-10, the
Commission considered additional capitalization of Rs.43.47
Crores. However, as of now Rs.8.68 Crores have been
capitalized. More explanation has been provided while
discussing the return on equity..
The details of funding the project cost are given in Table
16 below:
Table 14: Project Cost –
Funding
|
|
S.No. |
Funding Source |
Amount
(Rs. Crores) |
|
Phase 1: 2x210 MW |
|
1 |
Project cost at the start of 2009-10 |
1350.39 |
|
2 |
Additional Capitalization in 2009-10 |
8.68 |
|
3 |
Total Project Cost |
1359.07 |
|
5 |
Outstanding Debt Component at the start of 2010-11
|
638.90 |
|
6 |
Total Debt |
|
|
7 |
Equity Component at the start of 2010-11 |
142.8 |
|
8 |
Equity infusion during 2010-11 |
26.70 |
|
9 |
Total Equity |
169.50 |
|
6.2. Elements of Fixed Costs
The fixed costs include:
The details are submitted below
for consideration of Honourable Commission
6.3. Interest on Loan
The loan outstanding as on 31.03.2010 is Rs 638.90 Crores.
The interest on the outstanding loan 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 15: 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 |
|
|
2010-11 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
|
|
30.00 |
13 |
3.9 |
|
|
Total 2010-11 |
638.90 |
|
|
638.90 |
|
83.06 |
The Petitioner’s inability to
repay loan is due to non-recovery of dues from JSEB.
The Commission has directed the petitioner for restructuring
the existing loan, however as submitted earlier petitioner has
approached the GoJ for converting the loan into equity.
The subject is under consideration and hence no restructuring
of loan has been done.
Therefore the Petitioner requests the Honourable Commission to
approve the interest charges for 2010-11.
The weighted average of interest rated for the petitioner is
13% and the same has been applied for calculating the
interest.
Table 16: Loan Outstanding and
Interest Charges for 2010-11 (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 |
|
|
2010-11 |
|
|
|
|
|
|
|
1 |
Bihar Govt. Loan |
608.90 |
|
- |
608.90 |
13 |
79.16 |
|
2 |
Jharkhand Govt. Loan |
30.00 |
|
|
30.00 |
13 |
3.9 |
|
|
Total 2010-11 |
638.90 |
|
|
638.90 |
|
83.06 |
|
|
Table 17: Interest Charges for
2010-11 (Rs. Crores)
|
|
|
|
|
|
|
|
|
2009-10 |
2010-11 |
|
Petition |
Approved |
Actual |
Petition
|
|
|
|
|
|
|
Interest on
Loan |
83.06 |
83.06 |
83.06 |
83.06 |
|
6.4. Depreciation
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 18a: Depreciation for the
Plant (Rs. Lakhs)
|
|
S.No. |
Asset Classification |
Asset at the beginning of 2009-10 |
Additions for the year |
Depreciation on Asset |
Depreciation on Additions |
Asset at beginning of 2010-11 (Rs.Lakhs) |
Rate of Depreciation (%) |
Depreciation on Asset (Rs.Lakhs) |
|
1 |
Land |
3864.70 |
|
|
0.00 |
3864.70 |
|
|
|
|
|
|
|
|
|
|
|
|
|
2 |
Buildings |
|
|
|
0.00 |
0.00 |
|
|
|
(a) |
Factory |
4210.34 |
|
151.57 |
0.00 |
4210.34 |
3.60% |
151.57 |
|
(b) |
Residential |
2287.43 |
11.22 |
41.17 |
0.20 |
2298.66 |
1.80% |
41.38 |
|
(c) |
Non-Residential |
1829.77 |
51.25 |
32.94 |
0.92 |
1881.02 |
1.80% |
33.86 |
|
|
|
|
|
|
