Before the MAHARASHTRA ELECTRICITY … 58 42/Order-158_of _2017-05022018.pdfEmail: [email protected] Website: ... Nagpur is one of largest city in the state of Maharashtra having

Before the

MAHARASHTRA ELECTRICITY REGULATORY COMMISSION

World Trade Centre, Centre No.1, 13th

Floor, Cuffe Parade, Mumbai – 400 005

Tel. 22163964/ 65/ 69 Fax 22163976

Email: [email protected]

Website: www.mercindia.org.in/www.merc.gov.in

CASE NO. 158 of 2017

In the matter of

Petition of Nagpur Solid Waste Processing and Management Pvt. Ltd. for determination of

Tariff for sale of electricity from 11.5 MW Municipal Solid Waste based power project to

be commissioned at Nagpur to Distribution Licensees in Maharashtra

Coram

Shri. Anand B. Kulkarni, Chairperson

Shri Deepak Lad, Member

ORDER

Date: 5 February, 2018

M/s Nagpur Solid Waste Processing and Management Pvt. Ltd. (NSWPMPL), 513A,5th

Floor,

Kohinoor City, Kirol Road, Kurla (West), Mumbai has filed a Petition on 7 November, 2017

under Section 62(1)(a) of the Electricity Act (EA), 2003 and Regulations 8.1 and 8.2 of the

Commission‟s (Terms and Conditions for Determination of Renewable Energy Tariff)

Regulations, 2015 („RE Tariff Regulations,2015‟), for determination of Tariff for supply of

electricity from its 11.5 MW capacity Municipal Solid Waste(MSW) based Power Plant at

Bhandewadi, Nagpur to Distribution Licensees in the Maharashtra.

The Commission, in exercise of its powers under Sections 61, 62, and 86 read with Section 181

of the EA, 2003, and all other powers enabling it in this behalf, and after taking into

consideration the submissions made by NSWPMPL, suggestions and objections from the public

and stake-holders and other relevant material, has determined the tariff for the Project of

NSWPMPL at Nagpur as set out in this Order.

mailto:[email protected]

http://www.mercindia.org.in/

MERC Order for determination of Tariff for 11.5 MW MSW project of NSWPMPL

Order- Case No 158 of 2017 Page 2 of 92

Table of Contents

1. BACKGROUD AND BRIEF HISTORY .................................................................................................... 7

1.1. Background ............................................................................................................................ 7

1.2. Admission of the Petition and Public Consultation Process .................................................. 8

1.3. Organization of Order ............................................................................................................ 9

2. CONCESSION AGREEMENT BETWEEN NMC AND CONCESSIONAIRE ................................... 10

2.1. Tendering Process ................................................................................................................ 10

2.2. Salient features of Concession Agreement ........................................................................... 10

2.3. Salient features of the Nagpur MSW Project, as per NSWPMPL ....................................... 13

2.4. Scope of work of MSW Project ........................................................................................... 13

2.5. Existing and New Scientific Landfills.................................................................................. 14

2.6. Role of NMC ........................................................................................................................ 14

2.7. Term and Termination of Agreement:.................................................................................. 15

2.8. Ownership of assets and transfer of Project ......................................................................... 16

2.9. Viability Gap Funding .......................................................................................................... 16

2.10. Bid evaluation report and observations of NEERI and GIPE: ............................................. 16

2.11. Solid Waste Management Rules (SWM) 2016 and its Implications: ................................... 18

2.12. Provisions of Tariff Policy 2016: ......................................................................................... 21

3. PREMISES FOR DETERMINATION OF PROJECT-SPECIFIC TARIFF ....................................... 23

3.1. Regulatory Framework for Tariff Determination ................................................................. 23

3.2. Premise for Development of Tariff Structure: ..................................................................... 24

4. SUGGESTIONS/OBJECTIONS, NSWPMPL’S RESPONSE AND COMMISSION’S RULINGS .... 27

4.1. Maharashtra Energy Development Agency‟s (MEDA) Submission: .................................. 27

4.2. Nagpur Municipal Corporation‟s (NMC) Submission: ........................................................ 29

4.3. Maharashtra State Electricity Distribution Company Limited (MSEDCL)‟s Submission ... 31

5. PARAMETERS OF TARIFF DETEREMINATION .............................................................................. 34

5.1. Background .......................................................................................................................... 34

5.2. Technology of proposed MSW Project ................................................................................ 34



5.3. Calorific Value (CV) of MSW in Nagpur: ........................................................................... 38

5.4. Installed Plant Capacity ........................................................................................................ 41

5.5. Capacity Utilisation Factor ................................................................................................... 42

5.6. Auxiliary Energy Consumption Factor ................................................................................ 44

5.7. Capital Cost .......................................................................................................................... 48

5.8. Viability Gap Funding (VGF) .............................................................................................. 57

5.9. Useful Life of MSW Plant ................................................................................................... 58

5.10. Debt-Equity Ratio ................................................................................................................ 62

5.11. Depreciation ......................................................................................................................... 63

5.12. Operation and Maintenance(O&M) Expenses ..................................................................... 65

5.13. Escalation factor for Annual O&M expenses: ..................................................................... 73

5.14. Periodic Maintenance expenditure: ...................................................................................... 74

5.15. Interest on Term Loan .......................................................................................................... 76

5.16. Interest on Working Capital ................................................................................................. 78

5.17. Return on Equity .................................................................................................................. 79

5.18. Tipping Fee and Other Income ............................................................................................. 80

5.19. Discount Rate ....................................................................................................................... 82

5.20. Status of Statutory Clearances: ............................................................................................ 83

5.21. The summary of various parameters and assumptions ......................................................... 83

5.22. Tariff Rate and Other Conditions ......................................................................................... 86

5.23. Other Commercial aspects: .................................................................................................. 86

6. SUMMARY OF COMMISSION’S DIRECTIVES AND APPLICABILITY OF ORDER .................. 89

Appendix – 1 ..................................................................................................................................................... 90

List of persons at the Technical Validation Session held on 22 November, 2017 ........................................ 90

Appendix – 2 ..................................................................................................................................................... 91

List of persons at the Public Hearing held on 29 December 2017 ................................................................ 91

Annexure-1: Summary of Levellised Tariff ................................................................................................... 92



List of Tables

Table 1: Waste Generation in Nagpur ......................................................................................................................... 11

Table 2: Financial working by GIPE ........................................................................................................................... 18

Table 3: Emission standard for incinerators technologies as per SWM Rules, 2016 .................................................. 21

Table 4: Chemical characteristics of MSW ................................................................................................................. 38

Table 5: Physical characteristics of MSW ................................................................................................................... 39

Table 6: Summary matrix- All sources ........................................................................................................................ 40

Table 7: Summary matrix- Chemical and physical characterization ........................................................................... 40

Table 8: Comparative Capacity Utilization factor of MSW Projects........................................................................... 44

Table 9: Auxiliary Equipment Details submitted by NSWPMPL ............................................................................... 45

Table 10: Comparison of Auxiliary Consumption of various similar projects ............................................................ 46

Table 11: Auxiliary Consumption as considered by Commission ............................................................................... 47

Table 12: Break-up of Capital Cost as Submitted by NSWPMPL .............................................................................. 48

Table 13: Quotation for Plant & Machinery Cost (as per Hitachi-Zosen India Pvt. Ltd.) .................................. 49

Table 14: Details of Quotations received for Civil work of MSW Plant ............................................................... 50

Table 15: Comparative Capital Cost of MSW Projects ............................................................................................... 53

Table 16: Comparison of Soft Cost and Hard Cost of MSW Projects ......................................................................... 56

Table 17: Capital Cost of MSW Projects considered by the Commission ................................................................... 56

Table 18: Comparative Useful life of MSW Projects .................................................................................................. 60

Table 19: O&M Expenses for the plant as estimated of the by NSWPMPL ............................................................... 65

Table 20: O&M Expenses for pre-processing facility as estimated of the by NSWPMPL .................................. 66

Table 21: Summary of O&M expenses proposed by NSWPMPL (Year 1 to 7) ......................................................... 66

Table 22: Summary of O&M expenses proposed by NSWPMPL (Year 8 to 13) ....................................................... 67

Table 23: Detailed Break up of O&M expenses as submitted by NSWPMPL ............................................................ 67

Table 24: Category wise break-up of Employees as submitted by NSWPMPL ................................................... 68

Table 25: Detailed break up of A&G expense as submitted by NSWPMPL ........................................................ 69

Table 26: Detailed Break up of O&M expenses as submitted by NSWMPMPL ................................................. 71

Table 27: Annual inflation escalation for computation of Capex ................................................................................ 75

Table 28: Monthly 1 Year MCLR declared by SBI ..................................................................................................... 77

Table 29: Computation of Revenue from tipping fees ................................................................................................. 81

Table 30: Status of Statutory Clearances ..................................................................................................................... 83

Table 31: Summary of Project Specific Parameters .................................................................................................... 84



Abbreviations

APTEL Appellate Tribunal for Electricity

BOOT Build Own Operate and transfer

CEA Central Electricity Authority

CER Certified Emission Reduction

CERC Central Electricity Regulatory Commission

CDM Clean Development Mechanism

CoD Commercial date of Operation

CPCB Central Pollution Control Board

CSS Cross subsidy Surcharge

DBFOT Design Build Finance Operate and Transfer

DPR Detail Project Report

EA 2003 Electricity Act 2003

EIA Environmental Impact Assessment

EIL Essel Infra Projects Limited

EPA Energy Purchase Agreement

EPC Engineering, Procurement and Construction

FD Forced Draft

GCV Gross Calorific Value

GIPE Gokhale Institute of Politics & Economics

GoM Government of Maharashtra

ID Induced Draft

IDC Interest During Construction

IRR Internal Rate of Return

HV High Voltage

kVA Kilo Volt Ampere

kW Kilo Watt

kWh Kilo Watt Hour



LDO Light Diesel Oil

MEDA Maharashtra Energy Development Agency

MERC Maharashtra Electricity Regulatory Commission

MoD Merit Order Despatch

MNRE Ministry of New and Renewable Energy

MoEF Ministry of Environment & Forest and climate change

MSEDCL Maharashtra State Electricity Distribution Company Limited

MSETCL Maharashtra State Electricity Transmission Company Limited

MSW Municipal Solid Waste

MU Million Unit

MW Mega Watt

NCV Net Calorific Value

NEERI National Environmental Engineering Research Institute

NMC Nagpur Municipal Corporation

NSWPMPL Nagpur Solid Waste Processing and Management Pvt. Ltd.

O&M Operation and Maintenance

OEM Original Equipment Manufacturer

PLF Plant Load Factor

PPP Public Private Partnership

RDF Refuse-Derived Fuel

RE Renewable Energy

RPO Renewable Purchase Obligation

SERC State Electricity Regulatory Commission

SLF Sanitary land filling

SPV Special Purpose Vehicle

TPD Metric Tons per Day

WTE Waste to Energy



1. BACKGROUD AND BRIEF HISTORY

1.1. Background

1.1.1. Nagpur is one of largest city in the state of Maharashtra having 4.73% of the total urban

population of the state. Nagpur is being developed as a Smart City under Smart City

Mission of Government of India. As per Nagpur Municipal Corporation (NMC), the city

is currently generating an average of 1100-1200 TPD of waste, with an average

generation of 444 grams per capita per day.

1.1.2. For effective treatment of MSW in the Nagpur City, NMC had invited Expression of

Interest (EoI) published dated 29 November, 2014. Further, Request for Proposal (RfP)

was invited on 19 January, 2015 for selection of bidder for construction, operation and

maintenance of Municipal Solid Waste Management (MSWM) facility on Design, Build,

Finance, Operate and Transfer (DBFOT) basis for treating the MSW. Consortium of M/s

Essel Infraprojects Ltd. and M/s Hitachi Zosen India Pvt. Ltd., was selected vide

competitive bidding process and Letter of Award (LoA) was issued to Consortium by

NMC dated 4 January, 2017

1.1.3. Consortium has promoted and incorporated M/s Nagpur Solid Waste Processing &

Management Pvt. Ltd. (NSWPMPL) as Special Purpose Vehicle (SPV) for execution of

the solid waste processing plant at Nagpur. A Concession Agreement was signed between

NSWPMPL and NMC on 4 May, 2017 for design, construction and operation of MSW

processing facility at Bhandewadi, Nagpur for capacity of 800 MT per day including Pre-

processing of MSW in line with the provisions of the Solid Waste Management (SWM)

Rules, 2016 during the Concession Agreement Period.

1.1.4. NSWPMPL has proposed Hitachi Zosen‟s incineration technology for managing waste

processing and generating electricity from the processed waste. The Installed capacity of

the proposed Waste to Energy power plant is 11.5 MW.

1.1.5. Accordingly, NSWPMPL has filed the Petition under Sections 62(1) (a) and 86(1) (e) of

the EA, 2003 and Regulations 8.1 and 8.2 of RE Tariff Regulations, 2015 for

determination of Tariff for sale of electricity generated from its 11.5 MW MSW-based

Power Plant.

1.1.6. The prayers of NSWPMPL are as follows:

1. Take the accompanying Tariff Petition for approval of power purchase from the

11.50 MW pre-processed MSW based WtE plant of NSWPMPL on record and treat it

as complete;



2. Approve the levellised tariff of Rs. 7.80/kWh in accordance with the tariff structure

adopted by the Hon‟ble CERC;

3. Grant exemption from Merit Order Dispatch Principles for the Project.

4. Direct DISCOMs to consider the benefit of zero contract demand charges.

5. Direct the DISCOMs to consider energy which may be drawn during shut down or

start up after the CoD of the Project be set off against the energy injected into the

grid by the Project

6. Grant waiver on Cross Subsidy Surcharge on sale of power from the Project in case

of sale of power directly to third party.

7. Condone any inadvertent omissions/ errors/ shortcomings and permit the Petitioner

to add/ change/ modify/ alter portion(s) of this filing and make further submissions as

may be required at a later stage; and

8. Pass such an order as the Hon'ble Commission deems fit and proper as per the facts

and circumstances of the case.

1.1.7. This Order relates to NSWPMPL‟s Petition for determination of Tariff for supply of

electricity from its 11.5 MW capacity MSW-based Power Project at Bhandewadi, Nagpur

to Distribution Licensees in Maharashtra.

1.2. Admission of the Petition and Public Consultation Process

1.2.1. NSWPMPL has filed a Petition on 7 November, 2017 under Sections 62(1) (a) and 86(1)

(e) of the EA, 2003 and Regulations 8.1 and 8.2 of the RE Tariff Regulations, 2015 for

determination of Tariff for sale of electricity generated from its 11.5 MW MSW-based

Power Plant.

