New Delhi: Reliance Power has moved electricity regulator CERC seeking compensation from the government for cost escalation at its Sasan ultra mega power project due to "unprecedented" depreciation of the rupee.
The 4,000 MW UMPP at Sasan in Madhya Pradesh is being set up by a special purpose vehicle -- Sasan Power Ltd. The total estimated cost of the project is Rs 20,000 crore.
The company has filed a petition with Central Electricity Regulatory Commission, "under the section 79 of the Electricity Act, 2003 for compensation due to unprecedented, unforeseen and uncontrollable depreciation of the Indian Rupee," the petition said.
Reliance Power has filed another petition with the Commission seeking relief and compensation due to increase in construction cost for the Sasan project.
When contacted a Reliance Power spokesperson said, "Adjustment sought by the company are as per the provisions of the PPA signed by the company with the procurers in 2007."
These two petitions would come up for hearing on March 13 and the hearings will begin after the Commission agrees to accept them.
Reliance Power bagged this project in 2007 in an international tender quoting the lowest 'levelised' tariff of Rs 1.19 per unit for 25 years.
The year-end exchange rate in rupees per US dollar for 2007 was around 39.4 compared to 54.56 levels at present, signifying a rupee depreciation of over 38 per cent.
As per the Power Purchase Agreement (PPA) between the developer of the project and procurer of electricity, the company can approach CERC for any Change in Law during the Construction period and fluctuation in the value of Indian Rupee.
Power Finance Corporation, is the nodal agency for the UMPPs in the country, it has awarded four such projects of which Reliance Power have bagged three -- Krishnapatnam (Andhra Pradesh) and Tilaiya ( Jharkhand) apart from Sasan. Tata Power is executing the fourth 4,000 MW Mundra plant in Gujarat.
An Ultra Mega Power Project (UMPP) is a power plant of at least 4,000 MW generation capacity.