ntpc- kawas gas power project financial appraisal of r&m ... - Infraline

NTPC- KA W AS GAS POWER
PROJECT
FINANCIAL APPRAISAL OF
R&M WORKS OF NTPC- KA W AS GAS POWER PROJECT
ST AGE-I
(656.20 MW)
CONTENTS
1.00 INTRODUCTION 2
2.00 BACKGROUND OF NTPC LIMITED 4
3.00 NTPC KAWAS GAS POWER PROJECT 13
4.00 RENOV AnON & MODERNISA nON WORKS 25
5.00 R&M WORKS FINANCIALS 35
--00000--
Appendices attached to this report
Appendix 1: Projected Financial Statements
Appendix II: Key Assumptions
--00000-

1.00 INTRODUCTION
1.01 A. F. Ferguson & Co. (AFF) have been engaged by NTPC Limited to carry out a
financial appraisal of the proposed Renovation and Modernisation (R&M) Works of the Kawas
Gas Power Project (KGPP-Stage I) (656.20 MW) at Kawas, Surat.
1.02 This document contains the report on the financial appraisal of the above R&M Works.
Obiective of the financial appraisal
1.03 As a part of NT PC's internal approval process, the R&M Works for the projects that are
proposed to be undertaken by it are required to be appraised by an external agency. Accordingly,
this report has been prepared for the internal use of NT pc.
1.04 NTPC is proposing to seek investment approval from its Board for the above R&M
Works.
Scope of work
1.05 The scope of work was to carry out a financial appraisal of the above project covering:
• Reviewing the financial model and the related project information which involved:
• Reviewing the basis of the assumptions made with a view to assessing their
prima-facie adequacy
• Reviewing the consistency of the assumptions made in the financial forecast
• Commenting on the viability of the R&M Works based on the proposed financing
plan, expected internal rate of return (IRR) and other relevant financial parameters
• Based on the above review, assessing the overall financial viability of the R&M
Works.
1.06 The above review was to be carried out based on the project information, R&M Works
financial forecast, assumptions, and other necessary details as prepared / provided by NTPC.
A brief description ofthe approach and methodolo2V
1.07 The financial appraisal has been carried out based on the information and explanation
provided by NTPC. The main documents / information provide by NTPC included the following:
• R&M Works details including the Capital cost and the implementation schedule
• Details about the existing operations of the power plant including the past
performance, beneficiaries, Bulk Supply Agreement, tariff, approvals etc.
• Proposed funding of the R&M Works
2

1.08 AFF has relied upon the 'documents and information and explanations provided by
NTPC.
Caveats
1.09 AFF's engagement for the assignment did not constitute an audit or certification of the
historical/ financial statements/ forecasts of the Company/ Project.
1.10 AFF does not accept responsibility or liability for any loss that may be caused to NTPC/
any other person through the investment decision taken based on this report.
1.11 This report is confidential and prepared solely for the internal use of NTPC. No part of
this report can be published externally or used by any third party without AFF's prior written
consent.
3 .'

2.00 BACKGROUND OF NTPC LIMITED
2.01. NTPC Limited (NTPC) was incorporated on November 7, 1975 as a wholly owned PSE
by the Government of India with the objective of planning, promoting and organizing integrated
development of thermal power plants to meet the power requirements of the country. Within a
span of30 years, NTPC has emerged as a truly national power company, with power generating
facilities in all the major regions of the country. NTPC became a 'public limited' company in
September 1985.
2.02. The Core business of NTPC is engineering, construction and operation of power plants
and it also provides consultancy to power utilities in India and abroad.
2.03. The corporation began its operation by undertaking four green field projects to install
four thermal power stations in various locations. The locations comprise Korba (Chattisgarh),
Farakka (West Bengal), Singrauli (Uttar Pradesh) and Ramagundam (Andhra Pradesh). The first
Unit at Singrauli was synchronized in February 1982 and the unit commenced commercial
operations from June 1982.
2.04. Presently, NTPC is the largest thermal power generating company in India. As on March
31, 2007, NTPC accounted for 20.18 % in the total installed capacity of the country and
contributed 28.50 % ofthe total power generation of the country during 2006-07.
2.05. The installed capacity of NTPC as on date is 27,904 MW through its 15 coal based
(22895 MW), 7 gas/liquid (3955 MW) and 4 Joint Venture projects (1054 MW).
NTPC Owned
Coal
GaslLiquid Fuel
Total
Owned by NCs
Coal
GaslLiquid Fuel
Grand Total
15
07
22
3
1
26
22,895
3,955
26,850
* Captive Power Plant under Ns with SAIL
** Power Plant under N with GAIL, FIs & MSEB
(Source: www.ntpc.co.in)
314*
740**
27,904
4

2.06. The installed capacity of coal based and gas based power station is given below:
Coal Based Power Stations
SNo •.
. ,.;?;~:r;~:,('; Commissioned
..
:':€ollihased State .
.

Power Plants with Joint Ventures
,
,
"
, ,.. -,
Coal Based" 'Stitll '! ',,-'~'.,- ' ...~..",-."" ., .....•.... '- " .....
;
FUel
,', ,
-
J. ,~,Commissi()J1ed
"'?, calr:~ihr:,
" -
"',' '~'.' ;-,',
,/

NTPC OPERATING PERFOMANCE PLF
OF NTPC STATION Vs ALL INDIA
ISALlINDlA PLF .NTPC PLF I
to
87
"
15
72
69
II
IS
60
,",. 11911. 'H9. 2000. 200'. 2002. 200S. 201M. 2lM15- 2OIHI.
Ie 9' 2000 2001 2002 2003 2004 2005 2_ 2007
2.\ o. It may be observed from the above that NTPC has consistently outperformed the national
average in terms of PLF.
2.11. While the installed capacity has increased by 56.40% in the last nine years, the employee
strength went up by only 3.34%. The % of increase in the generation per employee from year
1997-98 to year 2006-07 id given in the table below:
Installed Capacity MW 16,847 26,350 56.40
Generation Mus 97,609 1,88,674 93.29
No. of employees No. 23,585 24,375 3.34
Generation/employee MUs 4.14 7.74 86.95
2.12. The detailed operational performance of coal based stations over the years is given in the
table below:
~
Generation BU 106.2 109.5 118.7 130.1 133.2 140.86 149.16 159.11 170.88 188.67
PLF % 75.20 76.60 80.39 81.8 81.1 83.6 84.4 87.51 87.54 89.43
Availability
Factor
% 85.03 89.36 90.06 88.54 81.8 88.7 88.8 91.20 89.91 90.09
7

Gas based Stations
2.13. The generation and availability of gas based stations of NTPC for the last five - year
period ended March 31, 2006 is as under:
Y~f:endeaMarcli'3l., '2002 2Q03·' 2004 . 2005 2006'
Capacity (Gas) - MW 3955 3955 3955 3955 3955
Generation (Billion units)
Anta 3.06 2.75 2.77 2.78 2.81
Auraiya 4.68 4.27 4.25 4.12 4.28
Dadri 5.73 5.21 5.06 5.46 5.39
Faridabad 2.86 2.70 2.79 3.16 2.95
Total- North 16.33 14.93 14.87 15.52 15.44
Kawas 3.75 4.20 3.89 2.82 2.88
Gandhar 3.61 3.37 3.22 4.03 4.48
Total- West 7.36 7.57 7.11 6.85 7.36
RGCCPP 1.32 2.12 2.12 0.62 0.36
Total- South 1.32 2.12 2.12 0.62 0.36
Grand Total 25.01 24.62 24.10 22.99 23.16
Availability (%)
Anta 94.67 90.87 92.17 94.63 96.53
Auraiya 92.94 89.51 90.08 87.87 94.7
Dadri 91.68 89.97 91.63 94.85 95.41
Kawas 84.14 90.67 88.75 95.53 97.19
Gandhar 81.44 77.21 78.33 94.17 92.98
Combined * 87.74 87.74 88.97 93.49 95.82
* Including Faridabad and RGCCPP
2.14. During the FY 2006, NTPC generated 23.16 billion units from gas based plants as
compared to 25.01 billion units in FY2002, while availability improved from 87.74% in FY2002
to 95.82% in FY2006.
;1
8

Financial Performance
2.15. The financial position and performance of NTPC during last four financial years is given
below:
Profit and Loss Account
INCOME
Sale of Energy 199810 190571 232415 266564
Consultancy and Other income 4492 61816 24110 26806
Operating Revenue 204302 252387 256525 293370
EXPENSES
Fuel expenses 110312 122150 137235 163947
o & M expenses 20649 14835 14725 22739
Operating Expenses 130961 136985 151960 186686
PSIDT 73341 115402 104565 106684
PBIDT/Operating Revenue 35.90% 45.72% 40.76%, 36.36%
Interest 9916 33697 16955 17632
Depreciation 15291 20232 19584 20477
Operating Profit 48134 61473 68026 68575
Operating Profit /Operating 23.56% 24.36% 26.52% 23.37%
Revenue
Prior Period Items (Net) 803 183 -102 2488
PST 47331 61290 68128 66087
Income Tax (net of Deferred 11256 8682 10058 7885
Tax)
PAT 36075 52608 58070 58202
PAT/Gross Revenue 17.66% 20.84% 22.64% 19.84%
9