1.2.2. Preliminary data gaps were forwarded to NSWPMPL on 13, 22, 27 November,2017 and

11 December,2017, to which NSWPMPL submitted replies vide letter dated 21, 25

November, 2017 and 25 December,2017.

1.2.3. A Technical Validation Session (TVS) was held on 22 November, 2017. During TVS,

NSWPMPL made a presentation on the salient features of the Petition. The Commission

directed NSWPMPL to implead NMC as Party and serve the copy of the Petition to NMC

as well as to other Distribution Licensees in the state. TVS minutes were forwarded to

NSWPMPL on 29 November, 2017.List of person attended the TVS is at Appendix – 1

1.2.4. The Commission highlighted the data gaps in the Petition, and asked NSWPMPL to

comply with all data gaps within a week. Along with reply to data gaps, NSWPMPL

submitted a revised petition on 28 November, 2017. The Commission admitted the



revised Petition on 30 November, 2017 in accordance with Section 64 of the EA, 2003,

and directed NSWPMPL to publish its Petition in an abridged form by 7 December,2017,

and to reply expeditiously to all suggestions and objections received from the public on

its Petition.

1.2.5. NSWPMPL published the Public Notice in the daily English Newspapers viz. Times of

India and Indian Express and Marathi Newspapers viz. Loksatta and Maharashtra Times

in all editions all over Maharashtra on 5 December, 2017 inviting public

suggestions/objections and intimating the date of Public Hearing. Copies of the Petition

and its Executive Summary were made available at NSWPMPL‟s offices and on its

website in downloadable format. The Public Notice and Executive Summary of the

Petition were also made available on the websites of the Commission

(www.mercindia.org.in, www.merc.gov.in) in downloadable format.

1.2.6. A Public Hearing was held on 29 December, 2017 at the Office of the Commission, 13th

Floor, Centre No. 1, World Trade Centre, Cuffe Parade, Colaba, Mumbai. The list of

persons at the Public Hearing is at Appendix-2.

1.2.7. The Commission has ensured that the due process was contemplated under the law to

ensure transparency and public participation was followed at every stage and adequate

opportunity was given to all concerned to file their say.

1.3. Organization of Order

1.3.1. This Order is organized in the following 7 Sections:

Section 1 provides a brief history and sets out the quasi-judicial regulatory process

undertaken by the Commission. A list of abbreviations with their expanded forms is

included.

Section 2 describes the salient features of the Concession Agreement between NMC and

the Concessionaire.

Section 3 details the Tariff philosophy underlying the tariff determination.

Section 4 covers objection summary and rulings thereof.

Section 5 comprises the submissions with respect to performance parameters and

financial parameters, the Commission's analysis, and the methodology adopted to

determine the tariff and other parameters.

Section 6 summarizes the directives and rulings of the Commission.

Section 7 addresses the applicability of this Tariff Order.



2. CONCESSION AGREEMENT BETWEEN NMC AND CONCESSIONAIRE

2.1. Tendering Process

2.1.1. NMC had issued RfP document for selection of developers on DBFOT basis (copy of

which is shared by NSWPMPL as part of this Petition), wherein it stipulated eligibility

criteria for shortlisting the potential bidders. The eligibility criteria included the past

experience in commissioning a MSW processing facility of minimum 200 MT per day of

MSW in India or elsewhere in last five years and the plant to be operational for 180 days

before bid due date.

2.1.2. The financial requirement of minimum net-worth of Rs. 25 Crore at close of preceding

year was also stipulated as part of bid condition.

2.1.3. The Bid evaluation and selection of successful bidder was on the basis of minimum

technical and financial criteria and the bidder who quoted the lowest tipping fee declared

as the successful bidder.

2.1.4. Accordingly, the Project has been allotted to Consortium of M/s Essel Infraprojects Ltd.

and M/s Hitachi Zosen India Pvt. Ltd on DBFOT basis for construction and operation of

a MSW processing facility for 800 TPD for a period of 15 years. Post completion of the

Concession Agreement period, Concessionaire will have to transfer all the moveable

infrastructure and facilities including vehicles, equipment, workshop offices,

communication arrangement etc. and immovable infrastructure facilities, free of cost to

NMC.

2.2. Salient features of Concession Agreement

2.2.1. Consortium of M/s Essel Infraprojects Ltd. and M/s Hitachi Zosen India Pvt. Ltd

promoted and incorporated NSWPMPL as Special Purpose Vehicle (SPV) for execution

of the waste processing plant at Nagpur.

2.2.2. A Concession Agreement was signed between NSWPMPL and NMC on 4 May, 2017 for

design, construction and operation of MSW processing facility at Bhandewadi, Nagpur

for capacity of 800 MT per day including Pre-processing of MSW in line with the

provisions of the Solid Waste Management (SWM) Rules, 2016 over the period of

Concession Agreement. The Concession Agreement is for a period of 15 years, including

construction period of 2 years.

2.2.3. NMC has agreed to deliver the assured waste quantity of 800 TPD ±20% at the Project

site for processing. NMC has also agreed to pay a tipping fee of Rs. 225 per MT with an

annual escalation of 4.5% till the end of the Concession Period.



2.2.4. The waste generation on a daily basis in Nagpur city is quantified by NMC in a report

covering a span of almost two years from 2015 to 2017. The data is shown in the Table

below:

Table 1: Waste Generation in Nagpur

Year Waste per month (in MT) Average Daily (in MT)

Apr-15 32907 1097

May-15 31103 1003

Jun-15 32785 1093

Jul-15 34164 1102

Aug-15 32330 1043

Sep-15 32255 1075

Oct-15 34785 1122

Nov-15 34986 1166

Dec-15 36448 1176

Jan-16 34738 1121

Feb-16 34443 1188

Mar-16 36080 1164

Apr-16 33970 1132

May-16 36140 1166

Jun-16 36923 1231

Jul-16 37483 1209

Aug-16 35511 1146

Sep-16 33999 1133

Oct-16 36007 1162

Nov-16 35068 1169

Dec-16 35517 1146

Jan-17 36181 1167

Feb-17 34349 1227

Mar-17 36848 1189

2.2.5. The Concessionaire can market and sell or dispose of all the components/ products of

MSW, including but not limited to electricity, recyclables and to further retain and

appropriate any revenues generated from the sale of such products/ end-products.

2.2.6. The Concessionaire shall receive all financial benefits accruing in respect of or on

account of the Project, including Carbon Credits/Certified Emission Reductions (CERs)

under the Clean Development Mechanism (CDM) and share 50% of such fiscal

incentives/ benefits with the NMC as per the provision of the Concession Agreement.



2.2.7. The treatment facility selected for the Project would scientifically process and dispose the

MSW. NSWPMPL is to ensure that not more than 20% of the MSW received at the

processing facility will be sent to a Landfill.

2.2.8. The Concessionaire should transfer the Project facilities to NMC, free of cost at the end

of the Concession Period or on Termination, in accordance with the provisions of the

Agreement.

2.2.9. The Concession Agreement also provided for Condition Precedent for its effectiveness as

under:

Condition Precedent required to be satisfied by the Authority (NMC):

NMC shall hand over the land to the Concessionaire for the development of the

Project and provide clear, vacant and unencumbered possession of the site to the

Concessionaire.

NMC will enter into an Escrow Agreement in accordance with Clause 23 and as per

the schedule 20 of Escrow Agreement.

NMC shall appoint an Independent Engineering/monitoring committee in accordance

with the Article 21.

Some of the major Condition Precedent required to be satisfied by the Concessionaire:

Provide construction and O&M Performance Security to the NMC as specified in the

Addendum.

Provide project development Fee of 1% of the total cost of the project.

Prepare the Environment and social Impact assessment (ESIA) Report through a

competent agency and obtain approval from NMC.

Obtain the EIA approval for the Project from competent authorities.

Procure all applicable permits specified in Schedule-2 unconditionally and if subject

to conditions, all such conditions required to be fulfilled by date specified therein.

Execute the Financing Agreements and deliver to the NMC.

Execute and procure execution of Escrow Agreement



Obtaining consent to establish and operate, based on project requirement from the

Maharashtra Pollution Control Board (MPCB), as per applicable rules and regulations

including SWM Rules, 2016.

2.3. Salient features of the Nagpur MSW Project, as per NSWPMPL

2.3.1. The proposed MSW Project involves use of mass combustion / incineration technology

for WtE conversion.

2.3.2. The Project will receive about 800 TPD of mix waste which will be segregated during

Pre-processing treatment and Project will process approximately 550 TPD of Pre-

processed MSW and produce around 80.59 million units yearly including Auxiliary

Consumption.

2.4. Scope of work of MSW Project

2.4.1. As per clause 2.1 of the Concession Agreement the scope of work is as follows: -

a) Design, construction and operation of MSW processing facility at Bhandewadi,

Nagpur for assured MSW quantity during the Concession Period.

b) The Concessionaire should erect a plant of capacity 800 TPD with presorting waste to

energy per day capable of producing 11.5 MW less auxiliary consumption.

c) Provision and operation of adequate number of suitable vehicles for transport of

MSW within the Municipal Solid Waste Management Facility at Bhandewadi

Nagpur.

d) Performance and fulfillment of all other obligations of the Concessionaire in

accordance with the provisions of Concession Agreement and matters incidental

thereto or necessary for the performance of any or all of the obligations of the

Concessionaire under the Concession Agreement.

e) Rehabilitation and operations and maintenance of existing Scientific Landfill and

disposal of process remnants and Residual Inert matters.

f) Re- Location of waste dumped at proposed land site at Bhandewadi.

g) The scope of work also included any and all other activities that are ancillary to the

above mentioned scope of work.

h) The Concessionaire has to develop and implement the above Project on DBFOT

basis.



2.5. Existing and New Scientific Landfills

2.5.1. The Concessionaire is responsible for rehabilitation and operations and maintenance of

existing Scientific Landfills (SLF). As per the provisions of SWM rules 2016, post-

closure care of landfill site shall be taken for at least fifteen years. Accordingly, the

Concessionaire is required to close the existing SLF as well as to maintain the exiting

SLF post closure the till 15th

year of the Project life.

2.5.2. Further the Concessionaire is also responsible for design, construction and operation of

new SLF along with its post closure maintenance. Accordingly, the Concessionaire has

proposed new SLF consisting of 3 cells. Each cell of new SLF would be used

sequentially up to its storage capacity. Further, the use of the three cells for the new SLF

would be closed at the end of 4th

year, 8th

year and 13th

year from CoD of the proposed

Project respectively. Each of these closure would incur a capital expenditure towards

scientific closure of SLF site at respective years.

2.5.3. All closed SLFs would be maintained for 15 years from the day of their respective

closures.

2.6. Role of NMC

2.6.1. To grant in a timely manner all such approvals, permission and authorization which

Concessionaire may require.

2.6.2. To recommend and forward to the relevant authority/ministry /department any

application of Concessionaire to obtain necessary permissions.

2.6.3. To ensure that the building plans for the Projects Facilities at site are duly and

expeditiously approved by the concerned authority under relevant Acts/ Building by-laws

/other relevant bylaws or regulation

2.6.4. To handover land to the Concessionaire as per the requirement, on a License basis, for

development of the Project Facilities and Land Fill at Bhandewadi, Nagpur

2.6.5. To pay Tipping fee to Concessionaire for processing of MSW on a Monthly basis.

2.6.6. To declare and maintain or cause to declare and maintain, a no development zone around

the landfill site in accordance with applicable laws



2.7. Term and Termination of Agreement:

As per Concession Agreement, the tenure of Concession Period means fifteen (15) years

including construction period of 24 months starting on and from the Appointment Date

and ending on Transfer Date. As defined in the Concession Agreement, “Appointment

Date means the date on which Financial Close is achieved or an earlier date that the

Parties may by mutual consent determine, and shall be deemed to be the date of

commencement of the Concession Period” As defined in the Concession Agreement,

“Transfer date means the date on which this Agreement and the Concession hereunder

expires pursuant to the provisions of this Agreement or is terminated by a Termination

Notice.”

Further, as per the Concession Agreement the agreement may be terminated by either

party on the occurrence of the following Events:

2.7.1. Termination due to failure to achieve financial closure: As per clause 23.2 of

Concession Agreement in case financial closure does not occur, for any reason

whatsoever, the Concession agreement shall be deemed to have been terminated, upon

such termination NMC shall be entitled to encash the bid security.

2.7.2. Termination upon occurrence of any Forces Majeure Event: As per clause 26.8 of

Concession Agreement, if a forced Majeure Event subsists for a period of 180 days or

more with a continuous period of 365 days, either party may in its discretion terminate

the agreement by issuing termination notice to the other party, upon issuance of such

termination notice the agreement shall stand to be terminated.

2.7.3. Termination due to Default Event: In case of occurrence of either Concessionaire (i.e.

NSWPMPL) or Authority (i.e. NMC) event of default i.e. either party may terminate the

agreement by issuing a termination notice in a manner set out under clause 29.2.3 of

Concession Agreement.

2.7.4. Events of Default as per Concession Agreement have been stipulated as follows

1. Concessionaire Event of Default: In case a Concessionaire event of default occurs

(as given in clause 29.1.2) and the Concessionaire fails to cure the default within the

cure period (if cure period not specified a cure period of 30 days), the Concessionaire

shall be deemed to be in default of the agreement.

2. Authority Event of Default: In case an Authority event of default (as given in clause

29.1.3) occurs and NMC (the authority) fails to cure the default within the cure period

of 90 days, NMC shall be deemed to be in default of the agreement.



2.8. Ownership of assets and transfer of Project

2.8.1. As per clause 22 of the Concession Agreement, the ownership of the Project Facilities,

including all improvements made therein by Concessionaire during the Concession

Period that, all the immovable assets including sites and civil structure created for

processing facility shall remain with NMC, while the ownership of all the moveable

assets including equipment and machinery and vehicles shall remain with the

Concessionaire.

2.8.2. Upon completion of the Concession period the Concessionaire shall transfer all the

moveable infrastructure and facilities including vehicles, equipment, workshop offices,

communication arrangement etc. and immovable infrastructure facilities to NMC in

working condition and certified by independent engineer, free of cost.

2.8.3. The Concessionaire shall provide training to NMC‟s staff for taking over the Project

facilities from the Concessionaire for at least 3 months.

