Queries raised by Director (Tariff) on ARR and Tariff

Application ofOHPC for FY 2011-12

on02.02.2011

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• OHPC has claimed an interest amount for Upper Indravati Project of Rs.38.21 cr. @7% on the Govt. of Orissa loan of Rs.545.86 cr., for the year 2011-12. The outstanding loan as on 01.04.2010 was Rs.576.09 cr. The Commission had allowed depreciation of the order of Rs.30.23 cr. in 2010-11 tariff order for OHPC. Therefore, the balance loan outstanding as on 01.04.2011 is Rs.576.09 cr. minus Rs.30.23 cr. which equals to Rs.545.86 cr. The present claim of OHPC in respect of interest on this principal amount is Rs.38.21 cr.

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• The Govt. of Orissa notification dtd.06.01.2010 had mentioned that the State Govt. investment actually made in Upper Indravati Project, excluding equity, should yield a return to the State Govt. with effect from FY 2010-11 after loan liabilities of PFC are cleared. OHPC has claimed the interest amount based on the above notification.

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• However, if we allow this Rs.38.21 cr. towards interest payment, the average tariff of Upper Indravati comes to 99.92 p/u as projected by OHPC. If we do not allow this interest amount the average tariff of Upper Indravati comes down to 80.25 p/u approximately i.e. a reduction of the order of 19.67 p/u. Since the net energy sold by Upper Indravati accounts to 35% of total hydro energy sold by OHPC, this interest component of Upper Indravati shall have a significant impact on average tariff of OHPC. This is worked out at 6.8 p/u.

• OHPC should, therefore, pursue this matter of interest payment with the State Govt. to convert this as interest free loan in order to avoid a tariff shock to the consumers. In any case the Commission has already allowed depreciation of the order of Rs.30.23 cr. to Upper Indravati during 2010-11. For the FY 2011-12, OHPC has already claimed the same amount under the head depreciation which the Commission may allow towards principal repayment for this State Govt. loan.

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• OHPC has claimed license fee for consumption of water for generation of electricity to the tune of Rs.5.676 cr. for 2011-12 to be paid to the Govt. as per the Gazette Notification dtd.01.10.2010. The impact of this claim is 1 p/u for the entire energy sold by OHPC. Since OHPC is a Govt. owned corporation and the water is used for non-consumptive purpose, the State Govt. may waive this license fee for OHPC.

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