•
Balance
Sheet
SOURCES OF FUND
Shareholders' Fund 315040 355501 417763 449587
Deferred Revenue on account of 271 1591 3374 4408
AAD
Develo ment Surchar e Fund 3784
Loan Funds 132157 154528 170878 201973
Deferred Tax Liabili 1 1 1 1
TOTAL 447469 515405 592016 655969
APPLICATION OF FUNDS 0 0 0 0
Fixed Assets 262513 287498 322433 367235
Investments 36674 173380 207977 192891
Current Assets 194132 135468 129073 157245
Less: Current Liabilities 45850 80941 67467 61402
Net Current Assets 148282 54527 61606 95843
TOTAL 447469 515405 592016 655969
2.16. The key financial ratios are given below.
~, Pll '~'-.'--j~)_~" - ~-"·-".~.···.~I}:.{·-r-·"jJ'T1.?j~1~" '~I1i~ilh-':~~: - )J'

Joint Ventures (JV)
2.18. The following Joint Ventures (JVs) have been formed by NTPC:
• NTPC Alstom Power Services Pvt. Ltd: This JV formed in 1999 was formerly known
as NTPC-ABB Alstom Power Services Pvt. Ltd. NTPC has formed this JV to Undertake
Renovation & ModemisatiQnof power stations in India and other SAARC countries. The
promoter's equity contribution is 50:50 in this JV.
• Utility Power Tech Ltd: NTPC has formed a JV in 1996 with Reliance Energy Limited
(formerly BSES Limited) a private sector Indian power company to undertake project
construction, erection and supervision in power sector and other sectors in India and
abroad. The promoter's equity contribution is 50:50 in this JV.
• PTC (India) Ltd: This JV has been promoted with Power Grid Corporation of India Ltd
(POWERGRlD), a Government owned transmission major in India. Power Finance
Corporation (PFC), a power sector finance company owned by the Government of India
and National Hydro Electric Power Corporation Ltd. (NHPC), a Government owned
hydro power utility. This JV was formed in 1998 to trade, import, export and purchase
power from identified power projects and sell it to identified SEBs/others.
• NTPC-SAIL Power Company (Pvt) Ltd (NSPCL): NTPC has formed a JV with SAIL
in equal participation which later merged with Bhilai Electric Supply Co. Pvt Ltd to
supply power to the Bhilai, Durgapur and Rourkela Steel Plant of Steel Authority of India
Limited (SAIL) from its Coal based power stations at Bhilai (Chhattisgarh), Durgapur
(West Bengal) and Rourkela (Orissa). For the purpose of its business development,
NSPCL is carrying out the expansion of its installed capacity at Bhilai, by
implementation of 500MW (2x250MW) power plant.
• NTPC Tamil Nadu Energy Company Limited: This JV was incorporated on May 23,
2003 with Tamil Nadu Electricity Board, a State run Electricity Board in the State of
Tamil Nadu engaged in generation, transmission and distribution of electricity. The JV
was formed to set up a 1000 MW coal based power station at Ennore in Tamil Nadu
utilising the existing infrastructure facility at Ennore and supply power mainly to Tamil
Nadu and the states of Kerala, Kamataka and Pondicherry. NTPC has equal equity
participation with TNEB in this JV.
• Vaishali Power Generating Company Limited: This JV was incorporated on with
Bihar State Electricity Board, a State run Electricity Board in the State of Bihar, engaged
in generation, transmission and distribution of electricity to take over Muzaffarpur
Thermal Power Station (2xllOMW), a coal based power station at Kanti, for carrying out
11

estoration, R&M and supplying power mainly to the state of Bihar. The equity
participation is NTPC: 51-74% and BSEB: 26-49%
• Aravali Power Company Private Ltd: The Joint Venture Agreement was signed on
December 14, 2006 among NTPC Ltd, Indrapastha Power Generation Company Ltd.
(IPGCL) and Haryana Power Generation Company Ltd. (HPGCL).The Company was
incorporated on December 21, 2006 to set up a coal-based power station of 1500MW
capacity in Distt. Jhajjar, Haryana, in joint venture with IPGCL and HPGCL. The equity
participation is NTPC-50%, IPGCL-25% and HPGCL-25%.
To summarise
2.19. NTPC has emerged as the largest power generating company in India. NTPC is a
growing, profit making and a dividend paying company. NTPC's operating performance has
been in line with! above the industry averages. NTPC has rich experience in the field of project
engineering, implementation and management, electricity generation and O&oMof power plants.
12

'..:.
3.00 NTPC KA WAS GAS POWER PROJECT
3.01. This chapter briefly describes a background of the NTPC Kawas Gas Power Project
(KGPP), including the existing facilities, past operating and financial performance of the plant,
bulk sale agreement, tariff structure etc.
3.02. The Project (Stage I) was sanctioned on August 19, 1988 and the main plant contract was
awarded in March 1990. The commercial operation of the plant commenced in the year 1992-93.
EXISTING
FACILITIES
Location
and Land
3.03. NTPC Kawas Gas Power Project (KGPP - 656.28 MW) is located near Mora village
under Choryasi Tehsil in Surat district of Gujarat having latitude of 21°10' N and longitude of
72°41' E and is adjacent to the Surat-Hazira road. The site is bounded by KRIBHCO Fertilizer
Plant towards East, Reliance Petro-Chemical Plant towards West and river Tapti towards South.
The Plant is located at a distance of 23 Kms from Surat Railway station and is connected with
Vadodara and Mumbai through NH- 8. The nearest airports are located at Surat and Vadodara.
The detail of existing plant land is given below:
Mau.-;~~~.~'d¥·62!'~;'\:···'· :',..~.~;;: ; /······.· ..fj~si~ls:t·~;;/.:·
Stage-l 166.71
Reservoir 127.37
Stage-2 228.97
Subtotal 523.05
Aditya Nagar Township 45.10
Total 568.15
Capacity
3.04. KGPP is a combined cycle duel fuel fired gas power plant. KGPP has two combined
cycle modules, each comprising 2 gas turbines of capacity 106 MW each and I steam turbine of
capacity 116.10 MW. The Gas Turbines (Frame 9161E) were supplied and commissioned by
EGT France. The details of the commissioning schedule is given below:
Gas Turbine
GT#lA
GT#lB
GT#2A
24.05.1992
22.03.1992
30.06.1992
01.08.1992
01.06.1992
01.11.1992
98549
100667
100039
13

Un.itNo~
GT#2B
Steam Turbine
27.08.1992
ST# 1C 23.02.1993 01.09.1993
ST#2C 19.03.1993 01.09.1993
* Gas turbines have a capacity of 106 MW each
** Steam turbines have a capacity of 116.1MW each
89085
92513
Technical
facilities
Gas Turbines
3.05. The Stage-I, Kawas Gas Turbines are GE Frarne-9161- E design supplied by Mis EGT
France. These Gas Turbines are capable of firing on Natural Gas and Liquid Fuels viz. Naphtha I
NGL I HSD and mix fuel.
Waste Heat Recovery Boilers
3.06. The Waste Heat Recovery Boilers are of vertical type; double drum unfired and assisted
circulation type. These were supplied by Mis. CMI, Belgium.
Stearn Turbines
3.07. The Stearn Turbines are of Impulse, tandem compound, double exhaust and condensing
type. The HP Turbine is single flow horizontal 13 Stage and LP Turbine is of double flow
horizontal having 5 stages.
Generators
3.08. The Generators are of 145 MY A for Stearn Turbine and 134 MY A for Gas Turbine. The
rated terminal voltage is 11.5 KY ahd is of air-cooled type.
Water Treatment Plant and other facilities
3.09. Beside above facilities, Kawas has water treatment plant, fully equipped Workshop,
NGLI Naphtha storage facility of 8000 KL and HSD storage tank having capacity of250 KL.
Simulator
3.10. Kawas has a combined cycle gas power plant simulator, one of its kind in Asia. It
provides simulator training to NTPC as well as other power plant operation engineers for better
operation of plant and real time simulation of various operation conditions.
14

Inputs for Power Generation
Fuel
3.11. Natural Gas is supplied from Western offshore gas fields through HBJ Pipe Line, while
liquid fuel NGL / Naphtha is supplied by Mis HPCL through separate pipeline. HSD is obtained
from open market from IOC / HPCL and is supplied to plant through road tankers.
3.12. As informed by NTPC, from the very beginning, NTPC-Kawas was not able to get earlier
committed supply of 2.25 million Standard Cubic Metres per day (MCMD) gas by the Ministry
of Petroleum and Natural Gas, from the HBJ pipe line. The requirement of gas for KGPP at 80%
PLF (approx 2.4 million Standard Cubic Metres per day) is higher than the minimum committed
gas quantity available from GAIL (1.752 million Standard Cubic Metres per day) as per its
agreement with NTPC dated July 14,1999 ..
3.13. In order to overcome the situation, arrangements for the off-base liquid fuel handling
facility to make the plant operational on liquid fuel was decided. Ministry of Petroleum vide
letter date 15.03.1995 allocated 0.7 MMTP A in favour of Mis HPCL to supply Naphtha to NTPC
through a pipeline. The liquid fuel"facilities were commissioned for all the gas turbines units in
December 1997.
3.14. Further in the year 2000, mix fuel firing facilities was commissioned in all the gas
turbines to make the plant operational on mix fuels also. With this facility, Gas Turbine can be
operated in any ratio of Gas and Liquid fuel.
3.15. Since June 2006, KGPP has also switched over to LNG (a cheaper fuel than Naphtha). A
separate pipeline has been laid in June 2006 to connect the GSPL (Gujarat State Petroleum
Corporation) Mora Gas Terminal with the GAIL Gas pipe line. Now in case of spot purchase of
LNG, NTPC is getting gas through GSPLlHazira LNG also.
Water System
3.16. Make-up water was being drawn from Suvali minor canal Kakrapar right bank canal
network, taking off from Kakrapar .reservoir on river Tapti. As an alternative measure, all Hazira
based industries jointly constructed a weir-cum causeway across river Tapti near Surat city.
NTPC has its share for a reserved quantity ofl5MGD water. Water is taken from Singanpur weir
on Tapti River through an Underground pipeline of about 16 kIn length.
15

