ANNEXURE___

 

MINUTES OF 118TH MEETING OF THE CENTRAL ELECTRICITY AUTHORITY ON 12/11/93

 

                        SUMMARY  RECORD OF  DISCUSSIONS OF THE

                        118th  MEETING  OF   CENTRAL   ELECTRICITY

                        AUTHORITY OR TECHNO-ECONOMIC APPRAISAL

                        OF POWER DEVELOPMENT SCHEMES.

                        FIRST SESSION HELD ON 12.11.93 AT 3.00 PM

                        SECOND SESSION HELD ON 16.11.93 AT 3.00 PM

 

FIRST SESSION

 

List of participants is at Annex-I

 

Item 1 :Dabhol CCGT Plant - 2015 MW (net) in

            Mahrashtra by M/s. Dabhol Power Company

            Ltd. ( of M/s. Enron, USA )

            Estimated Completion Cost :

            US $ 2828.524 million = Rs 9051.27 crores.

 

1.1            Introducing the scheme, Chief Engineer (TPA) stated that the proposal was for setting up of an LNG based Combined Cycle Gas Turbine (CCGT) Plant of 2015 MW (net) capacity by M/s Dabhol Power Company (IPC) of M/s Enron, USA. The following brief details of the scheme were presented :

 

            Phase - I            :            695 MW (net) capacity to the fuelled by                                                             imported distillate fuel till commissioning                                                             of Phase - II           

            Phase - II            :            1320  MW ( net )  capacity  to be fuelled  by                                                 imported Liquified Natural Gas (LNG) Total                                                             - 2015 MW (Phase I & II)

 

            Completion cost            :Phase -I (1996)

            (including taxes              US $ 863.651 million (Rs 2763.68 Crs.)

            and duties)

                                                Phase -II (1998)

                                                US $ 1964.873 million (Rs 6287.59 Crs)

                                                Total : US $ 2828.524 million

                                                            (Rs 9051.27 crores)

            Sale rate of            :            Phase-I - US cents 7.47/Kwh

            electricity                        (Rs 2.39/Kwh) = 1st year

                                                Phase-II - US cents 7.62/Kwh

                                                (Rs 2.44/Kwh) = 1st year

 

            Exchange rate            1 US $ = Rs 32.00

 

            Clearances/            :            - Sec.29 of E (S) Act, 1948

            inputs to be                        - State Govt. approval

            tied up                                    - Clearance of CWC for water  availability

                                                - Clearance of Ministry of Environment                                                               & Forests for power plant and harbour

                                                - Clearance of Port Authority for                                                                           construction of harbour

                                                - Clearance of NAA for stack height.

            Commissioning :            March 1996 for Phase- I

            schedule                        July 1997 for Phase- II           

 

1.2            Dy. Adviser, Planning Commission read out the observations of Adviser (Energy), Planning Commission. His observations were :

 

i)            From sustem opeation point of view it would perhaps be advantageous to consider or setting up of pumped storage schemes in the Western region. The implications of the likely power exchange between the Southern and Western regions through the proposed HVDC would have to be kept in view while considering the new capacity additions.

 

ii)            The backing down of the existing thermal generation capacity in Maharashtra due to this new capacity addition would imply heavy additional economic costs imposed on the power system of MSEB and these costs needed to be quantified and net economic rate of return from Dabhol project computed.

 

iii)            Keeping in view the costliest option of distillate fuel/LNG, the difference between the cost of LNG based power and the least cost option for Dabhol should be quantified.

 

iv)            Any addition to generation capacity should be matched by corresponding investment on T&D works, the present allocation for T&D works being only 27.7% of the power sector outlay of Maharashtra.

 

v)            The objective should be to minimise the cost of supply of electricity to the consumers in Maharahtra in the context of prevailing low electricity tariff structure in various states including Western region.

 

He concluded with the remark that CEA should consider these aspects before taking a fianl view on the proposal.

