This follows two days of hectic discussions between SBI Caps, Power Trading Corporation (PTC), project developers and the state electricity boards (SEBs) during Central Electricity Regulatory Commission (CERC) hearings.

Although this is a marginal reduction from the previous levelised tariff figure of Rs 1.2249 per Kwh, it will result in an annual savings of around Rs 75 crore to the five SEBs of Punjab, Haryana, Gujarat, Madhya Pradesh and Rajasthan.

For a 30-year period, the savings on account of this reduction works out to be Rs 2250 crore, a substantial amount given the current financial position of SEBs.

The final tariff recommended by SBI Caps is at 85 per cent plant load factor (PLF) and at 88 per cent front loading.

CERC, after hearing all the parties, is expected to give its final verdict on the tariff for this project sometime next week, before Prime Minister Atal Bihari Vajpayee leaves for the US. This is because a formal project development agreement is expected to be signed between PTC and the project developers during Mr Vajpayee's visit.

The Rs 20,477-crore Hirma mega power project is being jointly developed by the US-based power major Southern Energy and Reliance Power.

In its final recommendations to the commission on Friday, SBI Caps has recommended the use of super critical boilers while implementing this project. Even the technical consultants to CERC, Black and Veatch have recommended use of these boilers as against the sub-critical boilers.

However, with super critical boilers, SBI Caps has recommended a 0.74 per cent increase in levelised tariff as the capital cost will be higher by around $ 31 million plus as against a sub-critical station.

Once approved by the commission, this tariff will then become a benchmark for negotiating tariff from other mega power projects.

Another change made by SBI Caps in its final recommendations to the commission relates to the capacity charges. Earlier, in its report to the commission, SBI Caps had recommended a capacity charge of US $ 0.0362 per Kwh, 50 per cent of which was to be converted into rupees at the current exchange rate ($ component) and 50 per cent would be converted at the rate of Rs 35 (rupee component) for the first 12 years.

The ratio was to become 25 per cent and 75 per cent respectively for the next 18 years, with capacity charges at $ 0.0101 per Kwh.

However, in its final recommendations, SBI Caps has suggested a capacity charge of US $ 0.03615 per Kwh and now 46 per cent of which would be converted into rupees at the current exchange rate ($ component) and 54 per cent would be converted at the rate of Rs 35 (rupee component) for the first 12 years.

The ratio will now become 23 per cent and 77 per cent respectively for the next 18 years with capacity charges at $ 0.0105 per Kwh.

SBI Caps has fixed 30, June, 2001, as the `milestone' date by which all the agreements related with the power purchase, fuel supply and implementation should be in place.