|
|
|
|
|
3 |
Roads |
|
|
|
0.00 |
0.00 |
|
0.00 |
|
(a) |
Pucca Road |
1807.67 |
208.38 |
32.54 |
3.75 |
2016.04 |
1.80% |
36.29 |
|
(b) |
Boundary Walls
& Others |
253.14 |
98.80 |
4.56 |
1.78 |
351.94 |
1.80% |
6.33 |
|
|
|
|
|
|
|
|
|
|
|
4 |
Plant and
Machinery |
|
|
|
0.00 |
0.00 |
|
0.00 |
|
(a) |
Plant &
Machinery |
107232.71 |
|
3860.38 |
0.00 |
107232.71 |
3.60% |
3860.38 |
|
(b) |
D.G. Set |
216.16 |
|
12.97 |
0.00 |
216.16 |
6.00% |
12.97 |
|
(c) |
Refrigeration |
2.41 |
315.44 |
0.14 |
18.93 |
317.85 |
6.00% |
19.07 |
|
(d) |
Internal Wiring |
0.11 |
|
0.01 |
0.00 |
0.11 |
6.00% |
0.01 |
|
(e) |
Overhead Lines |
4890.78 |
|
176.07 |
0.00 |
4890.78 |
3.60% |
176.07 |
|
(f) |
Hydraulic Works |
7924.37 |
|
142.64 |
0.00 |
7924.37 |
1.80% |
142.64 |
|
(g) |
Tools and
Tackles |
41.14 |
0.12 |
1.48 |
0.00 |
41.25 |
3.60% |
1.49 |
|
(h) |
Miscellaneous
Equipment |
8.87 |
0.17 |
0.53 |
0.01 |
9.04 |
6.00% |
0.54 |
|
(i) |
Air
Conditioners |
34.87 |
5.93 |
6.28 |
1.07 |
40.80 |
18.00% |
7.34 |
|
(j) |
Cycle |
0.01 |
|
0.00 |
0.00 |
0.01 |
6.00% |
0.00 |
|
(k) |
Dozer |
282.25 |
145.14 |
50.81 |
26.12 |
427.39 |
18.00% |
76.93 |
|
(l) |
Computer |
31.70 |
8.55 |
1.90 |
0.51 |
40.25 |
6.00% |
2.41 |
|
(m) |
Vehicle |
16.61 |
|
2.99 |
0.00 |
16.61 |
18.00% |
2.99 |
|
(n) |
Weight Bridge |
14.45 |
|
0.00 |
0.00 |
14.45 |
|
|
|
(o) |
V-Sat |
21.66 |
|
0.00 |
0.00 |
21.66 |
|
|
|
|
|
|
|
|
|
|
|
|
|
5 |
Furniture &
Fixtures |
|
|
|
|
|
|
|
|
(a) |
Office
Equipment** |
17.94 |
0.17 |
1.08 |
0.01 |
18.12 |
6.00% |
0.01 |
|
(b) |
Furniture** |
49.25 |
23.21 |
2.95 |
1.39 |
72.46 |
6.0%0 |
0.04 |
|
|
Mobile |
0.93 |
|
0.00 |
0.00 |
0.93 |
|
|
|
|
Total (A) |
135039.28 |
868.38 |
4523.00 |
54.70 |
135907.65 |
|
4572.32 |
|
|
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 18 b: Depreciation for Head
Office (Rs. Lakhs) |
|
S.No. |
Asset Classification |
Asset at the beginning of 2009-10 |
Additions for the year |
Depreciation on Asset |
Depreciation on Additions |
Asset at beginning of 2010-11 (Rs.Lakhs) |
Rate of Depreciation (%) |
Depreciation Amount (Rs.Lakhs) |
|
1 |
Furniture &
Fixtures |
44.66 |
3.94 |
2.68 |
0.24 |
48.60 |
6% |
2.92 |
|
2 |
Close Circuit
Camera |
5.78 |
|
0.35 |
0.00 |
5.78 |
6% |
0.35 |
|
3 |
Photocopy
Machine |
3.86 |
|
0.23 |
0.00 |
3.86 |
6% |
0.23 |
|
4 |
Refrigerator |
0.64 |
|
0.04 |
0.00 |
0.64 |
6% |
0.04 |
|
5 |
Miscellaneous
Equipment |
9.94 |
6.52 |
0.60 |
0.39 |
16.46 |
6% |
0.99 |
|
6 |
Telephone &
Mobile Sets |
9.06 |
|
0.54 |
0.00 |
9.06 |
6% |
0.54 |
|
7 |
EPBX System |
5.69 |
|
0.34 |
0.00 |
5.69 |
6% |
0.34 |
|
8 |
Fax Machine |
0.68 |
|
0.04 |
0.00 |
0.68 |
6% |
0.04 |
|
9 |
Typewriter |
0.52 |
|
0.03 |
0.00 |
0.52 |
6% |
0.03 |
|
10 |
Television |
1.81 |
|
0.11 |
0.00 |
1.81 |
6% |
0.11 |
|
11 |
Computer &
Accessories |
18.01 |
3.43 |
1.08 |
0.21 |
21.44 |
6% |
1.29 |
|
12 |
Generator |
2.57 |
|
0.15 |
0.00 |
2.57 |
6% |
0.15 |
|
13 |
Air Conditioner
& Coolers |
16.88 |
2.30 |
3.04 |
0.41 |
19.19 |
18% |
3.45 |
|
14 |
Car |
14.15 |
|
2.55 |
0.00 |
14.15 |
18% |
2.55 |
|
15 |
Cycle |
0.02 |