-
Status on the current available approvals/sanctions
and their validity
3.17. The Status on the available approvals/sanctions obtained for Kawas Gas Power Project
and their validity (as provided by NTPC) is given below:
S.No • 'J>~~n.pgq~}'.
.. . .. . .,'
:' ' ..
.
Y~!ldp,pto: .' LiccllSe No.
(Date) ..•.•.
. .. "
,,,,},
:.:'.' .
1. Annual IBR inspection of WHRB-1 A 23,03,2008 GT-3069 (HP)
(Waste Heat Recovery Boiler)
GT-3070 (LP)
2, Annual IBR inspection of WHRB-1 B 15.04.2008 GT-3071 (HP)
GT-30n (LP)
3. Annual IBR inspection ofWHRB-2A 29.04.2008 GT-3103 (HP)
GT-3104 (LP)
4. Annual IBR inspection of WHRB-2B 30.08.2007 GT-3094 (HP)
GT-3095 (LP)
5. Storage of DiesellNGLlNaphtha 31.12.2008 P-12 (25)
2999/GJ/SURl512
6. Storage of Diesel in Black Start 31.12.2007 P-12(25)
3383/GJ/SURl556
7. Storage of Chlorine 31.03.2007 GJ/SUR/GC/S-29
(sent for
renewal)
8. Storage of CO2 31.03.2009 PV/ (WC) S-
312GJ/SURlPVC/35
9. Storage of Naphtha (As per Gazette 29.10.2007 W1712000
Notification)
10 Air Consent Order 07.03.2010 13836
II Water Consent Order 07.03.2010 3639
12 Hazardous Waste Handling 07.03.2010 3264
3.18. As per the above table nece~sary approvals are in place/ current at present
SUPPLY OF POWER
Bulk Supplv A2reement
3.19. The Bulk Supply Agreement (BSA) was entered into on January 12, 1994 between
National Thermal Power Corporation Limited (NTPC) and Madhya Pradesh Electricity Board
(MPEB), Maharashtra State Electricity Board (MSEB), Gujarat Electricity Board (GEB),
Electricity Department of Government of Goa (EDGG), Union Territory of Daman and Diu
(UTDD), Union Territory of Dadra and Nagar Haveli (UTDNH) and Western regional
Electricity Board (WREB) (Collectively referred as "Bulk Power Beneficiaries").
16

3.20. The Bulk Supply Agreement pertains to selling of the bulk energy from NTPC's
generating stations, wherein NTPC is desirous to sell to the bulk power customers, who are
desirous of purchasing energy from NTPC at a mutually agreed terms and conditions.
Allocation of Power
3.21. The share of Power for the beneficiary states as per the Bulk Power Supply Agreement
entered on January 12, 1994 is as follows:
Beneficiary States·· MW··· .. %Share .
MSEB 201 31.16%
GEB 184 28.50%
MPSEB 137 21.24%
Goa 22 3.40%
Dadra & Nagar 2 0.30%
Haveli
Daman & Diu 2 0.30%
Unallocated 97 15.03 %
Total 645 100.00%
3.22. Presently, the power produced is fed to the Western grid and is shared by the
beneficiaries. The current allocation of power to the beneficiary states is as under:
,
•
~%~ot~Yr.e;, .
-,' .' ..... " ~"
BenetJcian> Stat~,.;:; .:',':~'~.MW~(,:~~:~;~;\~
MSEB 238 36.28%
GEB 191 29.12%
MPSEB 158 24.09%
CSEB 3 0.46%
Daman & Diu 12 1.83%
Dadar and Nagar
Havelli 53 8.08%
SEZ -Indore 1 0.15%
Total 656 100.00%
3.23. The Bulk Supply Agreement entered into with the beneficiary states in the year 1994 is
valid upto year 1997. However, as per Clause 12 of this agreement, all terms and clauses of the
agreement shaH be remain in force and shaH continue to be applicable unless the agreement is
nullified or renewed. As informed by NTPC, currently, the power is supplied to the beneficiary
states on the basis of this agreement and it shall continue to be valid for the extended life of the
plant after the implementation of the R&M Works.
17

Power Scenario in Beneficiarv
States
3.24. The beneficiary states have been facing power deficits of varying magnitude during the
last 3 years. The power supply in the beneficiary states during the years 2003-04 to 2005-06 and
during the period April
illl.'.,~""'.;
2006 to February 2007 is given below:
.;~""E~,";;ir
~til~~!i,;X.~r.
' :-~bili' \D~'clti~ie}~ii ; "~'~iii' ~.\;- "niitl·.
R~s~'n;',m':'1~'.
".,...
.
"d"-"'~/., ... , "(l\t.W)'
."=.1.i •..,,,.!" ......•...' """,.,,,....
" -
~JfitY.,.
(MlJ)' ...... WlJ)."
~"'
:,'::.:-,y2",~;-:':' ;'-(o/~),(2,~'/;~~
',' ;"'·;

StatelUTl Year Peak Peak };nergy~ Energy' Energy
-·;}1~ - , ',' "- .,' :"_' r.-,· . ':
Region A~iqability D~gCit
•...,"'~#."", .."..... ',," ~~!ll~~!lt
...~ .., . (MUr'~'•., ..,
......
~
,.•..~/ •.::
;~v~~~~~f$~~,
.:;
~..

•
section 43A(2) of Electricity Supply Act, 1948 (as amended). In case of any difference between
the terms and conditions of the Bulk Power Supply Agreement and above notifications of Gol,
the provisions of GoI shall prevail. For the tariff of Gas Power Station the prevailing
arrangements of adhoc tariff would continue subject to adjustment as per the Notification to be
issued by Gol.
3.29. The revision of tariff and terms and conditions shall be in accordance with the
notifications issued by GoI from time to time.
Subsequently, CERC has notified the revised tariff for Kawas Gas Power Project on November
16,2006 and has laid down the norms for tariff recovery till financial year 2008-09. The various
tariff parameters that have been decided upon by CERC vide this order are as follows:
D"'~~ ,",,;;-,-,' , '~',;',~::',"f> /':~ill>·",~
·.J;Ju:ame.etC::·,;N: '~,>"
Ca ital Base as on 1.4.2004
Debt E uit Ratio
Rate of Interest on Borrowings
Interest on loan
O&M Expenses
Working Capital
Interest on workin
ca ital
Year: 2004-05 - 6.43 %
Year: 2005-06 - 8.09 %
Year: 2006-07 - 8.09 %
Year: 2007-08 - 8.11 %
Year: 2008-09 - 9.58 %
Since the loan has been repaid till the
year 2004-05, there is no interest on
loan from 2005 onwards.
80%
14% i.e. Rs 10598 lacs er annum
Depreciable value of Rs 41504 lacs has
been spread over the balance useful life
of 8.39 years. (Depreciation per annum
is Rs 4947 lacs
Year: 2004-05 - Rs 3412 Lacs
Year: 2005-06 - Rs 3550 Lacs
Year: 2006-07 - Rs 3688 Lacs
Year: 2007-08 - Rs 3839 Lacs
Year: 2008-09 - Rs 3990 Lacs
Fuel Cost (1 Month)
Naphtha Stock (112 month)
O&M expenses (1 month)
Spares (1% of historical cost, escalated
@ 6% p.a)
Receivables (2 month
10.25 % .a
20

3.30. The operational norms for computing the variable cost for the period Year 2004 to Year
2009 were fixed as follows:
Des~,riIi~.YP
- ,.;;.~:>-';~,:r,-
Gas rice (Rs./I000 SCM)
Gas GCV (kcaIlSCM)
Price of Li uid Fuel (Rs./MT)
GCV of Li uid Fuel (Kcal/K )
·AS
'-"""'"."
considered
4770.53
9923.33
20129.08
11318.28
3.31. The norms laid down by C~RC are till the year 2008-09.
3.32. The break up of the existing applicable tariff is as under:
2004-05 200S;.o(}
11.09 11.09 11.09 11.09 11.09
0.002 a 0 0 0
23.76 23.76 23.76 23.76 23.76
a a 0 a 0
10.69 10.73 10.77 10.84 10.86
7.65 7.96 8.27 8.61 8.95
53.19 53.54 53.89 54.30 54.66
25.72
285.50
25.72
285.50
25.72
285.50
25.72
285.50
25.72
285.50
364.41
364.76
365.11
365.52
365.88
102.88 102.88 102.88 102.88 102.88
0.00 0.00 0.00 0.00 0.00
- Total Tariff under Scenario 2
A+C 156.07 156.42 156.77 157.18 157.54
3.33. It may be seen that the Energy Charges constitute the major component of cost in the
existing tariff. This is because the KGPP has almost lived its life and there are no outstanding
21

• '.~' y', .l'

.ParticullifslY ear'S 2003-04 2004-05 2005-P6 ..
.' .. "." " .'
Fixed Assets 413.45 316.36 210.61
Investments - - -
Current Assets 86.96 210.13 77.34
Current Liabilities 219.07 256.76 111.07
Net current Assets (132.10) (46.62) (33.73\
Misc. Expenditures
TOTAL 281.34 269.74 176.88
Current Assets (no. of days of 24 52 23
Sales)
Current Liability (no. of days 61 63 33
of Sales)
3.39. As per the above Table, the' net current assets was negative / negligible. The gross current
assets has been in the range of 15 to 24 days (except for 52 days in the year 2005-06).
3.40. The summary financial performance of the unit for the past three years has been as
under:
."0 , •• •••,;:};".~'l~~e~::;?,o
._e.~ ..•st~~.(~:~t'l~;,.";:*':··'
- ,
.. -,'
'?'_~·~~ltS.i~;~:~;~:-~
0
;;"{::':iL-"\ , '"Sales'
96.67%
':?~Jt%'~?of;~

