Aes, Review Panel Lock Horns Over Computation Of Tariff

The contentious issues this time are the working capital cost and performance incentive rate calculations.

The matter has been forwarded to the state government.

State energy department sources said the state may seek the Centres help in thrashing out a solution as interpretation of the central notification on tariff calculation is fundamental to the issue.

During the negotiations, AES insisted on basing the computation of working capital, including the cost of coal and oil cost, on the actual plant load factor of the unit concerned while the review committee said the calculation should be based on the minimum generated PLF of 68.5 per cent, sources said.

 

Regarding incentive income, AES has offered to bear the income tax and ruled out any cut in the incentive rate. The review panel wanted the US firm to do both.

Earlier, AES had offered to bring down the incentive rate in the initial years of operation to keep the start off tariff rate of the project down at Rs 1.90 per unit, as demanded by the state government.

Under the terms of this proposal, AES was supposed to charge incentives at the rate of 0.35 per cent for every percentage increased in PLF above 68.5 per cent in the first year of operation.

The incentive rate then would have gradually increased to 0.5 per cent in the second year and 0.6 per cent in the third year before stabilising at 0.7 per cent for the rest of the plant life from the fourth year onwards.

However, at the final round of renegotiation, the company withdrew this proposal and offered to exclude the income tax on incentive income from the tariff calculation while insisting on an incentive rate of 0.7 per cent from the very first year of operation.

A review committee member said the state is liable to send the details of renegotiation discussion to the Central Electricity Authority (CEA), which is slated to give a fresh techno-economic clearance to the beleaguered project, following the review.

After the CEA gives its approval, the power purchase agreement (PPA) will be revised accordingly.

Thereafter, fresh guarantee and counter-guarantee will be sought from the state and Union governments respectively, sources said. The whole process will take at least another three to four months, they added.

On another front, AES has agreed to a rebate of 2.5 per cent on the energy charges to the state government on timely payment of bills.

The United States company had refused to provide for such rebates in the earlier PPA.

Grid Corporation of Orissa (Gridco), the primary purchaser of power in the state, will open and maintain a months revolving letter of credit (LoC) in a nationalised bank to avail of the rebate.

With the energy bills of AES expected to range between Rs 500 and Rs 600 crore per annum, the rebate is expected to result in a net saving of Rs 15 crore to the state exchequer.