2.9. Viability Gap Funding

2.9.1. NMC has committed a Viability Gap Funding (VGF) support amounting to a maximum

of Rs. 70 Crore to NSWPMPL and as per clause 39.1 and 39.2 of the Concession

Agreement the VGF would be released in minimum of two tranches as follows: -

a) First tranche to the extent of a maximum 50% of VGF amount or an amount equal to

Concessionaire‟s equity contribution whichever is less shall be released at a date not

earlier than 30 day of fulfilment of condition precedent to VGF disbursement.

b) The balance 50 % amount shall be release in the second Tranche or progressively in

equal installments subject to equity contribution and achievement of milestones as

well as fulfilment of condition precedent to VGF disbursement.

2.9.2. VGF shall be released by NMC subjected to creation of security by Concessionaire

(NSWPMPL) in favor of NMC on the assets of the Project.

2.10. Bid evaluation report and observations of NEERI and GIPE:

2.10.1. The technical evaluation of bid was carried out by National Environmental Engineering

Research Institute (NEERI) and the financial evaluation by Gokhale Institute of Politics

& Economics (GIPE), Pune.

2.10.2. The key recommendations of NEERI report are as follows:

a) From the environmental point of view MSW management is essential and has to be

taken up on priority basis considering the rapid urbanization and increasing



population. The scientific waste management should have priority over energy

recovery or product recovery.

b) The apprehensions about the incineration are air pollution and the design of basic

incineration equipment, which can be sorted out by selection of the appropriate and

proven design and robust pollution control systems. NMC may go ahead with Hitachi

Zonsen‟s technology subject to strict compliance to environment laws.

c) Hitachi Zosen‟s incinerator has considered the wide range of calorific value of MSW

i.e. from 1100 kcal/kg to 2200 kcal/kg, which is normal Indian MSW scenario with

800 TPD of nominal waste throughout of 1650 kCal/kg. NSWPMPL has designed the

WtE plant to burn waste with the lowest heat value (LHV) which can reasonably be

sent to a waste incineration plant.

d) NSWPMPL has proposed storage of 5 days which appears to be adequate in normal

circumstances.

e) The bidder shall install appropriate segregation system for removal of construction

and demolition (C&D) waste and to maintain caloric value suitable for the plant.

f) The bidder shall maintain the existing RDF, compost and landfill facilities to avoid

any further environmental impact and health problem to people inhabited in and

around the site.

g) The bidder shall install and operate state of art emission control system for

conforming to all Central Pollution Control Board (CPCB) and Maharashtra Pollution

Control Board (MPCB) norms, including dioxins and furans, Compliance to

Environmental norms is the most important.

Key observations of GIPE:

2.10.3. GIPE evaluated financial proposal of MSW processing plant at Nagpur and found that the

EPC cost of Rs. 251.63 Crore for MSW Plant is overestimated which includes soft cost of

16%.

2.10.4. Plant O&M expenses and periodic maintenance cost is also overestimated with escalation

rate of 6.5% p.a. which is higher than CERC norms of 5.72% p.a.

2.10.5. Overestimated cost and O&M expenses results in lower Project IRR (12.62%) and Equity

IRR (14.76%). Further NEERI report has not considered the favorable tax treatment

available for infrastructure Projects. Sales of revenue from electricity has not been

considered in the NEERI report.



2.10.6. The cost of fly ash disposal plant has been considered as Rs. 3.37 Crore. However,

revenue from using the fly ash in the manufacture of bricks has not been estimated over

the Concession period.

GIPE reworked the financial parameters based on the CERC norms and found that the

project IRR and equity IRR of the Project works out to be 17.32% and 26.18%

respectively. GIPE has considered levellised tariff of Rs. 6.82 per kWh as per norms

considered by CERC. Details of financial working of GIPE is provided in the Table

below.

Table 2: Financial working by GIPE

Variable in Decision Sheet

Original

proposal of

EIL

GIPE

working as

per CERC

Guidelines

Financing Cost, IDC & Pre-Operative Exp. (% of EPC) 15.00% 15.00%

Yearly Increase in O&M Expenses 6.50% 5.72%

Interest Rate (p.a.) 12.75% 13.00%

Tipping Fee for Processing of Waste (Rs. per MT) 750.00 750.00

Yearly Increase in Tipping Fee for Processing of Waste 4.50% 0.00%

O&M - Processing 14.00 8.63

Gross MW Generation 11.50 11.50

Auxiliary consumption (%) 16.00% 12.50%

PLF: 1st year 60.00% 60.00%

PLF: 2nd year 80.00% 65.00%

PLF: 3rd year onwards 85.00% 70.00%

Levellised Tariff (in Rs.) 5.86 6.82

Based on above observations, GIPE concluded that the Project is financially viable.

2.11. Solid Waste Management Rules (SWM) 2016 and its Implications:

2.11.1. MoEF had notified the SWM Rules 2016 on 8 April 2016 to lay a framework for

scientific waste management across urban settlements and are applicable beyond

Municipal areas and extend to urban agglomerations, census towns, notified industrial

townships, areas under the control of Indian Railways, airports, airbase, Port and harbor,

defense establishments, special economic zones, State and Central government

organizations, places of pilgrims, religious & historical importance. These Rules

supersede the Municipal Solid Waste Rules, 2000. SWM,2016 Rules explicitly

emphasize on Pre-processing and Post-processing of MSW. These rules have casted the

responsibility of Pre-processing and Post processing on local bodies.



2.11.2. The SWM Rules,2016 lay emphasis on:

Source segregation of waste to channelize the waste to wealth by recovery, reuse

and recycle

Levy of user fees for collection of waste by local bodies.

Waste processing and treatment

Promoting use of compost

Promotion of waste to energy

Revision of parameters and existing standards

Management of waste in hilly areas

Constitution of a Central Monitoring Committee

2.11.3. Clause 9 seeks Distribution Licensees to procure power generated from municipal solid

waste to energy plants.

2.11.4. Clause 10 stipulates facilitation of infrastructure creation for waste to energy plants and

providing appropriate subsidy or incentives for such waste to energy plants as the duties

of MNRE Sources.

2.11.5. Clause 15 specifies the duties and responsibilities of local authorities wherein the local

authorities are responsible for: -

Facilitation construction, operation and maintenance of solid waste processing

facilities (on their own /private participation/other agency) for optimum utilization of

solid waste by adopting suitable technology including waste to energy.

Adhering to the guidelines issued by the Ministry of Urban Development from time

to time and standards prescribed by the Central Pollution Control Board.

Undertaking (on their own/through other agency) construction, operation and

maintenance of sanitary landfill and associated infrastructure.

Stop land filling or dumping of mixed waste soon after the timeline as specified for

setting up and operationalization of sanitary landfill is over.

Allow only the non-usable, non-recyclable, non-biodegradable, non-combustible and

non-reactive inert waste and pre-processing rejects and residues from waste

processing facilities to go to sanitary landfill

2.11.6. Clause 16 stipulates monitoring of environmental standards and adherence to conditions

as specified under the Schedule I and Schedule II of the rules for waste processing and



disposal sites, as one of the duties of State Pollution Control Board or Pollution Control

Committee.

2.11.7. Clause 19 specifies criteria for duties regarding setting-up solid waste processing and

treatment facility.

2.11.8. As per Clause 21, Non-recyclable waste having calorific value of 1500 kCal/kg or more

shall not be disposed of on landfills and shall only be utilised for generating energy either

or through refuse derived fuel or by giving away as feed stock for preparing refuse

derived fuel.

2.11.9. The Schedule I (A) of SWM Rules, 2016 specifies the following condition for site

selection of sanitary Landfills: -

Specifications for Sanitary Landfills

“(A) Criteria for site selection. -

…

(ii) The sanitary landfill site shall be planned, designed and developed with proper

documentation of construction plan as well as a closure planning a phased manner. In

case a new landfill facility is being established adjoining an existing landfill site, the

closure plan of existing landfill should form a part of the proposal of such new

landfill………………………………………………………………………….

2.11.10. Schedule-I (H) of SWM Rules, 2016 specifies the Criteria for post-care of landfill site as

below:

(1) The post-closure care of landfill site shall be conducted for at least fifteen years and

long term monitoring or care plan shall consist of the following, namely: -

(a) Maintaining the integrity and effectiveness of final cover, making repairs and

preventing run-on and run-off from eroding or otherwise damaging the final

cover;

(b) Monitoring leachate collection system in accordance with the requirement;

(c) Monitoring of ground water in and around landfill;

(d) Maintaining and operating the landfill gas collection system to meet the

standards.”

2.11.11. Therefore, as per the above provisions Concessionaire has to undertake the post-closure

care of landfill site for at least fifteen years.



2.11.12. The Schedule 2 (C) of the SWM Rules, 2016 also stipulates various emission standards to

be met by incineration/thermal technologies in Solid Waste treatment/disposal facility as

follows.

Table 3: Emission standard for incinerators technologies as per SWM Rules, 2016

Parameter Emission standards

Values Reference

Particulates 50 mg/Nm3 Standard refers to half hourly average value

HCl 50 mg/Nm3 Standard refers to half hourly average value

SO2 200 mg/Nm3 Standard refers to half hourly average value

CO

100 mg/Nm3 Standard refers to half hourly average value

50 mg/Nm3 Standard refers to daily average value

Total Organic

Carbon 20 mg/Nm3 Standard refers to half hourly average value

HF 4 mg/Nm3 Standard refers to half hourly average value

NOx (NO and NO2

expressed as NO2 ) 400 mg/Nm3 Standard refers to half hourly average value

Total dioxins and

furans

0.1 ng

TEQ/Nm3

Standard refers to 6-8 hours sampling. Please refer

guidelines for 17 concerned congeners for toxic

equivalence values to arrive at total toxic

equivalence.

Cd + Th + their

compounds 0.05 mg/Nm3

Standard refers to sampling time anywhere

between 30 minutes and 8 hours.

Hg and its

compounds 0.05 mg/Nm3

Standard refers to sampling time anywhere

between 30 minutes and 8 hours

Sb + As + Pb + Cr +

Co + Cu + Mn + Ni

+ V + their

compounds

0.5 mg/Nm3 Standard refers to sampling time anywhere

between 30 minutes and 8 hours

Accordingly, the Concessionaire has to meet the above mentioned emission standards.

2.12. Provisions of Tariff Policy 2016:

2.12.1. The Tariff policy 2016 mandates distribution licensees to procure 100 % of the power

produced from Waste to Energy Project, the relevant extracts are reproduced below

“6.4 Renewable sources of energy generation including Co-generation from renewable

energy sources:

…………….



1 (ii) Distribution Licensee(s) shall compulsorily procure 100% power produced from all

the Waste-to-Energy plants in the State, in the ratio of their procurement of power from

all sources including their own, at the tariff determined by the Appropriate Commission

under Section 62 of the Act.”

2.12.2. Further the clause 6.4 (2) of the Tariff policy 2016, stipulates exemption of waste to

energy plant from Competitive bidding based tariff determination. The relevant extract of

the tariff policy 2016 is reproduced below:

“6.4 (2) States shall endeavor to procure power from renewable energy sources through

competitive bidding to keep the tariff low, except from the waste to energy plants”



3. PREMISES FOR DETERMINATION OF PROJECT-SPECIFIC TARIFF

3.1. Regulatory Framework for Tariff Determination

3.1.1. As per Section 62(1) of the EA, 2003, the Appropriate Commission is empowered to

determine the Tariff for supply of electricity by a Generating Company to a Distribution

Licensee, and for transmission and wheeling of electricity. As per Section 61 (h), the

Commission shall be guided, among others, by the aspect of promotion of electricity

generation from renewable sources of energy.

“61. The Appropriate Commission shall, subject to the provisions of this Act, specify the

terms and conditions for the determination of tariff and in doing so, shall be guided by

the following, namely………………………

(h) The promotion of co-generation and generation of electricity from renewable

sources of energy;”

3.1.2. Section 86(1)(e) of the Electricity Act, 2003 stipulates that –

"The State Commission shall discharge following functions, namely

(1)(e) promote cogeneration and generation of electricity from renewable sources of

energy by providing suitable measures for connectivity with grid and sale of electricity to

any person, and also specify, for purchase of electricity from such sources, a percentage

of total consumption of electricity in the area of distribution licensee.”

3.1.3. The Commission has recognized Municipal Solid Waste based Waste-to-Energy Projects

as Renewable Energy Sources. As per Regulation 2(cc) of the RE Tariff Regulations,

2015.

“(cc) „Renewable Energy Sources” means the renewable sources such as Mini, Micro

and Small Hydro, Wind, Solar, Biomass including bagasse, bio-fuel urban or Municipal

Solid Waste and such other sources as are recognized or approved by the MNRE”

3.1.4. Central Electricity Regulatory Commission (CERC) also recognizes these Projects in its

regulations as Renewable Energy Sources. As per Regulation 2(x) of the CERC RE

Tariff Regulations, 2017.

“renewable energy sources” means renewable sources such as small hydro, wind, solar

including its integration with combined cycle, biomass, bio fuel cogeneration, urban or

municipal waste and other such sources as approved by the MNRE;”



3.1.5. Regulation 3.1 of the MERC RE Tariff Regulations, 2015 states that:

“3.1 These Regulations shall apply to those new RE Projects which are commissioned in

the State of Maharashtra for the generation and sale of electricity to Distribution

Licensees in the State, are Eligible Projects for the purposes of these Regulations, and

whose tariff is to be determined by the Commission under the provisions of Section 62

read with Section 86 of EA, 2003:”

3.1.6. As per Regulation 8.1, a Project-specific Tariff shall be determined on case to case basis

in case of MSW-based Power Projects.

“8.1 A Project-specific tariff shall be determined by the Commission on a case-to case

basis for the following types of Projects:

(a) Waste to Energy Projects based on the technologies approved by MNRE such as

Municipal Solid Waste-based Projects;”

3.1.7. Regulation 8.2 provides that the financial norms set out in the Regulations, except for

capital cost and O&M expenses, shall be the ceiling norms while determining the Project-

specific Tariff:

“8.2 The determination of Project-specific tariff for generation of electricity from such

RE sources shall be in accordance with such terms and conditions as may be stipulated

in the relevant Orders of the Commission:

Provided that the financial norms specified in Chapter 2, except with regard to

Capital Cost and O&M expenses, shall be the ceiling norms while determining such

Project-specific tariff.”

3.1.8. The Commission has issued a generic Tariff Order for procurement of power from RE

sources (namely, wind, non-fossil fuel-based co-generation, biomass, small hydro and

solar) for FY 2017-18 in Case No. 33 of 2017, dated 28 April, 2017.

3.1.9. While determining the Project-specific Tariff for this MSW Project, it has considered the

relevant principles and methodology adopted in the RE Tariff Order and subsequent

regulatory developments including amendments to MYT Regulations so as to ensure

consistency and certainty in the regulatory approach.

