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Reliance Power, CERC spar over launch of commercial operations at Sasan project

NEW DELHI: Has Reliance PowerBSE -1.30 % commissioned its Sasan ultra mega power plant? It seemed a routine announcement that the Rs 23,000-crore plant commenced commercial operations in March, but the regulator has grave doubts.

Central Electricity Regulatory Commission(CERC) has ruled that the project has not commenced commercial operations since it did not meet the set testing parameters. The company strongly contests the regulatory ruling. It said in an emailed statement that the order was "violative of principles of natural justice and is not tenable in law.Sasan Power is approaching Appellate Tribunal to quash the untenable order of CERC."

"The first unit of 660mw of 4,000 mw Sasan UMPP achieved commercial operations, as certified by the Independent Engineer (IE), appointed jointly by the procurers and Sasan Power, on 30.03.2013 which was duly accepted in writing by all the 14 procurers," the company said.

The regulator has directed the company to start testing of the unit and apply afresh for being declared as commercially operational. The regulator also ruled that the company did not act as per the provisions of the power purchase agreement.

"It is noticed that SPL (Sasan Power Ltd) instead of taking appropriate remedial measures under the PPA (power purchase agreement) has vide its email dated 30.3.2013 to WRLDC has intimated the commercial operation of the Unit from 0:00 hrs of 31.3.2013 and sent the declared capacity of the Sasan UMPP for 31.3.2013 for 620.4 mw. In our view, SPL has not acted strictly as per the provisions of the PPA," the regulator said in its order.

The Western Region Load Despatch Centre (WRLDC) had contested the company's claim in the CERC.

Reliance Power refutes this. "WRLDC has no locus standi to question COD (commercial operation declaration). WRLDC petition was listed before 
CERC on 23.05.2013 for hearing on maintainability only and the hearing was accordingly confined to maintainability. It is surprising that CERC vide order dated 20.06.2013 chose to deal with the merits of IE Certificate without even hearing Saasn Power or IE. The order effectively is an ex parte order," the company said.

Industry sources said that as per its power purchase agreements with 14 distribution companies, the company will receive a tariff of 70 paise per unit supplied from the 
Sasan project for the first year. The tariff remains same for the second year and rises by over 70% in the third year. If commercial operations started in March, which means the previous fiscal year, it would therefore be beneficial from the company as tariffs rise significantly in the third year.

WRLDC had moved CERC citing "deliberate suppression and misrepresentation of the facts" in a certificate of an independent engineer declaring the Sasan project as operational.

A senior WRLDC official said the company was required to the run the unit 3 of 660-mw at a minimum 95% of installed capacity for 72 hours.

Reliance Power declared the plant as operational at 101.38-mw capacity based on a certificate from an independent engineer and consensus with its procurers accepting scheduling of the electricity.

"The company was given ample opportunity to raise generation, but due to the issues at the plant, it could not increase generation at Sasan beyond 165 mw during testing period... Commercial operation of a project is a commercial arrangement between the generator and its consumers but declaring the project operational at 15% of capacity raise concerns on security of the grid," the WRLDC official said.