The exchange rate in July 2007 was Rs 40.27 per US dollar and the depreciation rate was estimated at 0.74% per annum.
The apex court had said CERC can allow tariff revisions “in a situation where there are no guidelines framed at all or where the guidelines do not deal with a given situation”.
The Central Electricity Regulatory Commission (CERC) has refused to grant compensation to Reliance Power against the unforeseen rise in foreign exchange rates which has considerably increased the debt servicing obligations for the company’s 4,000 mega-watt (MW) Sasan power plant.
The company claimed that due to depreciation of the Indian Rupee, the Sasan plant’s US dollar-denominated debt service obligation over the repayment period will be about Rs 11,392 crore, against Rs 6,516 crore estimated in 2007 when the company had submitted the bid for the project.
In 2014, the regulator had already held that the depreciation of the rupee is not a force majeure event. The latest petition relied on the Supreme Court’s April 2017 order, which had extended a lifeline to three troubled imported-coal-based power plants of Tata, Adani and Essar in Gujarat by allowing CERC to revise tariffs to facilitate pass-through of future fuel price escalation. The apex court had said CERC can allow tariff revisions “in a situation where there are no guidelines framed at all or where the guidelines do not deal with a given situation”.
The exchange rate in July 2007 was Rs 40.27 per US dollar and the depreciation rate was estimated at 0.74% per annum. The rupee has depreciated by about 5% per annum since then. Reliance Power also added that its claims have to be considered keeping public interest in mind since the plant’s levelised tariff of Rs 1.2/unit is the cheapest thermal power in the country. The plant supplied power to Uttar Pradesh, Madhya Pradesh, Delhi, Rajasthan, Haryana, Punjab and Uttarakhand.
CERC said the bidding guidelines had insulated the discoms’ buying power from the plant from any foreign exchange risk and the bidder is expected to factor in all possible expenditures, including the impact of foreign exchange rate variations, while quoting the tariff at which they will sell power.
Apart from borrowing Rs 11,612 crore for the Sasan project from banks and financial institutions, Reliance Power had entered a foreign currency facility agreement with India Infrastructure Finance Company (UK) and State Bank of India for $486 million, credit agreement with Deutsche Bank Trust Company Americas and Export-Import Bank of the US for a limit of $650 million, facility agreement with the Export-Import Bank of China, China Development Bank, Bank of China and Standard Chartered Bank for loan of $1,109 billion, and a credit agreement with Standard Chartered Bank, Mizuho Corporate Bank and DBS Bank for a credit limit of $150 million.