The Central Electricity Regulatory Commission (CERC) has refused to grant compensation to Reliance Power against the unforeseen rise in foreign exchange prices which has significantly enhanced the debt servicing obligations for the company’s 4,000 mega-watt (MW) Sasan energy plant.
The organization claimed that due to depreciation of the Indian Rupee, the Sasan plant’s US dollar-denominated debt service obligation more than the repayment period will be about Rs 11,392 crore, against Rs 6,516 crore estimated in 2007 when the organization had submitted the bid for the project.
In 2014, the regulator had currently held that the depreciation of the rupee is not a force majeure occasion. The newest petition relied on the Supreme Court’s April 2017 order, which had extended a lifeline to 3 troubled imported-coal-based energy plants of Tata, Adani and Essar in Gujarat by enabling CERC to revise tariffs to facilitate pass-via of future fuel value escalation. The apex court had mentioned CERC can permit tariff revisions “in a situation where there are no guidelines framed at all or where the guidelines do not deal with a given situation”.
The exchange price in July 2007 was Rs 40.27 per US dollar and the depreciation price was estimated at .74% per annum. The rupee has depreciated by about 5% per annum given that then. Reliance Power also added that its claims have to be regarded as maintaining public interest in thoughts given that the plant’s levelised tariff of Rs 1.2/unit is the least expensive thermal energy in the nation. The plant supplied energy to Uttar Pradesh, Madhya Pradesh, Delhi, Rajasthan, Haryana, Punjab and Uttarakhand.
CERC mentioned the bidding recommendations had insulated the discoms’ getting energy from the plant from any foreign exchange threat and the bidder is anticipated to aspect in all feasible expenditures, like the influence of foreign exchange price variations, whilst quoting the tariff at which they will sell energy.
Apart from borrowing Rs 11,612 crore for the Sasan project from banks and economic institutions, Reliance Power had entered a foreign currency facility agreement with India Infrastructure Finance Company (UK) and State Bank of India for $486 million, credit agreement with Deutsche Bank Trust Company Americas and Export-Import Bank of the US for a limit of $650 million, facility agreement with the Export-Import Bank of China, China Development Bank, Bank of China and Standard Chartered Bank for loan of $1,109 billion, and a credit agreement with Standard Chartered Bank, Mizuho Corporate Bank and DBS Bank for a credit limit of $150 million.