CEPA tariff evalution norms soon

To discuss this aspect, a meeting will be fixed shortly with the five beneficiary states, who have shown interest in buying power from this project.

Sources disclosed that earlier Power Grid was given the mandate to finalise the transmission services agreement for which a USA based consultant Freshfields, was also engaged.

However, number of issues related with the deemed generation and deemed commissioning could not be finalised. This issue will nowbe resolved by the SIG.

The members of the SIG group met the top brass of the power ministry and the public sector power undertakings on Wednesday this week to finalise the modus operandi for offering the mega power projects to the private sector. Apart from discussions on other mega power projects, CEPA project was also discussed at length.

Sources disclosed that in the meeting, the group opined that since there is no precedent or comparable case to gauge the reasonableness of tariff, as negotiated by the promoters of CEPA, the SIG will like to await the outcome of the tariff from one of the other mega power projects being set up under the new policy through the international competitive bidding route.

Meanwhile, SIG will come out with a feasible PPA, TSA and a FSA for the project. Power ministry officials said that the decision to place the CEPA project under the SIG8217;s purview was taken as further evaluation of the negotiated tariff for this project by the Central Electricity Authority CEA wasposing legal hassles.

CEPA was the only project whose tariff evaluation was done through the negotiations route, after which a tariff cost of 5.13 cents per kilo watt hour was worked out. However, at the same time, Sections 30 d and e of the Electricity Supply Act gave CEA the right to do a economic appraisal of the tariff, as is done for any other project under the MoU route.

quot;This was, however, objectionable to the promoters as the economic appraisal by CEA was being done on the already negotiated tariff and not on the tariff quoted by the promotersquot;, sources said.

In the recent mega power policy approved by the government, CEPA was included in the list of other mega power projects. This was done to take CEPA out of CEA8217;a ambit and to place it under the SIGs purview, so as to avoid any further appraisal by CEA.

The existing promoters of this project-Southern Electric of USA, who bought 80 per cent of shareholding of CEPA Ltd of Hong Kong are currently in the process of finalising the fuelsupplies for the project.

Popularly known as the CEPA project will be set up at Hirma in Orissa will have six units of 660 MW each and is likely to be set up in two phases.

Sources said that owing to escrow problems in the state of Madhya Pradesh and Gujarat, the government is planning to put up this project in two stages, the first stage would comprise of four units which would supply power to the Northern states and the two units for the Western states could come up when their security cover is acceptable to the project lenders.