3.2. Premise for Development of Tariff Structure:

3.2.1. The Commission has analyzed the Detailed Project Report (DPR) and the revised Petition

submitted by NSWPMPL taking into consideration the regulatory framework and the

objective of promoting generation from MSW-based Power Project. The Commission has



also taken into consideration objection/suggestion/ view expressed by stakeholders

through public consultation process and submission thereof. The Tariff has been

determined as per Regulation 9.2 of the RE Tariff Regulations, which reads as follows:

“9.2 A Petition for determination of Project-specific tariff shall be accompanied by

such fee as may be specified in the applicable Regulations of the Commission, and shall

be accompanied by:

(a) Information in Forms 1.1, 1.2, 2.1 and 2.2, as the case may be, appended as

Annexure-A to these Regulations;

(b) A detailed Project report outlining technical and operational details, site-specific

aspects, premises for Capital Cost and financing plan, etc.;

(c) A statement of all applicable terms and conditions and expected expenditure for the

period for which tariff is to be determined;

(d) A statement containing details of any grant, subsidy or incentive received, due or

assumed to be due from the Central Government and/or State Government, which

shall also include the computation of tariff without consideration of such grant,

subsidy or incentive;

(e) Details of financial gain through REC or any other mechanism;

(f) Any other information that the Commission may require the Petitioner to submit.”

3.2.2. Useful Life: Regulation 2.1 (mm) of RE Tariff Regulations, 2015 stipulates as follows

regarding the Useful Life of RE Projects requiring a Project-specific Tariff.

“Provided that the Useful Life of other RE Projects shall be as stipulated by the

Commission while determining the Project specific tariff, taking into consideration the

norms of the Central Commission.”

3.2.3. The CERC RE Regulations, 2017, specifies 20 years as the Useful Life of MSW Projects.

Accordingly, the Commission has taken the Useful Life of the present Project as 20 years

from its CoD. Rationale for considering useful life as 20 years have been elaborated in

subsequent Section.

3.2.4. Levellised Tariff Design: In accordance with Regulations 11.2 and 11.3, the

Commission has determined the levellised tariff for the Project case under consideration.

The relevant provisions are given below:



“11.2 For the purpose of computation of levellised tariff, a discount factor equivalent to

the normative post-tax weighted average cost of capital shall be considered.

11.3 Levelisation shall be carried out for the „Useful Life‟ of the RE Project, while tariff

shall be determined for the period equivalent to the Tariff Period.”

3.2.5. Tariff Period: The Commission has considered a Tariff Period of 13 years from the CoD

for the MSW Project of NSWPMPL.

3.2.6. The assumptions and rationale for input values of Project-specific parameters have been

elaborated in the subsequent Sections of this Tariff Order.



4. SUGGESTIONS/OBJECTIONS, NSWPMPL’S RESPONSE AND COMMISSION’S

RULINGS

4.1. Maharashtra Energy Development Agency’s (MEDA) Submission:

4.1.1. MEDA sought clarification from NSWPMPL, whether NSWPMPL has come up with any

pilot Project based on the same technology in order to prove the technology for Indian

climatic condition and to ascertain the performance parameters for development of large

scale MSW power Project.

4.1.2. MEDA suggested NSWPMPL to compare the parameters such as capital cost, Auxiliary

Consumption, O&M expense, working capital etc., with the parameters as approved by

Commission in its order in Case No 87 of 2015 dated 10 October,2016 in matter of

petition filled by Kolhapur Green Energy for determination of tariff from its 1.8 MW

MSW based power Project, wherein the Commission has determined levellised tariff of

Rs. 5.49/kWh for 20 years. [This was subsequently modified for revision in escalation

factor through Review Order as Rs. 5.94/kWh]

4.1.3. MEDA sought clarification from NSWPMPL if it has already opted for MNRE subsidy,

stating that the MNRE scheme for providing subsidy of 2 Crore/MW (Rs. 10 crore

/Project) was applicable only for setting up of 5 pilot Project based on MSW till 30

September 2017.

4.1.4. MEDA referred to MNRE's Standing Committee Report on power generation from

Municipal Solid waste dated August 2016, and submitted that the tariff for all waste to

energy plants should be declared through the process of Competitive Bidding.

4.1.5. MSW Projects Based on gasification, incineration and pyrolysis technology should

comply with MPCB norms as all these technology comes under combustion

route/thermal process.

4.1.6. MEDA submitted that the GoM RE policy 2015 dated 20th July 2015 only specifies

target of 200 MW for Industrial waste based power Projects, and no targets have been

specified for MSW based Power Projects in the RE policy.

NSWPMPL’s Reply:

4.1.7. NSWPMPL has undertaken detailed technology assessment while selecting the waste

processing technology for the proposed Project. It involved extensive discussions with

prospective vendors, including the site visits to several operational plants globally. For

this a team comprising of 3 members have visited 2 plants in China namely Teda

Environmental processing facility in the City of Dalian and processing facility in Gonzou

in China. NSWPMPL has also visited gasification plants in India and in Germany and has

evaluated existing technologies in „waste to energy‟ concept.



4.1.8. NSWPMPL has thus selected highly proven and dependable technology for processing

the waste and creating sustainable green energy. Hitachi Zosen‟s incineration technology

provides the cleanest and most efficient capability for managing waste processing and

creating sustainable green energy. M/s Hitachi Zosen has more than 833 operating WtE

Projects worldwide. NSWPMPL has therefore decided to move ahead by selecting the

technology partner, Hitachi Zosen which has most successful, existing and commercial

viable Projects. The primary promoter of the Project viz. Essel Infra has also successfully

commissioned and operating waste to energy plant based on mass incineration

technology in Jabalpur. EIL had ventured into the SWM business with focus on creation

of a sustainable ecosystem for future generations. Essel Infraprojects Ltd. is successfully

operating 11.5 MW waste to energy plant in Jabalpur (M.P.) for more than one and half

years on the same technology proposed for this Project.

4.1.9. WtE Projects have nonstandard scope of work, geographically different factors, and city

specific waste characteristics play a big role in definition of the capital expenditure.

These factors make mere comparison of cost parameters completely inappropriate.

Comparison of Kolhapur and Nagpur Project cannot be done as Regulatory framework

allows Project specific capital cost consideration to MSW Projects. Further Nagpur

Project involves rehabilitation of existing waste and its subsequent closure. The existing

waste dumped in the SLF needs to be properly rehabilitated by use of excavators/JCB‟s

to enable proper closure of the same. This also requires design and construction of the

same. Additionally, Nagpur Project also have air cooled condenser which increases the

auxiliary consumption.

4.1.10. As per the discussion with MEDA and as per GoM Comprehensive policy for RE dated

July 20th

, 2015, Municipal Solid Waste based WtE Plants are not included in the list for

subsidy and other incentives. Therefore, in compliance with the policy, NSWPMPL has

not approached MNRE for the financial assistance under any scheme. However, the VGF

for the Project committed by NMC has been used to offset the tariff required.

4.1.11. NMC has followed the process of competitive bidding for selection of selection of

successful bidder for the Nagpur MSW plant. NMC had invited proposal for EoI for

selection of bidders for construction, operation and maintenance of MSWM facility for

treating the MSW on DBFOT basis. Consortium of M/s Essel Infraprojects Ltd. and M/s

Hitachi Zosen India Pvt. Ltd. won the bid in competitive bidding process. The above

process concludes that NMC had followed the recommended procedure for selection of

successful bidder for Nagpur WtE power plant.

4.1.12. NSWPMPL appreciates the concern raised by MEDA regarding compliance with

environmental norms. It would be appropriate to re-iterate that NSWPMPL has chosen a

technology partner which has a successful record of setting up plants with the proposed

technology across the countries having stricter norms for environmental compliance.



NSWPMPL shall ensure that all statutory compliances are in place for successful

execution of the Project.

Commission’s view:

4.1.13. The Commission notes the MEDA‟s concern regarding of selection of appropriate

technology which suits Indian conditions. The technical evaluation report prepared by

NEERI and financial assessment report prepared by GIPE confirms that the said

technology and proposed Project is technically feasible and economically viable. Further

in response to the Commission‟s query during Public Hearing, NSWPMPL has confirmed

that, the support of its Technology Partner M/s Hitachi Zosen India Pvt. Ltd. shall be

available throughout the Concession Period of the Project.

4.1.14. The Commission notes the submission of MEDA and reply submitted by NSWPMPL.

Regarding availability of MNRE or any other subsidy, NSWPMPL has submitted that, it

is not availing any grant or subsidy except VGF of Rs. 70 Crores from NMC which it has

factored in Tariff.

4.1.15. Regulation 24 of RE Tariff Regulations, 2015, specifies the treatment to be provided to

the grant, subsidy or any incentives received by Project Entity. The Commission has

considered the VGF of Rs. 70 Crores to be received to NSWPMPL from NMC while

determining the Tariff.

4.1.16. Accordingly, the Commission rules that, in case any additional subsidy or grant is

received by NSWPMPL other than VGF of Rs. 70 Crores to be received from NMC,

MEDA shall inform the Distribution Licensee(s) regarding any such grant, subsidy or

incentives received by a NSWPMPL and Distribution Licensee(s) shall deduct any such

grant, subsidy or incentives received by a NSWPMPL in subsequent bills raised by

NSWPMPL towards sale of electricity in suitable installments or within such period as

may be stipulated by the Commission.

4.2. Nagpur Municipal Corporation’s (NMC) Submission:

4.2.1. The Commission during TVS, directed NSWPMPL to implead NMC as a Party and serve

the copy of the Petition to NMC. Accordingly, NSWPMPL impleaded as a Party and

served the copy of Petition and minutes of TVS. NMC vide its email dated 28 December,

2017 made its submission on the Petition submitted by NSWPMPL and queries raised by

the Commission during TVS.

4.2.2. NMC submitted that, the dumping yard at Bhandewadi, Nagpur is in existence since

1967. The waste was being dumped in around 55 acres of the reserved land in

unscientific manner. Regarding consideration of 15 year of Concession Period, presently

M/s Hanjer Biotech Energies Pvt. Ltd. is appointed as BOOT operator and processing the

waste of 200 MT/day and the contract is for 15 years. Since the life of existing SFL under



existing contract with Hanjer is envisaged for another 15 years, during finalization of

present tender, NMC decided to consider the bid for 15 years‟ period.

4.2.3. Further, NMC submitted that, after the contract period of 15 years is over, NMC will be

in possession of the waste to energy plant, and shall operate the plant by appointing a

new operator on the basis of tendering. The tipping fee will be also decided based on the

quotes, received through tendering process after 15 years.

4.2.4. NMC also submitted that, the existing plant installed by M/s Hanjer was operating only

on part capacity. In the year 2011-12, due to major fire in the processing unit & the

operator‟s limitations, M/s Hanjer, could not bring the plant to its original capacity. Due

to this there was a PIL in the Hon‟ble Bombay High Court, Nagpur bench & this matter

was further transferred to the Hon‟ble National Green Tribunal (NGT) Western Zone,

Pune being an environmental issue.

4.2.5. National Green Tribunal (NGT) instructed NMC to go for new operator at the earliest.

On this, NMC has carried out tendering process selection of the developer for processing

waste of 800 TPD. Since only one bid was received, NGT directed to get the bid

scrutinized by NEERI and GIPE. NEERI and GIPE has scrutinized the bid submitted by

M/s Essel Infraprojects and submitted its report. The report of NEERI and GIPE was

submitted to NGT and NGT and directed to complete the tendering process. The bid was

negotiated before the Municipal Commissioner of Nagpur and M/s Essel Infraprojects

offered the revised Tipping of Rs. 225 per MT with 4.5% escalation. The same was

submitted before the standing committee for approval. Upon approval, Concession

Agreement was signed with NSWPMPL on 4 May, 2017.

NSWPMPL’s Reply:

4.2.6. NSWPMPL vide its letter dated 1 January, 2018 submitted its reply on the submission

made by the NMC dated 28 December, 2017. NSWPMPL submitted that in view of the

non-operational waste processing units, there have been a series of directives from the

NGT asking NMC to come up with new waste processing facility on urgent basis to

address the environmental concerns. The proposed site is next to the existing dump site,

which avoids the resistance to such projects from citizens. Moreover, the identified site

also makes it possible to include the closure of existing landfill and rehabilitation of the

accumulated waste in the scope of PPP Project developer. Hence, NMC had appropriately

decided to proceed with competitive bidding for 15 years in order to address the issues of

existing dumping site.

4.2.7. Technical evaluation of the bid was done by NEERI, while the financial evaluation was

done by GIPE to finalize the tipping fees and other financial parameters. The integrated

DPR of scientific management and disposal Municipal Solid waste of Nagpur city was

submitted under the Swachh Bharat Mission, which was subsequently approved by high



power committee of GoM on 22 March 2016, along with a provision of viability gap

funding of Rs. 96.22 Crore for various components of the Municipal Solid waste, out of

which Rs. 70 Crore was allocated to WtE Project and the same has been considered for

Tariff determination.

4.2.8. NSWPMPL submitted that the plant will be transferred to NMC free of cost after the end

of 15 years period as provided under the Concession Agreement. NSWPMPL further

submitted that, since identified site is sufficient to absorb the inert and residue from the

procession facility for only about 15 years, NMC shall decide the future strategy for the

proposed Project only after conducting techno-commercial feasibility check. While

conducting the feasibility check NMC shall pay due consideration to the various key

aspects, such as land availability, compliance to environmental norms, growing

population density, technological advancements and the expected increase in the quantum

of MSW from 800 to 1500 TPD by 15 years. Therefore, NMC would need great deal of

clarity to ascertain the future of Project beyond 15 years.

4.2.9. As regards determination of Tipping fee, NSWPMPL submitted that, NMC would be in a

position to determine tipping fee only after finalizing the future of the Project at the end

of 15 Years period as provided under the Concession Agreement.


4.2.10. The Commission notes the submission of NMC regarding, competitive process conducted

by NMC for selection of bidder on DBFOT basis. The Commission also notes that,

though NMC has entered in to Concession Agreement with NSWPMPL for 15 years,

NMC has submitted that, Post completion of concession period of 15 years, NMC would

have liberty to operate the Project either themselves or by appointing a new operator on

the basis of tendering.

4.2.11. As regards Tipping Fee, the Commission notes that, NMC has confirmed about providing

Tipping Fee as per the provisions of the Concession Agreement and also NMC has

confirmed about providing VGF of Rs. 70.00 Crore to the NSWPMPL‟s MSW project.