3.41. From the above table, it emerges that fuel is the major cost of power in KGPP as the plant
has been almost fully depreciated and the there are no outstanding long term loans. The plant has
been making profits since the plant availability had been well over 80 % resulting in full
recovery of the fixed costs even though the PLF had been lower. As per the Tariff, the variable
cost is a pass through cost.
To summarise
• Since KGPP is an existing plant, it already has the required land, approvals, input
arrangements, bulk supply agreement, evacuation facility etc. in place. NTPC would need to
get the approvals renewed if any, as and when required.
• The tariff is governed by the CERC Tariff Order and the payment is secured as per the usual
payment security mechanism of opening of LC by the beneficiary States. It is understood
that the beneficiary states would continue to be governed by the existing Bulk Supply
Agreement and CERC Tariff Order during the extended life of the Plant post implementation
of the R&M Works.
• The major cost component of tariff is the fuel cost as the Plant has been almost fully
depreciated and there are no outstanding long term loans.
• The gas availability is lesser than the quantum of gas required to operate the Plant at 80%
PLF. The cost of fuel varies significantly depending upon the proportion of gas / Naphtha
used. However as per the Tariff Order, the fuel cost is recoverable at the actual fuel used.
• KGPP has maintained plant availability of over 90% in the past though the PLF had been
lower due to the lesser supply of gas / costly alternate fuel (i.e. Naphtha) resulting in less
energy requested by the beneficiary states.
• KGPP has been making profits since the plant availability had been well over 80 % resulting
in full recovery of the fixed costs and the fuel cost is a pass through cost.
~
'"•
24

4.00 RENOV A.TION & MODERNISATION WORKS
4.01. NTPC proposes to take up the Renovation and Modemisation work at its Kawas Gas
Power Project (656.28 MW). As informed by NTPC, the need for the R&M Works has arisen
mainly due to technological obsolescence and some change in the statutory requirements for
environment and safety considerations. As per NTPC:
• Each gas turbine has been in service for the last 15 years with an average operation of
6145 hrs to 6400 hrs per year (i.e. operating availability of 70% to 73%).
• All components installed in the turbines and the spares available at the site have almost
completed their recommended life and these components are beyond repair.
• Further, due to degradation of the compressor blades, the compressor efficiency may
come down resulting in the form of surging and thereby causing severe damage to the
compressor blades due to high vibrations.
4.02. In view of the above, NTPC has filed a proposal for investment in Renovation and
Modemisation (R&M) Works of the KGPP to Central Electricity Authority (CEA) in Dec 06 for
Techno Economic Clearance.
4.03. CEA has awarded the Techno Economic Clearance to the KGPP R&M Works vide its
letter No. 3/6/NTPC (Kawas)/TRM/CEA/2007/21 dated June 1, 2007. Further, on June 19,
2007, CEA has accorded its recommendation for the implementation of the KGPP R&M Works
at an estimated cost ofRs 51,604.30 Lacs.
4.04. Through R&M Works ofKGPP, NTPC plans to meet the following objectives:
• Life extension of the units
• Overcome Technological Obsolescence
• Meet statutory norms related to Environment and Safety.
• Sustain availability of the U.nits
25

4.05. The R&M schemes are planned to be implemented by 2012-13 in a phased manner. A Summary of the R&M Works cost as
provided by NTPC is given below:
I
GT Components
Extension
All the gas
components available
have almost completed
their recommended life.
For another 80,000 EOH
operation of GTs requires
replacement of the
components along with
the associated hardware.
;EX·e&t!d~Dlte.·
..~f.PI;H:,:;;··.·;
·Colfifuis-Sioniil'
First GT-
November 2009
Second GT- July
2010
Third
2011
GT- July
Fourth GT-
October 201 I
II
III
Renovation
and
Modernization of Gas
Turbine Control system
Renovation
and
Modernization of Steam
Turbine, WHRB and other
combined
cycle
equipments control system
up-gradation including
Man Machine Interface
(MMI , Vibration
708.00
2678.50
Existing GE Mark - IV
gas turbine contro'l
system has become
obsolete and phased out
by manufacturer.
Existing control system
and MMI have become
obsolete and phased out
by manufacturer.
Up gradation of the
control system with the
latest microprocessor
based digital control
system of Supertonics
Mark - VI s stem of GE.
Up gradation of existing
control system with the
latest microprocessor
based digital control
system ALSTOM
ALSPA P320.
Overcoming
Obsolescence
Overcoming
Obsolescence
Along with
GT's
Along with
Second and
Fourth GT's
26

IV
V
Monitoring system, UPS
s stem
Up-gradation of Simulator
Replacement of Halon
System
Total
550.00
275.00
51604.30
As the simulator
hardware has become
obsolete the spares
support is not available.
Statutory requirement to
phase out Halon fire
fighting system.
Present simulator Overcoming
hardware should be Obsolescence
replaced with the same as
main plant hardware so
that system workability
would not be affected.
Replacement of Halon Environment
fire fighting system with &
Inert gas fire fighting Obsolescence
system.
Year 2009-10
Year 2009- I0
27

4.06. The description of the above proposed schemes as provided by NTPC is given in the
subsequent paragraphs:
l. Gas Turbine lGT) Components Life Extension
I Area of pr'o})lem.
At Kawas, there are 2 modules of 2 Gas Turbines (GT's) and 1 Steam Turbine (ST) each. The
GTs are of GE USA make, model 9161 E and were supplied by EGT France. These are 3 stage
impulse turbines, with 17 stage heavy duty axial flow compressor. The combustion section is
multiple chamber cane annular type reverse flow design having 14 combustion chambers. All the
four Gas Turbines were commissioned in the year 1991-92.
As on August 1,2007, these turbines have clocked more than 90000 Equivalent Operating Hours
(EOHs) each. The details of machine EOHs are as follows.
• GT -1A
• GT-IB
•• GT - 2A
GT - 2B
98549 EOHs
100667 EOHs
100039 EOHs
98284 EOHs
These GT's operate on high temperatures. The temperature at turbine inlet is of the order of
1104 0 C. and the exhaust of the turbine is at 540 0 C. Further, there are various other operating
factors like different type of fuels, loading and unloading cycles, water injection etc., combined
effect of which results in corrosion, erosion and wear, creep deformation, out of dimension
limits, cracks, thermal fatigue etc.
To ensure GT availability at full potential performance and to avoid un-foreseen failures of the
machine and taking into consideration all the operational limiting factors, Original Equipment
Manufacturer (OEM) has recommended the Inspection intervals for the gas turbines which are as
follows:
• Combustion Inspection (CI) at every 8000 EOH: In this inspection, the combustion
chambers and the associated components like Combustion Liners, Transition Pieces,
Cross Fire Tubes, and Flow-Sleeves etc. are inspected and replaced, if required .
• Hot Gas Path Inspection (HGPI) at 24000 EOH: In this type of inspection, apart from the
combustion inspection portion, the turbine portion including the buckets, nozzles,
shrouds are also inspected and replaced, if required.
• Major Inspection (MI) at 48000 EOH: In this type of inspection, the whole gas turbine
including the Compressor and the bearings is inspected.

Till date, the GTs have completed
completed is as follows.
II cycles of Inspection each. The detail of GT wise inspection
Unit CI HGPI MI
GT-IA 6 3 2
GT -IB 6 4 I
GT - 2A 6 3 2
GT - 2B 6 3 2
Due to the factors discussed above, every component of the GT has a limited life in comparison
to the unit available life depending upon the type of component, its location in the turbine and its
severity of service conditions. The OEM recommends service life of the component in the form
of repair intervals and replacement intervals.
S"N "
1. Combustion Liner CI 5 CI
2. Transition Piece CI 6CI
3 Fuel Nozzle CI 3 CI
4. Cross Fire Tube CI 3 CI
5. Fuel Pump CI 3 CI
6. Stage # I Nozzle HGPI 3 HGPI
7. Stage # 2 Nozzle HGPI 3 HGPI
8. Stage # 3 Nozzle HGPI 3 HGPI
9. Stage # 1 Shroud HGPI 2 HGPI
10. Stage # 2 Shroud HGPI 3 HGPI
11. Stage # 3 Shroud HGPI 3 HOPI
12. Stage # I Bucket HGPI 2 HGPI
13. Stage # 2 Bucket HGPI 3 HGPI
14. Stage # 3 Bucket HGPI 3 HGPI
, .', .O~:'
CODlP6'ii:enti ",/. " Repa(fPite~al't, 'Rep~emehfiiite".r,.'
Thus, all the components installed in the turbines and the spares available at site have almost
completed their recommended life.
Axial Flow compressor deterioration is one of the major causes of loss in GT output and
efficiency. As mentioned earlier, all the GT's have logged more than 90000 EOH (equivalent
operating hours). Corrosion of compressor blades causes pitting in blade surface, which serves as
potential site for fatigue crack initiation in addition to increasing surface roughness. These
surface roughness and blade contour changes will decrease the compressor airflow and
efficiency.
29

