In the matter of the CERC (Conduct of Business) and (Terms and Conditions of Tariff) Regulations for “Transmission System for Power evacuation from ARUN-3 HEP, Nepal of M/s SAPDC – Indian Portion” in the Eastern Region – EQ

Summary:

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**1. Project & Asset Details**
– **Petitioner:** Power Grid Corporation of India Limited (PGCIL).
– **Project:** Transmission System for Power Evacuation from **ARUN-3 (900 MW) HEP, Nepal** (developed by M/s SJVN Arun-3 Power Development Company Pvt. Ltd. – SAPDC).
– **Asset in Question (Asset-1):**
– **Sitamarhi (POWERGRID) – Dhalkebar (NEPAL) 400 kV D/C (Quad) Transmission Line (Indian Portion):** 38.2 km.
– Associated **02 Nos. of 400 kV line bays** at the Sitamarhi (POWERGRID) Sub-station.
– **Purpose:** To facilitate the cross-border transmission of electricity from Nepal to India.

**2. Key Dates & Timelines**
– **Scheduled Commercial Operation Date (SCOD):** **April 30, 2023** (as per the Implementation Agreement).
– **Actual Date of Commercial Operation (COD) Claimed & Approved:** **September 3, 2023**.
– **Time Overrun:** **126 days**.
– **Tariff Period:** From COD (3.9.2023) to **March 31, 2024** (pro-rata for 211 days).

**3. Regulatory Framework**
– **Tariff Regulations:** CERC (Terms and Conditions of Tariff) Regulations, 2019.
– **COD Approval:** Granted under **Regulation 5(2)** of the 2019 Tariff Regulations. This clause allows a transmission licensee to seek COD approval when its asset is ready but the interconnected generating station or other transmission system (in this case, the Nepal portion or the generation) is not ready.
– **Key Documents Submitted:** CEA Energisation Certificate, NLDC Trial-run Operation Certificate, CMD Certificate, and prior notice to the respondent (SAPDC).

**4. Capital Cost Analysis**
– **Approved FR Cost:** ₹17,928.98 Lakh.
– **Capital Cost as on COD (Claimed):** ₹13,456.43 Lakh.
– **Capital Cost as on COD (Allowed after disallowances):** **₹13,006.51 Lakh**.
– **Disallowances:**
– **IDC (Interest During Construction):** ₹221.04 Lakh disallowed due to time overrun not condoned.
– **IEDC (Incidental Expenditure During Construction):** ₹228.66 Lakh disallowed due to time overrun.
– **Excess Initial Spares:** Nil.
– **Additional Capital Expenditure (ACE) Allowed (2023-24):** **₹507.15 Lakh** (for undischarged liabilities and deferred works, subject to truing up).
– **Admitted Capital Cost as on 31.3.2024:** **₹13,513.66 Lakh**.

**5. Time Overrun Analysis & Condonation**
The Petitioner claimed a 126-day delay, citing two primary reasons:

– **A. Right of Way (ROW) Issues (273 days claimed):**
– PGCIL faced persistent ROW issues including demands for exorbitant compensation, unauthorized construction of structures, and obstruction by landowners.
– **Commission’s Finding:** The ROW issues (except at locations 25/0 & 26/0) were resolved by **May 9, 2022**. The issues at 25/0 & 26/0 were resolved by **August 17, 2022**, following a court judgment.
– **Critical Observation:** Even after resolution of the last ROW issue (August 17, 2022), PGCIL took an additional **12 months and 17 days** to commission the asset. The Commission directed PGCIL to justify this further delay but **did not condone any part of the 126-day time overrun** in this order, stating that ROW issues for this period would be reviewed at the time of truing up based on additional information.

– **B. Unprecedented Rainfall & Floods (90 days claimed):**
– PGCIL claimed that construction was halted from May to August 2021 due to heavy rainfall and flooding in Bihar.
– **Commission’s Finding:** The Commission held that rainfall during June-September is a **normal seasonal phenomenon** and cannot be treated as a force majeure event or a ground for condoning delay. Therefore, **this delay was not condoned**.

– **Conclusion:** The entire **126-day time overrun was not condoned** in this order, leading to the disallowance of a pro-rata portion of IDC and IEDC.

**6. Tariff Determination (Annual Fixed Charges for 2023-24)**
The Commission approved the following Annual Fixed Charges (AFC) for the pro-rata period of 211 days (from COD to 31.3.2024):

| Particulars | Claimed (₹ in Lakh) | Allowed (₹ in Lakh) |
| :— | :— | :— |
| **Depreciation** | 418.12 | **404.57** |
| **Interest on Loan** | 433.63 | **419.57** |
| **Return on Equity (RoE)** | 445.18 | **430.73** |
| **O&M Expenses** | 73.82 | **73.82** |
| **Interest on Working Capital** | 22.62 | **21.99** |
| **Total Annual Fixed Charges** | **1,393.37** | **1,350.68** |

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