Accordingly, the Commission has considered the VGF and Tipping Fee while

determining the Tariff for said Project.

4.3. Maharashtra State Electricity Distribution Company Limited (MSEDCL)’s

Submission

4.3.1. MSEDCL vide its letter dated 28 December, 2017 sought one week‟s time for submitting

its objections/suggestions on NSWPMPL‟s Petition. MSEDCL vide its letter dated 1

January, 2018 made its submission.

4.3.2. MSEDCL submitted that it purchases RE power only for fulfillment of its Renewable

Purchase Obligations (RPO). MSEDCL would not assume any obligation to enter into



EPA, as it has sufficient power supply and adequate renewable projects in pipeline and

further option of purchasing REC to fulfil their future RPO target.

4.3.3. MSEDCL has submitted its analysis for higher Tariff of Rs. 7.80/kWh proposed by

NSWPMPL. NSWPMPL has proposed a PPA period of 13 years, while other SERC such

as Tamil Nadu, Telangana, Madhya Pradesh and Gujarat and MERC itself (in case of

Kolhapur MSW project) has approved PPA period of 20 Years.

4.3.4. Further, the Capital Cost of Rs. 19.03 Crore/MW proposed by NSWPMPL is higher as

against the Capital Cost approved by the Commission in case of Kolhapur MSW (13.79

Crore/MW) as well as the Capital Cost approved by other States (Tamil Nadu,

Telangana, Madhya Pradesh and Gujarat) for MSW Projects, which remains in range of

14 to 16 Crore/MW. Further, NSWPMPL is also receiving VGF of Rs. 6.09 Crore/MW

which was not available for other MSW Projects.

4.3.5. Further, the O&M cost approved for various MSW Projects in major states remains in the

range of 5 to 7% of Capital Cost, however NSWPMPL has computed O&M expense as

9.38% of capital Cost.

NSWPMPL’s Reply:

4.3.6. NSWPMPL vide its letter dated 4 January, 2018 submitted its reply to the objections/

suggestions submitted by MSEDCL. With regards to MSEDCL‟s submission on Useful

Life of 13 years considered by NSWPMPL, NSWPMPL submitted that, the RE Tariff

Regulations, 2015 does not explicitly define the term „useful life‟ for Waste to Energy

Projects in the state. The Regulations provide that the Commission can stipulate the

Useful Life in its Order after considering the case specific aspects for Waste to energy

Project. NSWPMPL has also submitted that, the O&M expense has highest impact on

Levellised Tariff which increases from 46% (year-2) to 82% (13th

year). This

demonstrates that, the higher Useful Life will further increase the Levellised Tariff on

account of increased O&M.

4.3.7. As regards Capital Cost, NSWPMPL has referred to Regulation 8.2 of RE Tariff

Regulations, 2015 which specifies, Project specific consideration of Capital Cost for the

WtE Projects. WtE Projects have non-standard scope of work, geographically different

factors, and city specific waste characteristics, therefore the approval of the Capital Cost

shall be on the merit of the specific Project under consideration instead of its comparison

with other Projects. In addition, NSWPMPL also has to comply with the norms specified

in the SWM rules 2016 such as mandatory pre-processing facility, compliance to

stringent emission norms etc., which has resulted into additional costs.

4.3.8. As regards O&M expenses, NSWPMPL submitted that the O&M expense as claimed by

NSWPMPL also includes additional O&M expenses towards Pre-processing activity



amounting to Rs. 744.13 Lakh. The Pre-processing activity is mandated by SWM rules,

2016, and these rules were not applicable at the time of implementation of other MSW

projects considered by MSEDCL. The O&M expenses estimated by NSWPMPL for the

Power Plant viz. Rs 1,308.00 Lakh works out to 5.98% of the Capital Cost which is well

within the limits approved by various SERC‟s for MSW based Power Projects.

4.3.9. NSWPMPL further submitted that, various other factors such as difference in ambient

conditions for design, lower bearing of soil, rehabilitation of existing waste and capping

of existing SLF and construction new SLF for ash and inert resulting in higher O&M

expenses.


4.3.10. The Commission has noted the submissions of MSEDCL, and the replies submitted by

NSWPMPL. The Commission has dealt with the issues relating to, Useful Life, Capital

Cost and O&M expenses in subsequent paragraphs in Section 5 of this Order.



5. PARAMETERS OF TARIFF DETEREMINATION

5.1. Background

5.1.1. Regulation 10 of the RE Tariff Regulations, 2015, specifies parameters of the Tariff for

RE Projects as single-part tariff consisting of following cost components:

a) Return on Equity (RoE);

b) Interest on Loan Capital;

c) Depreciation;

d) Interest on Working Capital;

e) O&M expenses;

In addition, NSWPMPL has considered income from Tipping Fee as Non-Tariff income

to offset the revenue required from electricity tariff. The Commission has also taken

similar approach in its earlier MSW Orders in Case No. 77 of 2014 and Case No. 87 of

2015.

The performance parameters and financial parameters are discussed in this Section.

5.2. Technology of proposed MSW Project

NSWPMPL’s submission

5.2.1. NSWPMPL has carried out a detailed study of the waste processing options including

landfilling, Composting/Pre-processed MSW recovery, Gasification and Waste-to-Energy

and considered the advantages and disadvantages both technically and commercially

each.

5.2.2. Three types of systems can be adopted, namely:

Combustion systems (Incinerators): Thermal processing with excess amounts of

air.

Pyrolysis systems: Thermal processing in complete absence of oxygen.

Gasification systems: Thermal processing with less amount of air.

5.2.3. Combustion system is the most widely adopted thermal treatment process world-wide for

MSW. Though pyrolysis is a widely used industrial process, the pyrolysis of municipal

solid waste has not been very successful. Similarly, successful results with mass fired

gasifiers have not been achieved. As per SWM Rules 2016, incineration is one of the

thermal process to handle MSW for high calorific value waste.



5.2.4. There are currently no indigenous waste-to-energy technology providers in India who

have experience in designing, developing, or operating combustion based waste-to-

energy plant on MSW. Therefore, it is unavoidable to source needed technology and

know-how for waste-to-energy from outside of India while keeping in perspective the

waste characteristics of Nagpur.

5.2.5. Europe and Japan are the global leaders for direct controlled combustion of MSW for

waste-to-energy and has maximum number of installation of waste-to-energy plants in the

world. The technology providers based in Europe have global experience for waste-to-

energy plants.

5.2.6. Keeping in perspective the waste characteristics in Nagpur, advantages and disadvantages

of waste processing technologies, ground reality of waste processing & disposal in the

City, maturity of technologies, commercialization of technology, mapping of global best

practices, NSWPMPL partnered with Hitachi Zosen‟s incineration based technology for

processing of MSW.

5.2.7. Hitachi Zosen‟s incineration Technology for waste-to-energy of MSW is the well-

recognized waste processing & disposal technology adopted globally lending itself

immense merit and credibility. There are over 494 waste-to-energy plants operating

globally.

5.2.8. NSWPMPL has proposed to use mass-burn combustion technology for the proposed

Project keeping in perspective the waste characteristics in Nagpur, advantages and

disadvantages of waste processing technologies, ground reality of waste processing &

disposal in the city, maturity of technologies, commercialization of technology, mapping

of global best practices.

5.2.9. The Waste to Energy process for proposed technology is as under:

Figure-1: Process overview- Block Diagram



Figure 4: Process Flow diagram

5.2.10. Key Features of the MSW power Project of NSWPMPL:

MSW pre-processing facility consists of MSW unloading, manual / mechanical

segregation, Pre-processed MSW preparation and bio-drying section for organic

fraction.



NMC will deliver fresh waste at the proposed MSWM facility. The wastes are

unloaded at a designated area of the tipping floor. MSW storage pit handles the

waste.

There will be leachate collection drains from the pit and thus leachate present in the

garbage will be collected in the collection pit.

Mechanical segregation will be done followed by bio-drying.

The prepared Pre-processed MSW will be stored in the Pre-processed MSW storage

area.

Mass combustion / incineration technology is used for WtE conversion.

Combustion of preprocessed MSW at temperatures in the range of 850 to 1000

degrees centigrade. This technology combines the combustion and gasification in a

single process.

The energy recovered through combustion of MSW is used to generate electricity

via a steam turbine.

Finally, all rejected materials are sent to landfill sites through vehicles.

The Project will process approximately 550 TPD of Pre-processed MSW and

produce around 80.59 million units yearly including Auxiliary Consumption.

Technology is reliable grate system which has a long and successful history all over

the world. The optimized secondary combustion chamber with tangential secondary

air-injection and specifically chosen refractory which results in low emissions.

5.2.11. The Commission asked NSWPMPL to submit the status of permissions for all statutory

clearances. NSWPMPL submitted that, as per the clause 2.1.1 of the Concession

Agreement, NSWPMPL is required to obtain certain clearances prior to the Appointed

Date. NSWPMPL further submitted that, as per the MoEF letter dated 3 July, 2017,

provisions of EIA Notifications, 2006 regarding prior environmental clearance are not

applicable to waste to energy plants up to 15 MW capacity. Hence only application for

seeking Consent to Establish from MPCB would be initiated soon.

Commission’s Analysis and Ruling

5.2.12. The National Master Plan (NMP) for Development of WTE has recognized various

technologies such as Refused Derived Fuel (Pre-processed MSW), Aerobic Composting,

Vermi-Composting, Anaerobic digestion (bio-methanetion), gasification/ pyrolysis,

incineration and land filling etc., for WTE Projects. Of these, gasification/pyrolysis and

incineration/combustion are suitable for solid waste. The technology adopted by



NSWPMPL i.e. mass-burn combustion (incineration) technology for the WTE process, is

also recognised in the NMP.

5.2.13. Further, Report of Task Force on Waste to Energy dated 12 May, 2014, has

recommended that for areas with more than 300 TPD of waste generation, WtE

technologies based on incineration, pyrolysis and gasification should be considered and

that out of above three technologies, incineration results in 90 % reduction of volume of

MSW and involves lesser capital and O & M cost. Thus, NSWPMPL has selected Mass

Burn Controlled based WtE technology.

5.2.14. The Commission vide para 2.10 of this Order has noted the recommendations given by

NEERI in its technical evaluation wherein it has recommended NMC to go ahead with

Hitachi Zonsen‟s technology subject to strict compliance to environment laws, therefore

in line with the recommendations of NEERI report the Commission has considered the

technology particulars for determining the Project-specific Tariff.

5.2.15. With regard to requirement of environmental clearance, the Commission has noted the

submission of NSWPMPL that, the environmental clearance is not required for WtE

plants upto 15 MW and NSWPMPL will process for the required consent from MPCB to

establish the WtE plant. The Commission also notes that, consent or NOC from MPCB is

one of the Condition Precedent under Concession Agreement, which needs to be strictly

adhered to by NSWPMPL.

5.3. Calorific Value (CV) of MSW in Nagpur:


5.3.1. NSWPMPL has carried out waste characterization study for Nagpur to understand the

physical and chemical make-up of the MSW. GCV of MSW of Nagpur is as shown in the

table No. 4 below. The average calorific value i.e. 1089 kcal/kg in the table is mentioned

as on wet basis which can be considered as „as received basis‟ so when the NCV is

calculated on this calorific value it comes out to be 631 kcal/kg which is on a very lower

side.

Table 4: Chemical characteristics of MSW

Sample location MC*

(%)

TS*

(%)

TVS#

(%)

Ash#

(%)

Calorific value*

(kcal/kg)

Zones

Zone 1 59.16 40.84 79.02 20.98 878

Zone 2 37.10 62.90 83.60 16.40 983

Zone 3 58.13 41.87 78.20 21.80 953

Zone 4 80.95 19.05 91.67 8.33 914

Zone 5 56.86 43.14 42.40 57.60 1047

Zone 6 74.40 25.60 96.90 3.10 1009

Zone 7 66.60 33.40 79.88 20.12 1154

Zone 8 58.70 41.30 44.02 55.98 1082



Sample location MC*

(%)

TS*

(%)

TVS#

(%)

Ash#

(%)

Calorific value*

(kcal/kg)

Zone 9 74.40 25.60 96.90 3.10 1114

Zone 10 80.63 19.37 66.33 33.67 1059

Average 65 35 76 24 1019

Commercial & Institutional

Commercial 1 12.89 87.11 45.86 54.14 1467

Commercial 2 13.23 86.77 46.23 53.77 1364

Institutional 1 57.33 42.67 61.56 38.44 1124

Institutional 2 54.87 45.13 59.86 40.14 1098

Average 54 46 64 36 1165

Combined average of

zones, commercial and

institutional

56.1 43.9 69.5 30.5 1089

Therefore, from the above average calorific value of MSW comes to 1089 kcal/kg as

GCV.

5.3.2. Further NSWPMPL has also carried out physical analysis of MSW as shown in the Table

No. 5 below. The components of MSW were quantified in terms of % of the sample

composition for the all the zones and commercial & institutions. The physical

constituents are broadly divided into organic and inorganic substances.

Table 5: Physical characteristics of MSW

Components Average % Constituents

Paper 7

Cardboard 7

Plastic 8

Textile 3

Organic 60

Wood 3

Thermocol (Polystyrene) 8

Inert 2

Metals 1

Glass 1

Total 100

5.3.3. The calculation of GCV from the physical composition is done by considering the GCV

of individual components in proportions of their percentage that comes out to be

3213kcal/kg. With the moisture is included as it was found in Nagpur‟s MSW, it lowers

down GCV to 1411kcal/kg as on received basis and the NCV comes out to be 1083

kcal/kg.



GCV from Historical survey by NEERI (2004-05)

5.3.4. A survey of 95 cities was done including Nagpur for the solid waste management which

included waste characterization. The GCV for Nagpur city waste was shown as 2632

kcal/kg without moisture and the % of moisture in waste was given as 41%, the as

received GCV after including moisture and NCV values come out to be 1553 kcal/kg and

1183 kcal/kg respectively.

Summary of waste characteristics

Table 6: Summary matrix- All sources

Source GCV (As received basis)

kcal/kg NCV kcal/kg

Chemical characterization 1089 631

Physical characterization 1411 1083

NEERI 1553 1183

5.3.5. As historical survey of NEERI was done at a very earlier stage (2004-05) so it is not

considered in this assessment.

Table 7: Summary matrix- Chemical and physical characterization

Source GCV (As received basis) kcal/kg NCV kcal/kg Moisture %

Chemical characterization 1089 631 56.1

Physical characterization 1411 1083 -

Average 1250 857 56.1

5.3.6. As mentioned above, average GCV and NCV for sample are 1250 kcal/kg and 857

kcal/kg at 56.1 % weighted moisture.