 

1.3            It was noted that Dabhol CCGT was to be set up in private sector for meetiong power requirements of Maharashtra. As per studies carried out by the Planning Wing of CEA, power from Phase -I (695 MW) could be absorbed by Maharashtra System. However, the state would be surplus both in capacity and energy for three years with commissioning of Phase-II of the project in 1997-98. Therefore, to ensure full utilisation of power from the project including off-peak energy, Maharashtra authorities would have to enter into firm commercial agreements with other states within and/or outside the region through the existing inter-regional HVDC link between the Northern and Western Regions and recently sanctioned HVDC link betwen western and Southern regions. In the absence of firm commercial arrangements to ensure absorptions of power as mentioned above, MSEB would have to postpone the commissioning of Phase-II of the project. Director (IPC), MOP stated that as per Power Purchase Agreement, under negotiation between Maharashtra authorities and M/s Enron, there was no commitment on the part of Govt. of Maharashtra for Phase II of the project and it could be postponed or even abandoned.

 

1.4            Chairman observed that since the project was scheduled for commissioning in a short time of about 2-3 years (by March 1996 and July, 1997), MSEB would have to ensure that the transmission scheme would be completed in time to match with commissioning programme of generation scheme.

 

Chief Engineer (PSP) stated that proposals for associated transmission system had been received from MSEB and if Phase -II was uncertain, the transmission scheme would have to be reviewed by MSEB, Member (G & O) obseved that telemetering arrangement, should be available both at the Power Plant and associated transmission system and the cost involved would not be high. CE(PSP) clarified that in so far as the associated transmission scheme was concerned, this has been taken care of in the scheme submitted by MSEB.

 

1.5            It was observed that as per the studies conducted by CEA, Dabhol CCGT plant was not the least cost option. CE (TPA) stated that MSEB had other less costly options such as Kaparkheda Unite 3 & 4 (2X210 MW), Kaparkheda-Unite 5 & 6 (2X250MW), Umred TPS-1000 MW, but these scheme were in the preliminary stages. Member (HE) pointed out that these projects being in preliminary stages, could not be considered for comparision purposes as they would not be available for meeting the power demand in the same time frame.

1.6            CE (TPA) stated that fuel for Phase - I of the project would be light distillate No.2 import origin and after completion of Phase -II, LNG from Qatar for the whole Plant. In regard to LNG fuel for power generation. Ministry of Power was earlier informed that LNG could not be least cost option. The project proposal of M/s DPC was, however, essentially based on imported LNG.

 

1.7            CE (TPA) stated that the tariff for sale of power from the project was not as per GOI notification dated 30th March, 1992. He further stated that in response to request for details of cost estimatesm M/s DPC informed in a letter dated 10.11.93 that the capital cost of the project was irrelevant to CEA because the tariff was guaranteed and changes in capital cost were not passed on to the customer in the tariff. Chairman observed that the Dabhol tariff was a negotiated one and a

communication was received from the Ministry of Power informing that the cost of power had been looked into by the Ministry of Finance and found to be more or less in line with other projects being put up in Maharashtra. As such, tariff aspects and deviations with reference to GOI notification and cost estimates could not be examined in the CEA.

 

1.8            CE (Commercial) stated that the tariff proposed was a negotiated one and not as per Goi notification or related to the capital cost and payments involved foreign exchange outgo. The return on equity would work out to about 26% in the 5th year increasing to 52% during the 15th year if the tariff of M/s DPC was adopted for calculations. Exemptions for deviations from GOI tariff notification including return on equity and other aspects would need to be looked into by the Ministry of Power and other concerned agencies of GOI.

 

1.9            Member (P) observed that as the World Bank had not agreed to  finance the project there would be a gap of US $ 600 million in the financing plan indicated by M/s DPC. Director (IPC) , MOP replied that M/s Enron were no longer seeking World Bank financing and would be arranging the funds from other sources.

                                                                       

(Chairman stated that in view of the replies received from M/s DPC in regard to cost estimates, clarification by the Ministry of Power on financial package and the examination of tariff aspects by Ministry of Finance, examination by CEA would, in effect get limited to the technical aspects and need for the project, which was already discussed.) Chief Engineer (C) expressed the view that given this background, the completed cost would not be considered by CEA at a later stage.