I Effect ofthe problem onpfant operation and performance:
The recommended life of turbine components has expired and the same are beyond repair. This
will render the components and the turbine unavailable for operation.
Due to degradation of the compressor Blades, the compressor efficiency may come down all of a
sudden, resulting in the form of surging and thereby causing severe damage to compressor blades
due to high vibrations. There are instances at Kawas of crack development at the root of the first
stage stator blades which called for replacement ofStage#1 stator blades on three occasions.
Problems have been faced by one of the NTPC gas stations due to failure of these vanes leading
to loss of availability. Any such occurrence at Kawas may lead to generation loss and unit
unavailability for long duration in absence of the safety stock of these spares.
To replace the components with new components such that the life of the turbines are extended
and the same are available for operation for another 80,000 operating hours.
The life of the gas turbines will be extended by further approx. 80,000 hours and part
performance recovery from existing levels is expected.
II. Renovation and Modernization of Gas Turbine Control System
The GT controls Mark IV installed presently have been phased out by GE due to up gradation of
technology and components. The control of GT is a very essential function of operation. Any
unavailability of control system function may result in unavailability of machine and in the worst
case may damage the equipment. As OEM support would not be available and spares
requirement of the existing Controls would affect the safe running of the GT's.
The solution of the above problem is the Up gradation of existing control system with the latest
Microprocessor based Digital control system of Supertonics Mark VI system of GE (OEM of
present control system) or equivalent. The control system shall be Operator work station based
for control from local control room level as well at the Central Control Room level. Further the
system shall open architecture for communication for integrating with the ST and WHRB control
system so as to achieve Integrated Man Machine Interface from the CCR. The systt'm shall have
provision for Historical data storage and retrieval capability. The associated systems/equipments
requiring upgrade / compatibility with the new system shall also be upgraded. This shall include
30

systems like power supply system, flame monitoring, hydraulic converters, speed detection ,
vibration monitoring, cables etc.
The SPEEDTRONIC Mark VI is Triple Modular Redundant (TMR) having Intel 300 MHz CPU
with built in flash memory. The CPU and I/O modules are triplex configuration. Mark VI
controller is single slot VME module housing. CPU board communicates with I/O boards
through VME bus. The operating system is QNX which is real time, multitasking OS designed
for high speed industrial application system. Mark VI diagnostics includes power up, background
and manually initiated diagnostic routines capable of identifying both control panel, sensor and
output fault. Mark VI is using two communication networks namely I/O Net and UDH. Both are
Ethernet based.
New digital control system shall provide many benefits including faster response and better
regulation. This new system has improved diagnostic capability and better reliability. This
system provides better protective features, safe and reliable operation of the GTs. The mark VI
Human Machine Interface (HMI) is powerful, flexible and user friendly operator interface. It
provides all display which are needed for real time control. The Alarm Viewer provides the
alarm management functions for HMI system. The system is having facility to store the historical
data. Historian is client -server based data archival system, designed to support plant data
collection, storage and presentation of it. Historian's fast data access can significantly reduce the
time required to analyze the process. This also helps to run the GT for optimum performance and
enhances the troubleshooting. SIMPLICITY software allows configuration of the system users
to control access and privileges. Each user is assigned identity with password. In addition to the
identity of user, each user is assigned a role and each role has certain privilege levels.
III. Renovation and Modernization Steam Turbine. WHRB and other Combined Cvcle
EQuipments Control System includine: Man Machine Interface (MMI). Vibration
Monitorine:System
Steam Turbine control system (REC 920), T 20 and Micro Z system for WHRB and other
combined cycle equipments and Man Machine Interface (MMI), Vibration Monitoring System of
Block-l and Block-2
Steam Turbine, Block Control System
The present block control system namely T 20 (open loop control system), Micro Z system
(Closed loop control system) and Steam Turbine REC 920 controls system and Centralog system
(HMI) would not have OEM support and the system is obsolete in nature.
31

The existing Block#l and Block#2 Man/Machine interface "Centralog System" was installed in
the 1992 along with the main plant. Centralog system facilitates the centralized operation of the
plant from CCR. Due to revolution and fast upgradation in the field of computer system, various
components of Centralog systems have gone in obsolescence. These components are serial
interface cards, Ethernet cards, keyboards, Hard disks, graphic control cards etc.
As the Control system is obsolete in nature, the spares would not be available, thereby affecting
the system availability. As a result the combined cycle availability would reduce.
Up gradation of existing control system with the latest Microprocessor based Digital control
system ALSTOM ALSP A P320 (QEM) of present system or equivalent for both the blocks. The
control system shall control two WHRB, one ST along with the HP and LP Bypass system in one
block with Open loop controls and closed loop controls of various systems. The control system
shall have Operator work station and Large Video screen based HMI system for control at the
CCR level. The HMI shall be integrated to achieve control of entire block including GT and
common system drives. The system shall have provision for Historical data storage and retrieval
capability. The control system of both the blocks shall be linked to the plant level LAN for
collection and dissemination of information to the plant operation and management personnel.
The associated systemsJequipments needing upgrade / compatibility with the new system shall
also be upgraded, this shall include systems like UPS and DC power supply system, vibration
monitoring and Analysis system and, cables etc.
Better availability of the control system would ensure safe and reliable operation of the
combined cycle plant.
IV. UDl!radation of Simulator
Present simulator hardware was supplied with main plant package which is exactly same as main
plant hardware. This has become obsolete. The HP Computer has also become obsolete which
actually simulates the processes. So the simulator needs up gradation for better workability.
As the simulator hardware has become obsolete, the spares support is also not available. Present
Simulator is to be up graded with main plant system so that system workability would not be
affected.
Present simulator System should be replaced with the operator interface same as that of main
plant hardware.
32

I Effedot:Upgradation
The up gradation of the simulator will give better workability with the system.
V. Replacement of Halon Fire Protection System in Central Control Room and Adiacent
Relav Room, Gas Turbine Local Control Rooms, UPS Rooms
,', ", ': I
Fire fighting system of stage-l covering CCR, adjacent Relay rooms to the CCR, Gas Turbines
Local Control Rooms and UPS Rooms for Module I & II.
As per International norms and ISO 14001 norms, the Halon gas used as the extinguishing
medium is to be replaced by the Non-ODS (Ozone Depleting substances) gas. This is essential as
per Montreal Protocol as well as Gazette notification by GOL
The existing fire fighting system IS around 16 years old. KGPP is facing frequent problems due
to obsolescence & deterioration. The electronic boards, output modules for alarm and release and
the existing sensors are of the imported origin. The sensors are old conventional type. The
problem faced is due to:
• Non-availability of the spares
• Non-availability of the technical support.
The fire protection system for the CCR, LCR and UPS rooms is very critical system. In case of
any non-availability or spurious functioning of old fire protection/fire fighting system it poses
following problems:
• Unsafe working condition.
• Non-conformance to safety norms .
• Environment deterioration due to use of Halon gas .
• Any eventuality will affect the entire generation from the station.
It is proposed to upgrade the present system with the state of art; fully addressable fire fighting
system with the addressable detectors in place of the conventional detectors. This will involve
replacing the existing sensors, detection system and the actuation system. hpart from this, the
existing Halon gas is to be replaced by the Non-ODS (Ozone Depleting substances) gas.
33

I Benefits Qnperformance 1generation as the result Qfrenovation
Reliable and trouble free fire detection and actuation system with the facility of pin-pointing the
location of fire / false call will ensure the safety and security of the switchyard building and
hence entire station. It will ensure the following:
• Safer working environment.
• Adherence to environmental and safety norms.
• Reduction in insurance premium.
• Saving on account of equipments, machines and human lives.
Conclusion
4.07. With the implementation of the R&M proposals, NTPC envisage that:
• The Gas Turbines life will be extended for about 80,000 - 100,000 hrs and
performance will be maintained to the design level. As per NTPC, the plant should
have an extended life of 15 years post implementation R&M Works.
• The new digital control system would provide safe and reliable operation of the gas
turbines.
• The new Halon-free fire protection would provide reliable and trouble free fire
detection and actuation system with the facility of pin pointing the location of
fire/false call and ensure the safety and security of the station.
34

5.00 R&M WORKS FINANCIALS
Estimation of Renovation and Modernisation (R&M) cost
5.01 The estimate of the R&M Works cost is as follows:
Estimation
of R&M cost
Head
NTPC Estimates
(Rs. in Lacs
R&M Cost
% of Total
HGP Components 47392.80 79.32%
Other R&M Cost 4211.50 7.05%
Total (as approved by CEA) 51604.30 86.37%
Contingency 2580.22 4.32%
R&M cost (including contingency) 54184.52 90.69%
Interest During Construction Period 5355.37 8.96%
(IDC)
Financing charges 209.12 0.35%
Total 59749.01 100.00%
Cost per MW 91.05
5.02 NTPC has determined the R&M cost estimates essentially based on the following:
• Most of the above mentioned cost estimates are based on either the budgetary
offers/purchase order or quotations invited during the year 2004 and 2005.
• NTPC has considered the exchange rate of Rs. 45 /- per USD and Rs. 60 /- per Euro
while computing the cost of the R&M Works.
• A provision of 5% has been made towards the physical contingency for the costs
estimates provided by NTPC.
5.03 As mentioned earlier, CEA has awarded the Techno Economic Clearance to the KGPP
R&M Works vide its letter No. 3/6/NTPC (Kawas)/TRMlCEA/2007/21 dated June 1,2007.
Further, On June 19,2007, CEA has accorded its recommendation for the implementation of the
KGPP R&M Works at an estimated cost ofRs 51,604.30 Lacs.
5.04 It should be noted that the above CEA approval is before taking into account the
contingency and IDC. CEA's clearance of R&M proposals are normally accorded excluding
35