5.3.7. The Commission during TVS sought NSWPMPL to clarify, whether NSWPMPL has

envisaged any reduction in the Gross Calorific Value (GCV) of MSW because of change

in the MSW fuel such as plastic and allied material due to change in Government

policies.

5.3.8. NSWPMPL submitted that, it has arrived at the GCV of Nagpur based WtE plant on the

basis of waste characterization report issued by NEERI for Nagpur city. The report

implies the presence of plastic in the mixed MSW generated in Nagpur city. It is not

possible to ascertain any change in GCV content of waste as a result of an undeclared

policy of Government. It is not clear that when any policy change would come in force. It

is also unknown, what kind of plastic and allied material would be affected.

5.3.9. Therefore, the impact of such change in GCV due to new policy cannot be envisaged at

this point of time. However, if any such policy change if risks operational performance of



the project materially and affects overall viability, NSWPMPL would reach out to the

Commission for needful consideration at such point in time.

5.3.10. During mechanical segregation and bio drying, the GCV of inlet raw MSW will improve

due to removal of inert and moisture. Inlet raw MSW quantity is 800 TPD at GCV of

1250 kcal/kg, which improved up to 1818 KCal/kg in 550 TPD processed MSW.

GCV of processed MSW = 800*1,250/550*1,000 kcal/kg

= 1,818 kcal/kg

Accordingly, it is estimated that, 550 TPD processed MSW at GCV of 1,818 kCal/kg will

feed into boiler.


5.3.11. The Commission has noted the analysis carried out by NSWPMPL for the MSW

available in Nagpur. NSWPMPL has estimated average 56.1% moisture by weight in the

MSW, this includes the seasonal variation also. The DPR submitted by NSWPMPL

provides the detailed computation of average GCV considered for unprocessed 800 TPD

waste and improved GCV of 550 TPD waste after pre-processing which works out to be

1818 kCal/kg.

5.3.12. The Commission also has noted the technical analysis of NSWPMPL‟s proposal carried

out by NEERI which confirms that, NSWPMPL has designed the WtE plant to burn

waste with the lowest LHV which can reasonably be sent to a waste incineration plant

and estimated power generation is computed considering the average lowest Calorific

value of MSW which ensures the estimated generation.

5.3.13. The Commission also notes that, while NSWPMPL has not envisaged any major change

in the Calorific value of MSW on account of Government‟s policies related to Plastic, it

has envisaged certain variation in the Calorific value of MSW to be received.

Accordingly, the Commission has noted the average Calorific value of MSW as 1800

Kcal/kg.

5.4. Installed Plant Capacity


5.4.1. The gross power generation, with net calorific value of incoming Pre-processed MSW as

1,800 kcal/kg and conversion efficiency of 24% is as follows:

Quantity of pre-processed MSW = 550 TPD

Assumed Net Calorific Value = 1,800 kCal/kg



Assumed Conversion Efficiency = 24%

Energy Recovery Potential from 550 TPD is estimated as per the following universally

accepted general formula:

Total MSW quantity (W tones) = 550 TPD

Net Calorific Value (NCV kCal/kg) = 1,800 kCal/kg

Energy recovery potential (kWh) = NCV x W x 1000/860

= 1.163 x NCV x W

= 1.163 x 1800 x 550

= 11, 51,370 Kwh

Power generation potential (kW) = 1.163 x NCV x W/ 24

= 1.163 x 1,800 x 550/24

= 47,973 Kw

Conversion Efficiency = 24%

Gross Generation potential (Minimum) = 11,513 kW

= 11.5 MW

Taking, net calorific value at 1800 kCal/kg, the possible power generation by using 550

TPD of Pre-processed MSW shall be 11.5 MW.


5.4.2. The Commission referred to the DPR submitted by NSWPMPL and noted that the

proposed capacity is in line with NSWPMPL‟s submission. Further, the Commission also

noted the waste management plan of 800 TPD worked out by NEERI in its technical

scrutiny of bid which also confirms that, out of 800 TPD waste, about 600 TPD would be

made available for WtE power plant and NSWPMPL also has considered 550 TPD for

WtE power plant.

5.4.3. The Commission has also reviewed the installed capacity estimation submitted by

NSWPMPL. Accordingly, the Commission has taken the installed capacity of 11.5 MW

for the purpose of this Project-specific Tariff determination.

5.5. Capacity Utilisation Factor


5.5.1. Considering the availability of MSW from NMC and variation in the quality of MSW

across seasons, NSWPMPL has considered the Capacity Utilization Factor (CUF) as 65%



during the stabilisation period (first year) and 80% for the post stabilization (remaining

period).

5.5.2. The Commission asked NSWPMPL to clarify whether 65% CUF (1st Year) and 80%

CUF (2nd

Year onwards) is minimum guaranteed generation? Further, clarify treatment

for under generation and excess generation as against normative PLF based generation as

submitted under Petition.

5.5.3. NSWPMPL submitted that, the proposed plant is designed is based on waste

characteristics study done by NEERI, and the commitment of NMC to supply MSW

quantity of 800TPD (+/-20%). There is a wide range of variations possible in calorific

content of incoming MSW when plant starts its operation. During the first year, the actual

waste characteristics, actual variations in waste quality and quantity, its actual GCV and

its variations; both daily as well as seasonal are observed and studied and the power plant

operating parameters are fine tuned to suit the same.

5.5.4. NSWPMPL further submitted that this is a long term process because seasonal variations

and waste quality/quantity changes are studied over the entire year. To deal with

unanticipated surprises, plant is operated at moderate level during the first year. Further,

there might be more interruptions in the plant operation, which will lead to PLF of 65%.

This PLF is an estimate for the purpose of anticipating energy generation during the first

year. It is not a guaranteed minimum PLF.

5.5.5. Based on the experience of the waste characteristic over the first year, lesser surprises

would be anticipated from the feedstock. The technical parameters of the Project would

be tuned accordingly. This will improve PLF to 80% in the second year. This PLF is an

estimate for the purpose of anticipating energy generation during the first year. It is not a

guaranteed minimum PLF.

5.5.6. Further, the NSWPMPL submitted that as regards to the petition seeking levellised tariff

for the RE Project, the tariff is driven on the parametric estimates considered while

determining tariff. In case the deviation in parameter value different than those

considered while determining tariff, risk is generally borne by the Project developer.

Accordingly, deficit/ excess power generation leading to lower/ higher PLF respectively,

the consequences would be confined to the developer. In such regime, discussion around

scenarios of deviation from the approved norm of one parameter (here, PLF) would not

be meaningful. Similar deviation can happen for other parameters like capital cost, O&M

expenses, and interest on loan, too. For such, there is no remedial process defined in the

Regulations of this Commission.

5.5.7. The parameters considered by NSWPMPL are estimates by nature. Therefore, the

quantum of over/under generation, or any probability cannot be ascertained at this point

of time. Therefore, no specific treatment is anticipated in case of change in PLF.




5.5.8. NSWPMPL has proposed the CUF that are comparable with CUF norm approved by this

Commission as well as other SERCs for similar MSW Projects as shown in the Table 8

below:

Table 8: Comparative Capacity Utilization factor of MSW Projects

Description

NSWPMPL

Proposed

Project

Case No

87 of

2015,

Kolhapur

Case No

77 of

2014,

Pune

Case No

65 of

2009,

Solapur

Case No

12 of

2016

JSERC

1443 of

2014 ,

Surat,

GERC

Petition

No.

27/2016,

DERC

CUF

(First year ) 65 % 65% 65%

78.9%

65% 60% 65%

CUF

(Second year

Onwards )

80% 80% 75% 75% 85.6% 75%

Accordingly, the Commission has considered the CUF of 65% for the first year and 80%

for the remaining life of the Project, as proposed by NSWPMPL.

5.5.9. The Commission also observes that, NSWPMPL has factored the operational risk of the

MSW Power Plant operations and the same shall be borne by NSWPMPL. The risk of

lower generation and consequent lower CUF cannot be passed on to the Distribution

Licensees/consumers at a later stage. Similarly, the benefit of excess generation beyond

the threshold value of CUF will be allowed to be retained by NSWPMPL.

5.6. Auxiliary Energy Consumption Factor


5.6.1. The overall Plant Auxiliary Consumption has been considered as 18.32% of gross

generation for tariff computation.

5.6.2. The Commission had asked NSWPMPL to submit the justification for considering

Auxiliary Consumption as 18.32% in context of auxiliary consumption for other MSW

Projects of NSWPMPL, referred in the Petition and DPR and in the context of

consumption of additional equipment (such as mechanical separator) considered in the

Project in order to comply with the latest SWM Rules, 2016.

5.6.3. NSWPMPL submitted that, it is operating WtE Project at Jabalpur which does not have

pre-processing facility. It has experienced auxiliary consumption of about 15% of gross

generation. For the proposed Project at Nagpur, the Auxiliary consumption for processing

plant without preprocessing is estimated similar to Jabalpur Project.



5.6.4. Based on the new SWM Rules 2016, it is mandated to deploy extensive preprocessing

facility for the mixed MSW to remove inert, metals, dust etc. The list of equipment and

their electrical loads and running load is submitted in the Table No.9 as below:

Table 9: Auxiliary Equipment Details submitted by NSWPMPL

Sr. No Feeder Name Connected Load

KW

Running Feeder Load

KW

1 BOILER MCC I/C 320 100

2 TG MCC I/C 345 80

3 ACC MCC I/C 183 92

4 FGT MCC I/C 235 74

5 WTP MCC I/C 175 75

6 ETP MCC I/C 45 10

7 COMMEN AUX MCC & Air

Conditioning 100 37

8 MLDB ( Plant Lighting ) 50 22

9 FIRE MCC 100 15

10 ID FAN VFD 450 344

11 PA FAN VFD 350 285

12 BFP-1 VFD 250 0

13 BFP-2 VFD 250 200

14 ACC-1 VFD 132 75

15 ACC-2 VFD 132 75

16 ACC-3 VFD 132 75

17 GRAB CRANE-1 220 75

18 GRAB CRANE-2 220 75

19 Pre processing

Ballistic Separator(MSW) 165 132

Conveyor 82.5 62

Feeding Hopper 22.5 20

Grab Crane with Gantry 60 51

Lighting System 100 35

LTP 5 3

Misc. 20 15

Transformer Losses 105 80

Total Load kW 4249 2107

As % of gross generation of

11.5 MW 18.32%

5.6.5. Further, NSWPMPL, has envisaged pre-processing work for 16 hours per day with

balance 8 hours for cleaning and maintenance. This 16 hours working has been factored

into auxiliary consumption calculation and accordingly the overall auxiliary consumption

worked out as 18.32%.



5.6.6. The proposed Project would have air cooled condenser. Air cooled condenser based

Projects have typically higher auxiliary consumption than that of water cooled condenser.

Water availability for cooling power plants is a major issue in the proposed Project due to

frequent water shortages. Corporations give first priority to provide drinking water to

citizens and since most of them are already facing water shortage coupled with the fact

that seasonal monsoon rains are unpredictable, it becomes necessary to use Air Cooled

Condenser for Waste to Energy Power plants. All the WtE Projects of NSWPMPL are

designed to use Air cooled condenser.

5.6.7. The transformer losses also have been considered for the auxiliary power. Therefore, the

total auxiliary consumption for Nagpur plant with preprocessing worked out as 18.32%

of gross generation.

5.6.8. Though auxiliary consumption is a project specific phenomenon, as asked by the

Commission, NSWPMPL has referred to the past orders issued by this Commission in the

Case No. 87 of 2015, 77 of 2014 and 65 of 2009 for auxiliary consumption as shown in

the Table No. 10 below:

Table 10: Comparison of Auxiliary Consumption of various similar projects

Description NSWPMPL’s

MSW Project

Case No 87 of

2015, Kolhapur

Case No 77-

2014, Pune

Case No 65 -

2009, Solapur

Auxiliary

Consumption

18.32% ( with

processing )

20% ( without

processing)

17% ( with

processing)

17%( with

processing)

Technology Type Mass Incineration Mass

Incineration Pyrolysis

thermophilic

bio-methanation

Capacity 800 TPD,11.5

MW

180 TPD, 1.8

MW

700 TPD,8.97

MW

150 TPD, 2.83

MW

5.6.9. Above table indicates that though auxiliary consumption for the Solapur and Pune

Projects are less than that proposed for Nagpur MSW power project, their technologies

are completely different. Pune Project includes pre-processing facility - primary and

secondary shredding with heating. Therefore, the auxiliary consumption for

preprocessing at Pune plant is higher i.e. 8% as compared to 2.8% proposed for Nagpur

Project. Solapur Project‟s auxiliary consumption with preprocessing is 17%, and without

preprocessing is 12.32%. This corresponds to preprocessing auxiliary consumption of

4.68%. Nagpur MSW power project has much lower auxiliary consumption of 2.8% for

preprocessing.


5.6.10. The Commission observes that while the NSWPMPL has claimed auxiliary consumption

of 18.32% in capacity (kW) terms, for the purpose of gross/net generation, the auxiliary



consumption factor will have to be factored in energy terms (kWh) taking into

consideration the operational parameters and running load conditions of various auxiliary

units, drives and pre-processing facilities. The Commission has verified the assumptions

made by NSWPMPL and recomputed the Auxiliary consumption factor as provided in

the Table No.11 below:

Table 11: Auxiliary Consumption as considered by Commission

Feeder Name

Connected

Load KW

Running Feeder Load

KW

Energy consumption

considered by the

Commission in MUs

Boiler MCC I/C 320 100 0.70

TG MCC I/C 345 80 0.56

ACC MCC I/C 183 92 0.64

FGT MCC I/C 235 74 0.52

WTP MCC I/C 175 75 0.53

ETP MCC I/C 45 10 0.07

Common AUX MCC &

Air Conditioning 100 37 0.26

MLDB ( Plant Lighting ) 50 22 0.15

Fire MCC 100 15 0.11

ID FAN VFD 450 344 2.41

PA FAN VFD 350 285 2.00

BFP-1 VFD 250 0 0.00

BFP-2 VFD 250 200 1.40

ACC-1 VFD 132 75 0.53

ACC-2 VFD 132 75 0.53

ACC-3 VFD 132 75 0.53

GRAB CRANE-1 220 75 0.53

GRAB CRANE-2 220 75 0.53

Pre processing

Ballistic Separator(MSW) 165 132 0.62

Conveyor 82.5 62 0.29

Feeding Hopper 22.5 20 0.09

Grab Crane with Gantry 60 51 0.24

Lighting System 100 35 0.16

LTP 5 3 0.01

Misc. 20 15 0.07

Transformer Losses 105 80 0.37

Total Load kW 4249 2107

Total Capacity (in MW) 11.5 18.32% 17.17%

Total Gross Energy

Generation (in MU) 80.59

Total Auxiliary

Consumption (in MU) 13.84



The Commission considered 80% CUF for computation of Auxiliary consumption of

Plant and considered two shift operation for preprocessing treatment for MSW which

works out as 13.84 MUs per year. Accordingly, auxiliary consumption amounts to

17.17% of Gross generation from second year onwards.