 

1.10            Member (PS) stated that since the tariff was designated in dollar terms, MSEB should absorb the associated exchange rate variations as other states purchasing the power may not agree to pay in foreign exchange or absorb variations in foreign exchange. Further, since the fuel supply would be from Qatar, in the event of any political problems, fuel supply might not be available and MSEB might not be able to meet its commitments to the consumers. In such an event, M/s DPC should compensate MSEB. Chairman stated that the aspects relating to import and security of imported fuel supplies, foriegn exchange outgo, etc. would need to be considered by the appropriate agencies/authorities in the Government of India.

 

1.11            Member (E & C) observed that in absence of compliance with Section 29 of E (S) Act, 1948, by the project authorities, formal clearance to the scheme could not be accorded. Chief Engineer, CWC, pointed out that the consent of state revenue authorities for land availability for the project was awaited. This aspect would have to be taken care of by the state authorities.

 

1.12            After discussions, it was decided that the Ministry of Power might be informed that in view of the fact that (i) the tariff for power from the project was negotiated one and not in conformity with GOI notification, and not related to the capital cost and (ii) cost of power from the project  had been looked into by the Ministry of Finance, only the technical aspects of the scheme were examined in CEA and found to be generally in order. Formal communication of clearance to technical aspects of the scheme could be given after compliance of Section 29 of the E (S) Act, 1948 by M/s DPC subject to the following conditions :

 

i)            State Govt.'s approval to M/s DPC to establish,             operate and             maintain the power plant;

ii)            Clearance of Ministry of Environment & Forests for             power plant and harbour/port;           

iii)            Clearance of port authorities for construction of the             harbour/port;

iv)            Clearance of National Airport Authority for stack             height  98m;

v)            Clearance of Central Water Comm. for water             availability;

vi)            Before starting Phase-II of the project,             Maharashtra             Govt/MSEB will ensure that the             entire power from the project including off-peak             surplus will be absorbed within the Maharashtra             system or if necessary by entering into

            agreement with entities outside Maharashtra.

vii)            MSEB will ensure completion of associated             transmission             system matching with the             commissioning schedule of the project.

 

The aspects relating to import of fuel, foreign exchange outgo and deviations from GOI tariff notifications including return on equity may be looked into by the Ministry of Power and other concerned agencies in the GOI.

 

                                                                                                Annex I

LIST OF PARTICIPANTS

 

118th CEA meeting held on 12.11.93 (First Session)

Shri Y.P. Gambhir, Chairman, CEA .......... in Chair

CENTRAL ELECTRICITY AUTHORITY

Shri M.I. Beg, Member (P)

Shri H.C. Mital, Member (PS)

Shri S.R. Narasimhan, Member (HE)

Sheri M.P. Ramanan, Member (T)

Shri B. Sengupta, Member (G & O)

Shri S.N. Shende, Member (E&C)

Shri V.V.R.K. Rao, Secretary, CEA

MINISTRY OF POWER

Shri N. Ramji, JS (IPC)

Shri A.K. Upadhyay, Director (IPC)

 

PLANNING COMMISSION

Shri L.P. Sonkar, Dy. Adviser (Power)

Shri D. S. Arora, Dy. Adviser (Power)

CENTRAL WATER COMMISSION

Shri T. Subba Rao, CE (HP)

CENTRAL ELECTRICITY AUTHORITY

Shri K.N. Sinha, CE (Commercial)

Shri Rajendra Singh, CE (HEP)

Shri B.K. Gaur, CE (HPA)

Shri S. Sethvandatham, CE (TPA)

Shri K. Ramanathan, CE (PSP)

Shri S.L.N. Prabhu, CE (pl-.I)

Shri Arun Sarkar, CE (Chairman's Office)

Shri K.V.K. Prema kumar, Director (PAC)

Shri R. Srinivasan, Director (TPIA II)

Shri R.S. Chadha, Director (HPA I)

Shri S.S. Jolly, DD (PAC)