Contingency & IDC. It is understood that NTPC will obtain CERe's approval for the revised
R&M Works cost based on the actual costs incurred on implementation.
Means of Financinl!.
5.05 The R&M cost is proposed to be financed with a debt equity ratio of 70:30. Based nn
this, the means of financing works out as follows:
(Rs. in Lacs)
PartiCular . Amount % ofR&M cost
Equitv 17,924.70 30%
Domestic commercial borrowings 41,824.30 70%
Total 59,749.01 100%
Equity
5.06 The equity funding component of the R&M Works is Rs. 17,924.70 lacs, being 30% of
the R&M cost including IDC and finance charges. The rate of return on equity has been taken as
14%.
Borrowings
5.07 Domestic commercial borrowings of Rs. 41,824.30 lacs would be raised from the
financial institutions/ banks. The interest rate is assumed at 10 % p.a. A provision has been made
for financing charges at the rate of 0.5% of loan amount. The loan will be repayable in 10 equal
annual installments from the next year from the completion of the R&M Works.
5.0& The adequacy of projected cash flows of the R&M Works to fund the above repayment
obligations has been evaluated later in this chapter. However it is understood that NTPC would
be raising funds based on its balance sheet and therefore debt servicing is not dependent only
upon the R&M Works cash flows.
Tariff and R&M Works Profitability
5.09 The projected profit and loss account, balance sheet, cash flow statement and the key
financial indicators of the R&M W9rks are given in Appendix - I.
5.10 The key assumptions underlying the profitability estimates for the proposed R&M Works
are given in Appendix II.
5.11 The commissioning date of the units has been taken as follows:
First GT 30 November, 2009
- Second GT 31 July, 2010
- Third GT 31 July, 2011
- Fourth GT 31 October, 2011
36

5.12 The financial appraisal of the R&M Works has been assessed assuming that the power
shall be continued to be sold by NTPC Kawas based on the existing Bulk Supply Agreement
entered into with the beneficiary states and the existing tariff notification issued by CERC for the
central power utilities shall continue to be applicable to the KGPP post R&M Works.
5.13 It is understood that the Bulk Supply agreement entered into with the beneficiary stMes
will continue to contain the existing provisions and safeguard for ensuring timely payment by the
beneficiary states. Accordingly, timely payments have been assumed in the R&M Works
financial s.
5.14 The R&M Works would lead to increase in the Fixed Charges component of the Tariff
for KGPP, covering the following costs items as per the CERC tariff norms:
• Depreciation on R&M Works cost, including advance against depreciation.
• Interest on loan for R&M Works
• Return on Equity funding
• Interest on incremental working capital (additional debtors due to increased tariff
and maintenance spares)
5.15 The other components of the fixed charge i.e. the O&M expenses will remain as before
since these are recoverable at the flat rate per MW. Thus, there will be no incremental revenue
on this account. The tariff norms provide for return on equity on post tax rates basis. Hence the
incremental income tax liability shall also be recoverable from the beneficiaries.
5.16 The existing fixed costs which form part of the Tariff shall remain unchanged with the
implementation of R&M Works except that there could be decapitalisation of project cost on
account of replacement of existing plant and machinery under the R&M Works. This may reduce
the existing fixed costs recovery.
5.17 As far as the variable charges (i.e. the fuel cost) are concerned, these shall continue to be
recovered at actuals as per the Tariff norms.
5.18 The incremental recovery of the fixed tariff shall form the incremental Sales Revenue for
the R&M Works.
5.19 In view of the above, the fmandal viability of the R&M Works has been evaluated based
on the incremental revenue and incremental costs to KGPP.
5.20 The life extension of GTs has been considered for 15 years. The levelised tariff for 15
years has been worked out taking full capacity of the KGPP i.e. GTs (4*106 MW) and STs
(2* 116.1 MW) throughout the life extension period. This would imply that the Steam Turbines
and other components of the plant shall also be available for the extended period of the project.
In this regard, it is assumed that if and whenever additional expenditure L required to be incurred
on the Steam Turbines and other components, KGPP will get compensated by way of appropriate
increase in tariff accordingly at that point of time in future.
37

5.21 The power station's performance in the year on completion of the full phase of R&M
Works (i.e. during the year 2012-13) is given below:
656.20
80%
4598.65
4460.69
9871.57
9871.57
2091.73
22.13
5.22 The key financial indicators of the R&M Works are given below:
Impact on Tariff
Parameters
Key Indicators
IRR 11.41 %
Average DSCR 1.38
Maximum DSCR 2.44
Minimum DSCR 1.18
Project Payback Period from the 8.17 years
year of commissioning of the first
GT i.e. FY 2009-10 (based on cash
accruals before interest on long term
loan)
Incremental Levelised Tariff 21.41
(paisalkwh) - l.e. Fixed Ch:rrges
(based on CERC tariff norms and
taking discount rate of 12% p.a.)
5.23 As per the details provided in the earlier chapter the break up of the existing tariff is as
under:
(FiJ[ures in PaisaIKwh)
Particulars·;··.'''/:-;;;'~:... , ';

Particulars
Auxiliary Power
Consum tion (%)
Gross Station Heat rate
(kcallk Wh)
2004-05 2005;.()6 2006-07
3% Normative
2008;.()9
25.72
285.50
25.72
285.50
25.72
285.50
25.72
285.50
25.72
285.50
364.41 364.76 365.11 365.52 365.88
102.88
0.00
102.88
0.00
102.88
0.00
102.88
0.00
102.88
0.00
Total Tariff under
Scenario 2 A+C 156.08 156.42 156.77 157.18 157.54
5.24 From the above Table, it may be seen that the fixed charges are in the range of Paisa 53
to 54 per Kwh. The fixed charges are low at present sinc~ the plant has depreciated to a large
extent and the loans have been fully repaid. With the R&M Works, the fixed charges would
increase by around Paisa 21.41 (i.e. estimated incremental levelised tariff). Thus the revised
fixed charges shall be around Paisa 75 per Kwh (based on 80% PLF). This is before taking into
account reduction in fixed charges due to decapitalisation, if any, of the existing plant being
replaced under the R&M Works. The revised fixed charges are understood to be lower than that
of a green field gas plant.
5.25 The total tariff cost is dependent upon the actual input scenario i.e. gas / Naphtha and can
vary significantly depending upon the proportion of gas / Naphtha used. Further, in case the
actual PLF is lower than 80% with availability remaining high the average tariff to the
beneficiary states would be further higher (as the fixed charges would be recovered by NTPC on
availability basis but for the beneficiary, it would be apportioned over lower energy sold!
purchased as compared to at 80% PLF).
5.26 However, under the CERC Tariff norms, the above costs are pass through and it is
assumed that the beneficiary states would continue to bear the additional cost due to the higher
input costs/ lower PLF. (In case NTPC was to sell the power as a Merchant Plant, these
additional costs may have impacted the competitiveness of the power produced).
39