5.7. Capital Cost


5.7.1. NSWPMPL has submitted that it has estimated the Capital Cost for the plant as Rs.

218.81 Crore and part of the same amounting to Rs. 70 Crore would be funded by way of

Viability Gap Fund (VGF) as committed by NMC. The capital cost as estimated by

NSWPMPL is presented in the Table No. 12 below

Table 12: Break-up of Capital Cost as Submitted by NSWPMPL

Particulars Cost (in Rs. Lakh)

Plant & Machinery 13,078.80

Building & Civil Cost (Inc. land preparation) 2,481.50

Engineering Expense 700.00

Transmission Cost 477.75

SLF (Inc. ash disposal) 1,029.00

Rehabilitation of existing SLF/ Land Capping 441.00

Total Hard Cost 18,208.05

Contingency Cost 546.24

Consultancy charges 455.20

PMC Charges 273.12

Preoperative expenses 182.08

Financing cost 364.16

Project Development Fee paid to NMC 218.00

IDC 1,633.72

Total Cost of Project 21,880.58

5.7.2. NSWPMPL has further submitted that due to location specific Project parameters along

with obligations stipulated in the Concession Agreement, the capital cost of the plant is

higher than the standardized norms followed by Commission.

5.7.3. The Commission asked NSWPMPL to provide detailed break up of parameters such as

plant and machinery, civil and building cost considered in the capital cost of plant and

break up of cost of supply for imported component and cost of supply of indigenous

component, break up of taxes and duties separately for imported component and

indigenous component.



5.7.4. NSWPMPL submitted that, it has selected Hitachi Zosen as technology partner, which

has most successful and commercially viable Projects under operation. Hitachi Zosen has

provided the quotation for cost to be incurred towards plant and machinery, civil works

and engineering services.

5.7.5. NSWPMPL has submitted the detailed break up of quotation provided by M/s Hitachi

Zosen India Pvt. Ltd. is as below:

Table 13: Quotation for Plant & Machinery Cost (as per Hitachi-Zosen India Pvt. Ltd.)

Sr.

No.

Description (Local Plus 1x 600 TPD) Price (Rs.

Lakh)

Taxes and

Duties (Rs.

Lakh)

1 Price on FOR Site basis for 11.5 MW WTE Plant

with

Indigenous components with Design, Engineering

and supply along with a pre-processing plant of 800

TPD input and 600 TPD as output to WTE facility

10950.00 890.00

Supply of imported components on FOR site basis. 81.0 7.00

Total of supply along with applicable taxes and

duties

11928.00

2 Erection and commissioning of

Erection and commissioning at Nagpur site for 11.5

MW WTE plant along with pre-processing facility

1000.00 150.00

Total of Erection and commissioning with

applicable taxes and duties 1150.00

3 Total Price on FOR site basis for design,

Engineering and supply of equipment towards

11.5 MW WTE plant along with pre-processing

facility including applicable taxes and duties in

Rs. Lakh

13078.00

Cost of Civil Works:

5.7.6. NSWPMPL submitted that, Civil Works include construction of works like Boiler and

Steam Turbine foundations, construction of effluent treatment plant, and construction of

chimney foundation. The cost also includes heavy construction of MSW storage bunker

that is an integral part of handling the MSW, mixing of MSW, prevention of leachate

pollution for isolating odors. Normally, this structure is not applicable for other type of

plants including the waste handling cranes. This part also has heavy foundation for load

bearing members of grab cranes, RCC ramps for unloading of trucks etc. And thus the

Cost of Civil works is higher than conventional biomass based or thermal power plants.



The site provided by the Municipal Corporation is marshy area and the soil has a very

low bearing capacity.

5.7.7. The Commission asked NSWPMPL to confirm the competitive bidding process to be

followed for award of contract for erection/civil works. NSWPMPL submitted that, the

civil cost is based on estimates as the Project is in design stage. The civil cost includes

erection of Boiler-Turbine-Generator equipment and cost of MSW storage bunker for

holding capacity of 4 days. Details of quotation received for civil work of MSW plant are

as submitted in the Table below:

Table 14: Details of Quotations received for Civil work of MSW Plant

Sr. No. Details Price (Rs. Lakh)

Civil work of 11.50

MW WtE Plant at

Nagpur

S S Enterprises Global

Engineering

Ujjwal

Construction

2707.19 2590.15 2481.50

M/S. Ujjwal was found to be most competitive for civil works, hence considered for

estimation purpose.

Engineering expenses

5.7.8. These include detail engineering services covering process design, civil, mechanical,

piping, electrical, instrumentation, automation including structural design using software,

piping isometric drawings using software and other related activities as applicable.

Transmission Cost

5.7.9. The transmission cost includes evacuation of power that shall be carried out by installing

a 33kV bay at MSEDCL‟s sub-station and laying 33 kV transmission line between plant

and the MSEDCL‟s 33/11 kV sub-station which is at a distance of 3Km from the power

plant. The NSWPMPL has submitted that the sub-station has full capability to receive the

power, i.e. 9.39 MW. The sub-station has also adequate land available for installation of

33kV bay link facilities for the Project.

5.7.10. The Commission asked NSWPMPL to submit the breakup of Rs. 477.75 Lakh considered

towards the Transmission cost as cost upto interconnection point and cost beyond

interconnection point. NSWPMPL submitted that, Rs. 126 Lakh are estimated as cost

upto interconnection point and Rs. 351.75 Lakh are pertained to cost beyond

interconnection point.

5.7.11. NSWPMPL has included cost of transmission line in the evacuation expenses, as

development of evacuation infrastructure is required to be ready at least 2 months before

commissioning of the Project and it may become critical for timely commissioning of the



Project. Delay in the Project commissioning on account of evacuation arrangement may

lead to increase in IDC and delay in staring power generation. Further, NSWPMPL, may

fail to honor time lines as specified in the Concession Agreement.

Developing Scientific Landfill (SLF)

5.7.12. MSW plants have higher ash generation due to presence of inert material, dirt, stones and

other debris resulting in requirement of ash disposal arrangement. As per clause 2.1 (f) of

Concession Agreement the scope of work covers as under: -

“2.1 (f) Design, construction and operation of Scientific Landfill and disposal of process

remnants and Residual Inert Matters.”

5.7.13. NSWPMPL would create new SLF by spending Rs. 1029 Lakh along with the

development of the Project Facility. The SLF would consist of 3 cells. Each cell of SLF

would be used sequentially up to its storage capacity. Accordingly, use of cells would

commence from CoD, 4th

year of CoD and 8th

of CoD.

Rehabilitation of existing SLF/ Capping of Existing Landfill

5.7.14. As per SWM Rules, 2016 [rule 15 (w), (zi), 16 (1) (b) (e), 16 (4)], following provisions

are mandated for SLF‟s,

“(A) Criteria for site selection. -

…

(ii) The sanitary landfill site shall be planned, designed and developed with proper

documentation of construction plan as well as a closure planning a phased manner. In case a

new landfill facility is being established adjoining an existing landfill site, the closure plan of

existing landfill should form a part of the proposal of such new landfill.” [Emphasis added]

NSWPMPL has estimated Rs. 441 Lakh to be incurred in the process of capping of

existing landfill.

Soft costs:

5.7.15. Contingency: Contingency is planned to tide over any escalation in Project cost or

unforeseen expenditure. Further, a significant portion of the capital expenditure of plant

& machinery is on the key imported equipment, there is a currency risk. Total

contingency cost is Rs. 546.24 Lakh or approximately 3% of total hard cost.

5.7.16. Consultancy services and Project management consultancy services: Consultancy

charges along with the Project Management Cost include support services in different

activities that align the Project to achieve the program goals and allows for optimized or

integrated cost, schedule and effort. This also includes expat services required for the

Project. Total consultancy and PMC (including expat services) charges are Rs. 455.20



Lakh and Rs. 273.12 Lakh respectively, which amount to 2.5% and 1.5% of the Project

hard cost respectively.

5.7.17. Pre-operative expenses: The pre-operative and preliminary expenses are incurred in

Project feasibility studies, technical & commercial studies and related activities for

conceptualizing the Project, expenses on ecology & topological survey, soil investigation

study, land fencing, pre-construction office cost, technology selection and EPC contractor

selection, visits to the working plants, cost for preparation of DPRs etc. Since this is a

generation Project, these studies are very important to determine Project viability.

Estimated preoperative expenses are estimated as Rs. 182.08 Lakh.

5.7.18. Financing cost: Financing cost includes up-front fees, processing fees, Project appraisal

fees, fees of lender‟s legal counsel, lender‟s independent engineer, syndicator, and

lender‟s insurance advisor. Estimated financing cost of the Project is Rs. 364.16 Lakh

which is 2% of Project hard cost.

5.7.19. Interest during construction: As the Project is under construction, IDC cost as well as

other soft costs can only be estimated at this point of time. NSWPMPL has estimated

IDC as Rs. 1,633.72 Lakh. NSWPMPL would be able to produce further details before

the Commission after achieving COD.

5.7.20. NSWPMPL submitted that such power Projects utilize pre-processed MSW, which

consists of highly corrosive and combustible chloride which is also highly volatile.

Therefore, specially designed low pressure boilers with tubes of better quality are

required to be used. Also, the requirement of equipment for de-stoning, shredding and

drying of pre-processed waste and additional pollution protection equipment are to be

accounted for. Pollution control / FGT also contributes to higher cost. Due to this, the

cost of equipment will be more than for the boilers used for generation of steam from

other renewable sources such as Biomass.

5.7.21. Even though the cost of producing electricity from such waste to energy Project is higher

than power from conventional sources, the benefits expected from the Projects are much

higher in terms of waste management in a most efficient and environment friendly

manner, reduced land requirement of landfill etc.

5.7.22. NSWPMPL further submitted that the capital cost estimated by NSWPMPL is based on

highly proven incineration technology for processing MSW. The following factors

arising due to the location specific Project parameters along with obligations stipulated in

the Concession Agreement render the capital cost for NSWPMPL‟s plant higher as

compared to the standardised norms of this Commission:

Additional cost related pre-processing activity that will be used to pre-process

MSW



Additional cost related to Leachate treatment plant

Additional cost related to Land capping for closure of SLF


5.7.23. The Commission has considered the documents and replies to data gaps as submitted by

NSWPMPL. Further, the Commission observes that CERC in its Generic Tariff Order for

MSW/WTE Projects for 2015-16, has considered a capital cost of Rs. 1500 lakh/MW,

excluding land cost which was continued even after FY 2016-17 as well. Further, GERC

in its Order dated 4 August, 2015 has determined the Project-specific Tariff for the 11.5

MW MSW based power plant considering capital cost of Rs 1778 lakh/MW based on

mass-burn combustion technology. A comparative table of recently approved capital

costs for WtE Projects by various Regulatory Commissions in India with the capital cost

proposed in the present case is presented in the Table No. 15 below:

Table 15: Comparative Capital Cost of MSW Projects

Sr. No Waste to Energy Project Capital Cost

(in Rs. Lakh) MW

Capital Cost

/ MW (In Rs.

Lakh)

Technology

1

MERC, Case No 158 of 2017

(Proposed by NSWPMPL - case

under consideration)

21880.58 11.5 1902.6 Mass

Combustion

2 MERC, Case No. 87 of 2015

(KGEPL) 2482.7 1.8 1379.3

Mass

Combustion


(Solapur Bioenergy) 3614.6 2.8 1277.2 Gasification


(Rochem Pune, RGEPL) 12949.9 9.0 1443.7 Gasification

5 GERC, Case No. 1433 of 2014

(RGE Surat Pvt. Ltd.) 20448.0 11.5 1778.1

Mass

Combustion

6 CERC (Generic, SM/03/2015) 1500.0 Combustion

7 BERC, Case No. 22 of 2015

(PGEPL, Patna) 20542.8 11.5 1786.3 Combustion

8 Jabalpur MSW (MP Pollution

Control Board) 17250.00 11.5 1500.00

Mass

Combustion

9 Ranchi MSW (Jharkhand ERC) 18631.00 11.5 1620.00 Mass

Combustion

5.7.24. Considering the above comparative analysis of capital costs for WTE Projects, the

Commission finds the capital cost proposed by NSWPMPL is on higher side. The

Commission has also noted the submission of NSWPMPL regarding Pre-processing

activities and post-closure activities which has found part of overall Capital Cost in line

with provisions under Concession Agreement and in pursuance of SWM Rules, 2016.



Accordingly, the Commission has recomputed the capital cost considering the capital cost

considered by other SERCs for similar MSW Projects and also taking into account the

replies to the data gaps submitted by NSWPMPL.

5.7.25. NSWPMPL has formed consortium with M/s Hitachi Zosen India Pvt. Ltd. and adopted

its mass incineration technology for its Nagpur MSW Project. The budgetary offer of M/s

Hitachi Zosen India Pvt. Ltd. has considered for estimation of plant and machinery.

Similarly, for Building and Civil work also NSWPMPL has considered budgetary offered

received from market and proposed that, this work will be carried out by inviting

competitive bids.

5.7.26. The Commission has scrutinized the DPR for various Cost components and technical

justification provided therein. Based on provisions of DPR and submissions of

NSWPMPL, the Commission notes that the components considered by NSWPMPL for

engineering services expenses and creation of SLF including ash disposal plant as Rs.

700 Lakh and Rs. 1029.00 Lakh respectively, are based on the price offered to

NSWPMPL by technology provider M/s Hitachi Zosen India Pvt. Ltd.

5.7.27. Regarding consideration of transmission/Evacuation expenses in the evacuation cost,

Regulation 13 of RE Tariff Regulations,2015 specifies the Capital Cost to be considered

for Tariff determination as below:

“13. Capital Cost

The norms for Capital Cost as specified in the subsequent RE technology-specific

Chapters shall be inclusive of all capital works, including land cost, plant and

machinery, civil works, erection and commissioning, financing costs, preliminary

and pre-operative expenses, interest during construction, and evacuation

infrastructure up to the inter-connection point:

Provided that a Petition for Project-specific tariff determination shall provide the

break-up of Capital Cost items in the manner specified in Regulation 9.”