|
0.00 |
0.00 |
0.02 |
6% |
0.00 |
|
16 |
V.Set |
0.57 |
|
0.03 |
0.00 |
0.57 |
6% |
0.03 |
|
|
Total (B) |
134.85 |
16.19 |
11.81 |
1.25 |
151.04 |
|
13.06 |
|
|
Table 18 c :
Depreciation on Additional Capitalization (Rs. Lakhs)
|
|
ACCOUNT HEAD |
Budget 2010-2011 |
Depreciation Rate (%) |
Depreciation
(2010-11) |
|
Plant &
Machinery |
4887.00 |
3.6% |
175.93 |
|
New EPABX |
|
6% |
0.00 |
|
New Dozer and
New Engine Dozer |
50.00 |
18% |
9.00 |
|
Air Compressor
for TH |
|
|
0.00 |
|
Pay Loader |
|
6% |
0.00 |
|
Electronic
Weigh Bridge |
|
6% |
0.00 |
|
Airconditioner |
10.00 |
18% |
- |
|
Air Compressor
for CHP |
75.00 |
6% |
4.50 |
|
Lift |
50.00 |
6% |
3.00 |
|
High Mast
towers |
5.00 |
6% |
0.30 |
|
Furniture &
Fixtures |
6.00 |
6% |
0.36 |
|
Computer &
other office equip |
5.00 |
6% |
0.30 |
|
Office
Equipment |
1.00 |
6% |
0.06 |
|
Land
|
|
- |
- |
|
Ambassador
car/Jeep |
|
18% |
- |
|
Mobile Sets |
|
|
- |
|
Tools & Tackles |
|
|
- |
|
Miscellaneous
Equipment |
|
|
- |
|
V-Sat |
|
|
- |
|
Dust
Suppression system for C-5A at SCH |
|
6% |
0.00 |
|
Dust
Suppression system for TH system |
|
6% |
0.00 |
|
ILMS for C-4A/B |
40.00 |
6% |
2.40 |
|
Modified and
improved VF |
80.00 |
6% |
4.80 |
|
Magnetic
Separator and Metal Detector in CHP |
80.00 |
6% |
4.80 |
|
Battery &
Battery Charger |
50.00 |
18% |
9.00 |
|
Total (A) |
5339.00 |
|
214.45 |
|
Depreciation to
be taken into tariff ( Prorata basis-assuming mid year as
ref point and hence dividing the total depreciation by 2) |
|
|
107.23 |
|
|
Table 18: Total
Depreciation (Rs.Crores)
|
|
|
Item |
2009-10 |
2010-11 |
|
Petition |
Approved |
Actual |
Petition
|
|
Depreciation for Plant |
45.17 |
45.17 |
45.23 |
45.85 |
|
Depreciation for HO |
0.12 |
0.12 |
0.12 |
0.13 |
|
Depreciation for Additional Capitalization |
0.26 |
1.06 |
0.28 |
1.07 |
|
Total |
45.55 |
46.34 |
45.63 |
47.06 |
It is requested that the
Honourable Commission may kindly approve the depreciation of
Rs. 47.06 Crores for the year 2010-11.
|
6.5. 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 been increasing substantially due to the age
of the plant and numerous outages experienced. Petitioner
incurred an expense of Rs.125.35 Cr as O&M expense for FY
2010. For FY 2011, petitioner projects O&M expense of 97.60
for FY 2011.
Table 19: 2009-10 O&M Expenses (Rs.
Crores)
|
|
|
|
|
|
|
|
Item |
2009-10 |
2010-11 |
|
Petition |
Approved |
Actual |
Petition
|
|
Employee Cost |
28.20 |
|
19.43 |
47.68 |
|
R&M
Expenses |
18.25 |
|
18.08 |
|
|
A&G
Expenses |
16.09 |
|
13.60 |
7.07 |
|
O&M (works and spares)
|
61.55 |
|
74.23 |
42.85 |
|
Total |
124.10 |
75.68 |
125.35 |
97.60 |
|
The major components of the O&M
expenses have been explained below:
a) Employee cost: The actual employee cost for FY 2009-10 was Rs. 19.43 Crores. For the year 2010-11 Petitioner projects
employee expense of Rs.47.68 Crores. This substantial increase
is on two accounts, one inclusion of CISF cost (Rs7.45
Crores).under this head and other is the impact of arrears of
VI pay commission, which Petitioner intends to disburse during
this year.