••• , •••. , , ; ~ • - , ". q \ '" ( '" •
Sensitivity Analvsis
5.27 A sensitivity analysis of the R&M Works financials is carried out on the following key
parameters:
~~~~ H'~~"; ~'r'-,_,_rt~'JC':I' . ]i::, ._ ,":"(~'l't,~ .. 1'.~"
!"" . " ~.~;- I'''' ,,,,. .... l - '
" ," '" ~'(_1I'''1'~
..... '''.. --;~~,:,.
~~ ~
Base Case 11.41% 1.38 21.41
Increase in R&M works cost (5%)- 11.41% 1.38 22.48
pass through
Increase in R&M works cost (10%) 11.38% 1.38 23.55
- pass through
Decrease in R&M works cost (5%) 11.41% 1.38 20.34
- pass through
Decrease 10 R&M works cost 11.41% 1.38 19.27
(10%) - pass through
Decrease in PLF (5%) (i,e. PLF at 11.41% 1.38 22.84
75%) - Though full recovery of
fixed cost at PAF 80%, but higher
average fixed cost per unit sold
Decrease in PLF (10%) (i.e. PLF at ] ].41% 1.38 24.47
70%) - Though full recovery. of
fixed cost at PAF 80%, but higher
average fixed cost per unit sold
Lesser capitalisation of the R&M 10.56% 1.31 20.33
Cost allowed by CERC (95%)
Lesser capitalisation of the R&M 9.70% 1.24 19.32
Cost allowed by CERC (90%)
Increase in R&M works cost (I 0%) 9.80% 1.26 21.40
- not pass through
Increase in Rate of Interest on long 12.02% 1.36 22.26
term loan (1% p.a.) - pass through
cost
Decrease in Rate ofInterest on long ]0.81% 1040 20.58
term loan (1% p.a.) - pass through
cost
40

Overall analysis
5.n From the above tinancial analysis, the following aspects emerge:
• The incremental levelised fixed charge as per the sensitivity analysis would increase!
decrease due to the changes in R&M Works costlPLF!interest rate etc. (though with
varying impact) as compared to the base case. However, if these are pass through
costs, there is no impact on IRR to NTPC.
• In case, CERC does not allow capitalization of full R&M Works cost to NTPC, there
would be under recovery to NTPC leading to lower IRR. However, it is assumed that
with NTPC's considerable experience in project management and R&M Works, the
probability of such an event should be low.
• It is understood that NTPC would continue to supply power to the beneficiary states
during the extended life of 15 years as per the Bulk Sale Agreement and the CERC
Tariff norms. Thus NTPC should be able to recover full fixed charges, considering
NTPC's consistent past performance in achieving over 80% plant availability.
Further, the Energy Charges shall be a pass through cost.
• In view of the existing Payment Security Mechanism and NTPC's past experience, it
is expected that KGPP should be able to collect sales revenue as per the payment
terms.
• The R&M Works IRR of 11.41 % is higher than the weighted average cost of capital
(i.e. 11.20 % based on 14% p.a. post tax return on equity and 10% p.a. interest rate on
long term loan and Debt Equity ratio of 70:30). The CERC tariff computation
provides for reimbursement of actual interest cost and post tax return on equity @
14% p.a. at the Debt Equity ratio of70:30.
• The DSCR is ranging between 1.18 and 2.44 which is within the normally acceptable
norms by the banks! financial institutions. The depreciation charge @ 6% p.a. as per
the CERC tariff has facilitated enough cash flows for the R&M Works to achieve this
level of DSCR.
5.29 Based on the above projected financials, assumptions and the project evaluation
parameters, the R&M Works appears to be financially viable.
41

S.LN3:W'JUV.LS '1VDNVNU

NT
• w••
• o- ro • w.•••
Proflt.llbll ectlon.
0.00 0.00 1.00 2.00 '.00 '.00 '.00 •. 00 1.00 •.00 '.00
For the .ar ended March 31 31-M.r.41 31-Mcr.ot 3t-Mar·1o. 31-Mar-i1 31-M.r-12 31-M.r.13 3100M.r-1. 31-M.r-iS 31·Mar-ia 31·Mar-11 31-Mar-18
l
851.20 658.20- '58.20 156.20 154.20 151.20 856.20 656.20 656.20 656.20 656.20
rotJon
0.00 0.00 12.00
0.00 0.00 12.00
0.00 0.00 12.00
0.00 0.00 12.00
0." 0." 12.00
•••• ••••
• 0%
Million Units 0.00 .598.6
MOOon UnIta O. 137.00
MfUfon Un 0." 4480..6
.• 8760. 8760 .
MNIlonUnllo O. 4460 .•
P.fMIKwfw 0.00 19.60
Ib. In lacs 0.00 8742.5
Ex: enditure
O&Me nse' RS./nt.ac:t. 0.00 0.00 0.00 0.00
Total Ex ndfture R.I. In lAct: 0.00 0.00 0." 0.00 0.00 0.00
P8DIT 0.00 0.00 1137.3 5305.0
De redation Rs. in lacs 0.00 0.00 38656 1847.8
Advance A .ins' De "!ltion Rs.lnUtc:::s 0.00 0.00 0.00 0.00
Interett on lotn R'./n 0.00 O. '50 2155.
Inton~n a 'tal Loan R •. In L..es 0.00 3e.43 1".
PST fts. Inucs 0.00 0.00 .u ..(1 1ft .1
Groa. Cuh Accru." Ra.ln UCI 0.00 O.
•••• •••••
Gross Profit M GPM% 100% 100% 100o/e '00% 100% 100% 100% 100% 100%
PST % 23.16% 22.57% 21.06% 21.19% 22.55% 24.02% 2562% 27.38% 29 26%

Kawai u •_r ..,t. &
••••
rontallbll P
••••
10.00 11.00 12.00 13.00 14.00 16.00 16.00 17.00 18.00
For the If ended Man:h :U 31-Ma,-1. S1-Ma,·20 31-Ma,·21 31-M.,-22 31·Ma,-2) S,-Ma,·2. 31-M.,-2S :)1-M.,-26 31·»&r-27
.ratlon
MW
'''.20
116.20 "'.20 1'1.20 156.20 151.20 656.20 866.20 656.20
aratlon
MllliorlUflfta
au 'on MilliooUnita
MlllionUnIlt
•
Million Units
Pa'se/K¥ffU'
Ra. in '.Ie.
Ex ndltun
O&Me Rt. In lacs 0.00 O. 0.00 0.00 O.
Tot.IEx ndllure Rs. In Laes 0.00 0.00 0.00 0.00 0.00
PBOlT 6096.41 6085.' 5,"".1 3008.7 1189 .• 1
aliOn Rs. in lacs 3584.91 3534.91 1737.2 643
Advance A ainlt De 'abon Rs. in lacs -214.33 -214 -125.03 -491
Interest on loan RI. in Lacs 0.00 0.00 0.00 0.00
1m on \\b1d C L•••• RI. In laC! 162.31 154.21 135.2 108.6
PBT lb. J" Ltc. 2683 .• 2660.' 1261.2 486.1
Gro•• Ca." Accruals R•• In Lac.
,_ ,_
5913.7 6023.5 6215.' $722.71 5934.1 $931.4 2873.4 10$1.1
GrossProfttMa n GPM% 100% 100% 100% 100% 100% 100% 100%
per % 31.35% 33.66% ~.18% 35.77% 42.05% 42.08% 42.06% 41.92% 40.91%

RIM
NTPC LTC
Klwa. ~. Power P ect # WOt1ls
ealance Sheet
RS.ln lacs
Forthe ar ended March 31 31-Ma,-oa 31oMa'"," 31-M.,·10 31-Mar·11 31·M.r·12 31-Ma,·13 31-Mar.104 31·Ma,·15 31·Ma,·16 31·Mc,·17 31·Ma,·18
Assets
Gross Block 0.00 59748..4 59748.4 59748.4
Less: De tttCiabon 0.00 19515.21 23100.1 26685.0
Net glad< o. 4023J.2 38648.3 33003..4
ca laIwmlnPr 7893. 0.00 0.00 0
."
CurrentAt;sets·
Receivables 0.00 1457.
Mainl&n-arn:e S ar&.t 0.00 597.48
Cash and bank balances 0.00 141-43.1
Total 7893.2 25-751 47251.0 804&0.01 580420.' •••• 31,01
U.bl!lUea
Share ca tal 2367. n25. 13924. 16

NTPC L 0
KJlWlI$ Gu Power ec:t-R&MWor1ts
aJl'Jlnte Sheet
R•• In LAc.
Forth. If ended MJln::h :11 31-M.r-1f 31-M.f·20 31-M.r·21 31-M.r-22 3M~.r-23 31-M.r-24 31-M.r-2S 31-Mar-2E1 31-Mar-21
"
59748
51566.9
8181.51
0
989,9 6«7 432
597-48 597.48 597.4
43116.9 46076.7 47210.91
Tot.' 4U76,1 47251, 456tl.8 51865." U4lJ8.2 5421&.
U.btlttM.
...,.-
Sh8reC 1792.04, 17924. 17924. 17924. 17924. 17924. 17924.5
ReJel'Y8J end J us 21327.1 2 16.1 356A 28920. 33770.7 35032.0 35518.7
Tenn loan
-R ll3e47 4182. 0.00 0.00 0.00 0.00
1353.7 1332. 1335. 1190.5 931. 772.61
T

· ' ..'.
NTPC LTO
Klw •• Gu Power Pro ect· R&MWo•.•.•
C•• hflow Pro ectlon.
R•. In Ilet
For the arended March 31 31""".0' 3,-Mllr.QI 31"'.r-10 3'-Mllr·" 31-MM·12 31.M.1r-13 31oM.r·'" 3'-M.r·15 31-Mar-1. :I'·Mar-11 :l1-Mar·18
Inflow
Orou Cash A.o:rualt 0.00 .00 64. 304

N CL
KawllS GIS POW'llrP • R&M Wor1l;.
C•• hftow Pro
RI. In tics
For the e.r tnded March 31 31-M.,-1' 31-Ma'·20 31·Mar.;l1 31-M.r-ZZ 31-Ma'·23 31-Mar-Z.4 31-M.r·2S 31-M.r·26 31-Mar-2T
Inflow
-
Gros, Cesh Aecruals 5973.7 6023.5 6275. 6722.71 5934.1 5931. 5291.7 2873 1081.1
Inct&aseln
0.00 000 0.00 0.00 0.00 0.00 o. 0.00 0
Term Loan Qr8w1s "
·Ru 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
1nc::nt8$$ In bank botT'OwI ..t6.e1 -46.81 -21.31 3.46 -125.68 -18.2 -258.91 -159.0
Toto' 5121.' 5971.7 1250403 1726.1 6808. 6273.51 2814. 922.11
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
4182.3 4182.3 41&2. 4182.3 0.00 0.00 0.00 0.00 o.
-62.41 -62.41 -28.41 4.S1 -167,58 -1.80 -24.33 -345.22 -212.0
41 •. 4119.'
., "-
4187 . -,67.58 -1.10 -24.33 -U5.2 -212.0
n ealance 1 ••. '94'4 .• 21271." 33 1.'
3'''7.
37111.1 48078.7
IUS I Deftclt 1101.' II 7 2100"' 213t.1 -5131." 5297. 1134.1
Closln Ba'ance 'NU•• 21211." 23371. 2&911.1 371".1 43111,9 47210.91

NTPC LTD
K.Wls au Power Pro .ct • RIM Worts
DSCR.nd IRR CAlCULA llONS
RI. in Lies
DSCR C"lcul.tlons 31..Mar-o 31-Ma, 31-M.,-1 31..M.,-11 31-M.,-f 31-AW'·f 31..Mar·1 31·M.,·'
Numerator
- Gross Cash Acc::.ruals 0.00 0.00 4690.7 5676. 5874,2