b) Repairs and Maintenance (R&M): The Petitioner observed an
R&M of Rs. 18.08 Crores in FY 2009-10. Petitioner is aligning
its accounts and hence is not projecting any expense in this
head for 2010-11.
c) Administrative and General (A&G) Expenses: Petitioner
incurred an amount of Rs. 13.60 Crores on account of A&G in
previous year. This year Petitioner projects an expense of
Rs.7.07 Crores which includes Rs.1.70 Crores of Corporate
Social Responsibility.
d) O&M Expenses: The petitioner projects an expense of Rs.
42.85 Crores on account of O&M for works and spares.
|
6.6. 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 as
observed during 2009-10 was Rs.22.51Crores. Hon’ble Commission
allowed interest rate of 12.25%, where as petitioner after
making immense efforts was only able to tie-up the loan at an
average rate of 12.5% only. With the increasing rates,
Petitioner would like to request Hon’ble Commission to kindly
consider a higher rate while truing the expenses for 2009-10.
For the FY 2011, Petitioner requests Commission to consider a
rate of 12.5% for FY 2011.
Table 20: Interest on Working
Capital (Rs. Lakhs)
|
|
|
|
|
|
|
|
Item |
2009-10 |
2010-11 |
|
Petition |
Approved |
Actual |
Petition
|
|
Cost of Coal for 1½ months |
29.22 |
19.63 |
25.98 |
35.72 |
|
Secondary Fuel Oil for 1 month |
2.03 |
1.36 |
2.14 |
2.48 |
|
Operation & Maintenance Expenses for 1 month |
10.34 |
6.31 |
10.45 |
8.13 |
|
Maintenance Spares @ 1% of Plant and Equipment |
11.72 |
11.72 |
11.72 |
11.72 |
|
Receivables Equivalent to 2 Months of Fixed and Variable
Charges |
91.06 |
66.28 |
139.80 |
112.98 |
|
Total Working Capital |
144.37 |
105.29 |
190.09 |
171.04 |
|
Interest on Working Capital (12.5% calculation, approved
cost @12.25%) |
18.05 |
12.90 |
23.76 |
21.38 |
|
6.7. Return on Equity
For last year, Petitioner in its additional submission
projected an equity infusion of Rs. 43.47 Crores for 2009-10
on account of additional capitalization proposed. However, as
per provisional balance sheet only 8.68 Crores of assets are
being reflected as capitalized. Petitioner would like to bring
into Commission’s notice, that Petitioner has actually used
the assets during the year 2009-10 only and the final accounts
are being prepared and would be made available shortly.
For the FY 2011, Petitioner plans to infuse equity of Rs.53.39
Crores on account of asset additions. Since, this infusion
would be spread over the year, for appropriately addressing
this, infusion of equity during 2010-11 is projected to be
26.70 Crores. The return on equity has been calculated at 14%
as per prevailing regulations. However, Petitioner would
request Commission to consider the RoE as per CERC regulations
for this year.
Table 21: Return on Equity (Rs.Crores)
|
|
|
|
|
|
|
|
Item |
2009-10 |
2010-11 |
|
Petition |
Approved |
Actual |
Petition
|
|
Equity
at the end of previous year |
138.04 |
134.21 |
134.21 |
142.8 |
|
Additional Equity |
0.741 |
43.47 |
8.68 |
26.70 |
|
Total
Equity |
138.77 |
177.59 |
142.8 |
169.50 |
|
Return
on Equity @14% |
19.43 |
21.82 |
19.99 |
23.73 |
|
6.8. Income
Tax
There is no assessable income for Income tax purpose and hence
no tax on income is proposed for the year 2010-11.
6.9.
Elements of Fixed Costs
The fixed costs for the year 2010-11 are summarized below:
Table 22:
Summary of Fixed Costs (Rs.Crores)
|
|
Particular |
2010-11 |
|
Interest on Loan |
83.06 |
|
Depreciation |
47.06 |
|
O&M Expenses |
97.60 |
|
Interest on Working Capital |
21.38 |
|
Return on Equity |
23.73 |
|
Income Tax |
- |
|
Total |
272.83 |
The Petitioner
requests Honorable Commission to kindly approve the proposed
fixed charges of Rs.272.83 Crores and expected net generation of
2507 MU. |