-Imereslon Term loan! 0.00 0.00 3431.5 3973.2 2300.32
Total 0,00 0.00 '12%.31 •• t.t1 "74.S
Denominator
-lnteres' on Term Loans 0.00 0.00 4.10. 2155. 34J1.5 3555.0 3136. 1882.
• Re a nt 0.00 O. 0.00 0.00 0.00 4182.3 4182.3 4182.3
0.00 0,00 450.98 21$1. 3-431.5 7137." 7319.1 6064 •.4
0.00 0,00 2," 2.41 2.37 1.20 1.22 1.29
2..u
1.38
1.18
'.00 8.00 7,00
••••
0.00 0.00 0.00
0.00 0.00 0.00
0.00 0.00 0.00
·15.84 ·15. -15,60
5724.9 5774.7 5824.4
3555.0 3136_8 2718
Net Cuh flow -1127. -18118.1 ·17607.11 ·1t3S. 3&30.0 'C'7.151 9295.8 8927.13 8558.8 8190,18 7821.7
IRR
1'."'%

·.,"'<
NTPC LTO
Kawas Gu PO'Wer tct - R&MWor1l.s
OSCR and IRR CALCULAnoNS
Rs. In Lacs
OSCR Cak:ulaUOns 31

Klw" a•• POMt NTPC~ P • M Wortl.s
PAYBACK
R•. lnlaca 0." 0." 1.00 3.00
••••
7.00 9.00
•••• •••• ••••
Forth. ear ended M.n:h 31 31-M.,-OI 31-M.r~ 31-Mar·10 31·".'·11 31-M.(-12 31oM.t-13 31-Mat-104 31-Mar·16 31-M.r-16 31-Mar-17 31-Mar-18
INFLOWS
PBT 0.00 0.00 263.41 1197.1 1749.3 2091.7 2140 2189.S; 2239.5 2289.J.! 2339.11
Add de nocfation incl. AAD 000 0.00 386. 1847.6 2941. 35&C.91 3584.91 3584.91 3584.91 3584.91 3584.91
Add: Interest term loan 0.00 0.00 450.ge 2155.60 3431.5 3973.2 3555.0 3136. 2718. 2300.3 1882.0
LLss : 'nCTtv5I! in Ulortillg C4piUIJ jUndid from inlmud accrual 0.00 0.00 190.49 168.08 241.71 -37."" -15.84 .15.60 -15.60 -15.60 -1560
lJ'Icre.ue in net watkin caitsl 0.00 0.00 761.97 664.3
•••••
-150. -63.35 -62.42 -62.41 -62.41 -62.41
l.e'u: Increase in WorkinR Ca itallban 0.00 0.00 571.4f 498.24 725.'. -112. -47.51 -46.81 -46.81 -46.81 .46.81
tnflows-5ub-total 0." ••••
'10~ ....." 1No." ••.• 1.51 t2'5.M 8127.1 8551.' 81to.1 7821.7
01JTROWS
l..e5s : Capital Expeondilure inc1! I Finand cost) 7893.2 17'" 7 .7
•••• o. o. 0.00 0.00 0.00 0.00
Outflow
Pro Kt Cub Row' (IU MUlIon) (7"320 (17•••. 22 !197~.32 (3352.37 2935.05 9687.51 9295.86 8927.13 8558.65 8190.18 7821.70
Cumulative Investment (~Million (7893.20 25751.43 (4S505.75 {48858.11 (45923.07 {3623S.$5 {26939.10 18012.57 9453.91 1263.74 6557"36
Plybilck (Yeill"5) 1.17 - - - - 8.17

•
=
KawlS Gas ec:t - RAM Works
Add redatlon incl AAO 35&4.91 35&4.91 3786.1 4182.3 3370. 3370. 3001. 1612.2 594.4
P PERIOD
10.00 11.00 11.00 13.00 11.00 18.00 17.00 11.00
I r ended March 31 31.••• ,-1' 31-M.,-2O 31-M.,·21 31oM.,-12 31 31•.•••'-24 31-M.r·ZS 31-M.r-26 31-Mar-27
2368.8 2438 2_. 2s.oo.
2563 2~~ 228~ 1261.2
""".7
Add: Interest term loan 1463.8ol 1045.6C 627.3€ 209.12 0.00 0.00 0.00 0.00 o.
Ln.s: JlfcrtaSt in w

NTPC l TD
Kawu G•• Po~r Pro ect • RIM Worts
T.11ft E.ttmat ••
•. 00 ••00 1.00 2.00 5.0Q 1.00 8.00 9.QO
31-M1r..08 31-M.r-4t 31-M1r·10 31-M.r-11 31-M.r-1( 31-M.r-16 31-Mar-1T 31·M.r-18
138.1 000 431. 202•. 3115.14 238217 2015.68 1649.1
0.00 0.00 386. 18A7,6 3584.94 3584.94 3584 3584.9
0.00 0.00 270.5 1293. 2509.4 2509.4 2500 25094
0.00 0.00 48.58 13. 2131.91 265.94 25798 25002
0.00 0.00 0.00 0.00 0.00 000 000 0.00
138.13 •. 00 1131.3 5305.0 9491.4 8742.5 83•.•. 7993.&1
.lseJKwhr •. 00 •. 00 30.60 2•.1' 21.28 19.60 18.16 11.92
scoun n actor
, •••
0.3 9
Discounted Tarm •. 00 0.00 29.&0 2-4.51 18.11 ".11 13.04 11.18 1.51 8.18 6.98
l.evellsed T.rtn Palse/Kwhr 21.• '

N PC L
Kawu Gas Power Pro aet - R&M Worh
T."" &tim.I ••
14.00 11.00 16.00 17.00 18.00
31·M.,-23 31-M.,-:. 31·M.,-2! 31-M.r-Ze 31-M.r-27
0.00 0.00 0.00 0.00 0.00
3370 3370 3001. 1612.26 594.4
2509.4 2509. 2238.87 1216.' 450.5
216,.' 205.62 200.9 180.3 144
000 0.00 000 000 0
6096." $0'5.' 6444.7 3008.1 1189.8t
13.67 13.6-4 13.32 11.5$ 11.6
DIsco actor
DIscounted T.M
levell.eeI T.,.", P"fselKwtl
•
•.3 .2 .248 0.221 •• 1 0.17 0.15 •. 4
5." 5.04 4.40 3.94 3.02 2.69 2.35 1.82 1.63

APPENDIX
II
KEY ASSUMPTIONS

Appendix II
ASSUMPTIONS
The assumptions made by NTPC in the financial forecast of the Kawas Gas Power Project -
R&M Works are given below:
I. Installed capacity:
• Gas Turbines:
• Steam Turbines:
656.20 MW
(4*106 MW)
(2*116.1 MW)
2. The R&M Works award date has been taken as March 1,2008. The commissioning date
of the Units have been taken as:
- First GT
- Second GT
- Third GT
- Fourth GT
- 30.11.2009
- 31.07.2010
- 31.07.2011
- 31.1 0.2011
R&M Works Cost estimation
3. The R&M Works cost estimated by NTPC is based on either the budgetary
offers/purchased order or quotations invited during the year 2004 and 2005.
4. Exchange rate of Rs. 45 /- per USD and Rs. 60 /- per Euro has been considered while
computing the cost of the R&M Works.
5. A contingency provision of 5 % of R&M Works costs has been provided in the R&M
Works cost.
6. Interest during construction on all loans is funded through drawls ofloans/equity.
7. While computing IDC, the interest on debt till the year in which the particular unit is
being commissioned, has been capitalized. Interest thereafter has been charged to revenue.
8. 25% of the estimated working capital requirement has been considered as the working
capital margin and it assumed that the working capital margin shall be funded by internal
accruals.

Capitalisation ofR&M Works is as follows:
9. The Capitalisation Schedule ofR&M Works is as follows:
SNo. Description of the Scheme Capitalisation
I
GT Components Life Extension:
• First GT • November 2009
• Second GT • July 2010
• Third GT • July 2011
• Fourth GT • October 2011
II Renovation and Modernization of Along with each GT's
Gas Turbine Control system
III Renovation and Modernization of Along with Second and Fourth
Steam Turbine, WHRB and other GT's
combined cycle equipments
control system up-gradation
including Man Machine Interface
(MMI), Vibration Monitoring
system, UPS system
IV Up-gradation of Simulator Year 2009-10
V Replacement of Halon System Year 2009-10
Means of Financing
10. The debt to equity ratio during construction (for the R&M cost) has been assumed to be
70:30. For this R&M Works, only domestic currency loans have been considered.
11. The terms assumed for the domestic currency loans are as follows:
Loan
Interest Rate
Financial fee
Repayment period
Ru ee
10.00 % .a
0.50%
10 annual equal installments from the
next year of completion of the R&M
work (i.e. ear 2012-13 onwards)
12. The post tax return on equity has been assumed at 14% p.a. for tariff computation, as per
the CERC norms.
13. Interest on bank borrowing for working capital has been assumed at @ 12.75 % p.a (i.e.
SBI PLR rate)

Assumptions of operational and financial norms
14. The life extension of GTs has been considered for 15 years.
J 5. Tariff during the extended life of 15 years shall be as applicable as per the existing CERC
Tariff norms.
J 6. The levelised tariff for the 15 years has been worked out taking full capacity of the KGP?
i.e. GTs (4*106 MW) and STs (2*116.1 MW) throughout the life extension period. This would
imply that the Steam Turbines and other components of the plant shall also be available for the
extended period of the project. In this regard, it is assumed that if and whenever additional
expenditure is required to be incurred on the Stream Turbines and other components, KGPP will
get compensated by way of appropriate increase in tariff accordingly at that point of time in
future.
17. The stable PLF is assumed to be 80% as per CERC norm. Auxiliary power consumption
has been taken at 3%.
J 8. Tariff depreciation has been assumed at an average rate of 6 % p.a. at SLM of the R&M
cost with suitable adjustment for advance against depreciation as per CERC norm and is limited
to 90% of the asset value. Advance against depreciation has been adjusted against depreciation
after the loan repayment is over.
19. In the profit & loss account, actual interest on term loan has been taken whereas for tariff
computation purposes, interest on term loan has been taken on normative repayment of loan
basis (i.e. as per the CERC norms - in case any moratorium period is availed, depreciation
provided for in the tariff during the years of moratoriwll shall be treated as repayment during
those years and interest on loan capital shall be calculated accordingly).
20. Income tax has not been considered in the tariff calculation.
21. For computing levelised tariff, yearly tariff has been discounted @ 12 % over the period
of extended life of GTs.