5.7.28. Further, Regulation 15 of RPO-REC Regulations,2016 specifics the provision of grid

connectivity framework as below:

“15 Grid Connectivity Framework

The concerned Licensee shall be responsible for development of evacuation

infrastructure beyond the inter-connection point, while the Generating Company shall

develop evacuation infrastructure from generation facility up to the inter-connection

point at its own expense;



Provided that, the evacuation infrastructure cost beyond the Inter-connection Point shall

be borne by the Licensee and shall be recovered from its Consumers as per the pricing

framework developed by the State Commission;”

5.7.29. Above provisions of the Regulations, specifies that, the transmission cost beyond

interconnection point shall not considered as a part of Capital Cost and concerned

licensee shall develop the transmission network at its own expenses and same shall be

recovered through suitable pricing mechanism such as Aggregate Revenue Requirement

(ARR) of concerned Licensee.

5.7.30. NSWPMPL has submitted that, cost upto interconnection point has been estimated as Rs.

126 Lakh, whereas evacuation cost beyond interconnection point has been estimated to

be Rs. 351.75 Lakh. Hence, the Commission has considered Rs. 126 Lakh towards

evacuation expenses as a part of Capital Cost of the Project and directs NSWPMPL, to

approach the concerned Licensee for expediting the work of transmission line for timely

availability of connectivity for its MSW Project.

5.7.31. The Commission has observed that, NSWPMPL has considered 3% of total hard cost

towards contingency cost. Further, NSWPMPL has justified its claim of contingency to

be factored in Project Capital Cost as each Project may have some unknown risks which

the Project developer cannot perceive at the time of determining the Project cost and to

mitigate such risks he needs to have reasonable resources.

5.7.32. However, in the present case, NSWPMPL has formed consortium with Hitachi Zosen and

the budgetary offer of Hitachi Zosen has been considered for estimation of plant and

machinery. The Commission is of the view that, the risk of variation in plant and

machinery cost which is almost 71% of total hard cost would be limited and besides there

would be scope for savings in these Costs at the time of award through competitive

process and negotiations; since the present cost estimates are based on budgetary

estimates. Further the Commission has noted the quotation of M/s Hitachi Zosen India

Pvt. Ltd. for plant and machinery which includes imported components of only Rs. 81

Lakh which is less than 7% of the total supply cost. Hence, the Commission is of the

view that, the impact of variation in exchange rate, if any would by very marginal and

specific provision of contingencies would amount to overestimation of capital cost.

5.7.33. NSWPMPL has considered 2.5% of total hard cost towards consultancy cost, 1.5% of

total hard cost towards PMC charges and 2% of total hard cost towards financing cost.

The Commission is of the view that NSWPMPL has technical collaboration with Hitachi

Zosen India Pvt. Ltd. and majority of engineering activities shall be carried out in

consultation with OEM. Further NSWPMPL has estimated pre-operative and preliminary

expenses of about 1% of the total hard cost towards project feasibility studies, technical

& commercial studies and related activities for conceptualizing the Project, expenses on

ecology & topological survey, soil investigation study, land fencing, pre-construction



office cost, technology selection and EPC contractor selection, visits to the working

plants, cost for preparation of DPRs etc. Thus, total Soft Cost (excluding IDC) as

estimated by NSWPMPL amounts to Rs. 2038.81 Lakh which is about 11.20% of the

total hard cost.

5.7.34. The Commission has undertaken comparison of soft costs towards various heads as

estimated by NSWPMPL vis-à-vis that considered for similar Projects cases earlier

approved by the Commission and other SERCs as shown in the Table below. The

Commission notes that as against NSWPMPL‟s claim of soft cost of 11.20% of hard

costs, the range of soft costs approved for similar cases by various SERCs varied from

7.46% to 7.88%.

Table 16: Comparison of Soft Cost and Hard Cost of MSW Projects

Particulars

GERC, Case No.

1433 of 2014 (RGE

Surat Pvt. Ltd.)

BERC, Case No. 22

of 2015 (PGEPL,

Patna)

Jabalpur,

MPERC

NSWPMPL

Petition

Hard Cost 167.88 169.63 151.75 182.08

Interest During Construction 23.37 23.15 16.09 16.34

Soft Cost 13.23 12.65 7.54 20.39

Total Cost 204.48 205.43 175.38 218.81

Soft Cost as a % of Hard Cost 7.88% 7.46% 4.97% 11.20%

Accordingly, the Commission has considered the soft cost as 8.20% of the hard cost as

against NSWPMPL‟s claim of 11.20% of the hard cost.

5.7.35. NSWPMPL has also considered about Rs. 1633.71 Lakh towards IDC at the rate of

12.30% p.a. Interest rate. Commission has considered Interest on Loan as 10.99% p.a.,

basis of the same has been elaborated in Para 5.14 of this Order. Considering phasing of

expenditure proposed by NSWPMPL with revised Interest rate of 10.99% p.a., the

Commission has recomputed the IDC which works out as Rs. 1347.42 Lakh.

Table 17: Capital Cost of MSW Projects considered by the Commission

Particulars Capital cost as proposed

by NSWPMPL

(in Rs. Lakh)

Capital Cost considered

by Commission

(in Rs. Lakh)

Plant & Machinery 13,078.80 13,078.80

Building & Civil Cost (Inc. land

preparation) 2,481.50 2,481.50

Engineering Expense 700.00 700.00

Transmission and Evacuation

Cost 477.75 126.05

SLF (Inc. ash disposal) 1,029.00 1,029.00

Rehabilitation of existing SLF/

Land Capping 441.00 441.00



Particulars Capital cost as proposed

by NSWPMPL

(in Rs. Lakh)

Capital Cost considered

by Commission

(in Rs. Lakh)

Total Hard Cost 18,208.05 17,856.35

Contingency Cost @ 3% 546.24

8.20% of

the Hard Cost

Consultancy charges@ 2.5% 455.20

PMC Charges @ 1.5% 273.12

Pre-operative expenses @1% 182.08

Financing cost @ 2% 364.16

Project Development Fee paid to

NMC 218.00

Total Soft Cost (excluding

IDC) 2038.81 1467.94

IDC 1633.72 1347.42

Total Cost of Project 21,880.58 20,671.71

5.7.36. In view of the above, the Commission considers Rs. 20671.71 Lakh towards Capital Cost

of NSWPMPL‟s MSW Project for determination of Tariff as against Rs.21880.58 Lakh

proposed by NSWPMPL.

5.7.37. The Commission hereby directs NSWPMPL to submit the detailed break up of actual

Capital Cost of Its Nagpur MSW plant with Pre-processing facility as on Commercial

operation date (CoD) duly certified by Statutory Auditor within six months from CoD of

the Project.

5.8. Viability Gap Funding (VGF)


5.8.1. As per Clause 39.1 of the Concession Agreement NMC has committed for VGF of Rs. 70

Crore.

“VGF support amounting to maximum of Rs. 70 (Seventy) crores, subjected to the terms

and condition as detailed in herewith and Concession Agreement.‟

NSWPMPL has accordingly reduced the capital cost of the Project by the VGF amount

earmarked for setting up of waste to energy Project Facility i.e. Rs. 70 Crore and balance

capital cost is proposed to be funded through debt and equity in the normative ratio of

70:30.


5.8.2. The Commission asked NSWPMPL to confirm the nature and extent of VGF available

for its MSW Project and whether it has been availed or is proposed to be availed.



5.8.3. NSWPMPL submitted that, at the time when EOI was floated by NMC, there was no

clarity about the availability of funding from GoI / GoM for implementation of waste

management in Nagpur. Over the period the Swachh Bharat Mission- Urban a major

initiative by the central Government was launched to attain vision of “Clean India”.

Under this program Central Government incentive for SWM under SBM was available as

20 % grant or Viability Gap Funding (VGF) and state was to contribute minimum of 25

% funds for SWM Projects. Under Swachh Bharat Mission Integrated Detailed Project

Report (DPR) of scientific management and disposal of MSW of Nagpur city was

submitted, in that WtE Project was one of the major component of the DPR. GoM, High

Power Committee approved the DPR on dated 22 March, 2016 at Mantralaya Mumbai

along with the VGF of Rs. 96.22 Crore for various components of MSW. Out of this, Rs.

70 Crore was allotted to WtE Project.

5.8.4. The Commission has verified the relevant provisions of Concession Agreement for grant

of VGF of Rs. 70.00 Crore by NMC. And accordingly considered the same while

determination of Tariff as proposed by NSWPMPL.

5.8.5. Commission has also asked NSWPMPL, if it has approached MNRE or MEDA for any

Capital subsidy for its MSW power plant. NSWPMPL has confirmed that, it has neither

approached nor any intension to approach in future to MNRE or MEDA for any Capital

subsidy or any financial assistance.

5.9. Useful Life of MSW Plant


5.9.1. NSWPMPL has considered useful life of the MSW Project as 13 years. The Commission

asked NSWPMPL, the rationale behind considering useful life of 13 years. NSWPMPL

submitted that,

a) NMC has awarded Concession Agreement to process MSW generated from the city

for the period of 15 years including construction period of 2 years. This leaves

operating period of only 13 years. For the Waste to energy Projects, the useful life of

the Project is defined by following two factors:

Right to process a feedstock – Operating period under Concession Agreement

Right to sell power – PPA period

If any of the above factor is absent, the Project would cease to be useful. The useful

life of the Nagpur Project is limited by operating period of 13 years, hence, the same

is considered as useful life.

b) Further, the Concession for the Project was awarded by NMC after a competitive

bidding process under DBFOT model. According to the provision 22.2.4 of the



Concession Agreement, on completion of the Concession period, the Project

including all movable and immovable infrastructure/ facilities will be transferred to

NMC free of cost. After the transfer, NSWPMPL will not have any rights on the

Project Facility and its infrastructure. NSWPMPL has to recover the capital costs and

investments made during the operating life of 13 years. Therefore, the useful life of

the Project for the purpose of the tariff petition is considered as 13 years.

c) NSWPMPL submitted that, it would be useful to highlight the provisions of MERC

(Terms and Conditions for Determination of RE Tariff) Regulations, 2015

“2.1 (mm) „Useful Life‟, in relation to a Unit of a Generating Station, including the

evacuation system, means the following duration from the date of commercial operation

(„COD‟) of such generation facility, namely: —

a. Wind Energy Power Projects 25 years

b. Biomass-based Power Project, Non-Fossil Fuel-based 20 years Co-

Generation.

c. Mini/Micro and Small Hydro Power Projects 35 years

d. Solar PV/Solar Thermal Power Projects 25 years

e. Solar Roof-top PV systems Power Projects 25 years

Provided that the Useful Life of other RE Projects shall be as stipulated by the

Commission while determining the Project specific tariff, taking into consideration the

norms of the Central Commission;” [Emphasis Added]

“79. Power to Relax: The Commission may, by general or specific Order, for reasons to

be recorded in writing and after giving an opportunity of hearing to the parties likely to

be affected, relax any of the provisions of these Regulations on its own motion or on an

application made before it by an interested person.” [Emphasis Added]

“82. Power to remove difficulties If any difficulty arises in giving effect to the

provisions of these Regulations, the Commission may, by general or specific Order,

make such provisions, not inconsistent with the provisions of the Act, as may appear to

be necessary for removing the difficulty.” [Emphasis Added]

Evident from above, the Commission‟s Regulations have not expressly defined the

„useful life‟ of the Waste to Energy Projects in the state. The Regulations specifies that

the Commission can stipulate the useful life in its order regarding Project specific tariff

after examining the case specific aspects.

Therefore, NSWPMPL requested the Commission to take into account Project specific

aspects of the proposed Project regarding operating life, transfer of the facility and the



period to recover the investments made, while defining the useful life of the Project as 13

years from the date of CoD.

5.9.2. NSWPMPL further submitted that, in view of the Project specific facts, it does not leave

any scope to consider operating life of more than 13 years. SLF proposed for the Project

would be sufficient to accommodate the residues coming from the processing facility

over the period of 13 years only. Post that, new SLF would be needed, for which, no land

is allocated at present. This would lead to difficulty in commercial borrowing by

NSWPMPL.

5.9.3. Further, Concession Agreement mandates closure of all SLFs created and its maintenance

for post-closure period of 15 years. Any extension in the operating life would also lead to

additional capex for creation of new SLF, SLF capping and its maintenance. This will

require higher value of post-closure reserves, than proposed in the Petition. This will lead

to diversion of higher share of tipping fees to reserve account. Presently tipping fees in

the form of non-tariff income have reduced the need for levellised tariff by almost Rs.

1.15/ kWh. If tipping fees available as non-tariff income reduces, levellised tariff for the

Project would increase.

5.9.4. If Tariff design has any divergence with Concession Agreement, it would create

challenges in executing PPA and achieving Financial Closure in timely manner. This

would jeopardise the Project.


5.9.5. The Commission notes that, NSWPMPL has considered useful life of the MSW Project

as 13 years considering the Concession Agreement period of 15 years (2 year for

construction + 13 years for operation) and computed Tariff for a period of 13 years.

5.9.6. Commission notes that, NSWPMPL has developed similar capacity and similar

technology MSW Projects at Jabalpur and Surat. Commission asked NSWPMPL to

submit the information about the useful life considered for both the Projects. NSWPMPL

submitted the information as below:

Table 18: Comparative Useful life of MSW Projects

Useful life Remarks

Nagpur

MSW

15 yrs

(including 2

yrs of const.

period), i.e.

operating life

of 13 yrs

Site provided for developing a new SLF would be sufficient to

accommodate the residues coming from the processing facility

over the period of 13 years only. Post that, new SLF would be

needed, for which, no land is allocated at present.

The useful life is limited by SLF‟s capacity and a period

giving right to process MSW. Therefore, the useful life cannot

be more than 13 years.



Useful life Remarks

Jabalpur

MSW,

MPERC

20 years from

COD

SLF was provided by JMC. Concessioner was not required to

develop an SLF. The useful life was not limited by SLF‟s

capacity. It was defined by period giving right to process

MSW, and the life of Plant.

Surat,

GERC

25 years from

COD

SLF was provided by SMC. Concessioner was not required to

develop an SLF. The useful life was not limited by SLF‟s

capacity. It was defined by period giving right to process

MSW, and the life of Plant.

BERC 25 years Sanitary landfill has to be developed by the NSWPMPL

Ranchi

MSW

JSERC

Order

20 years Sanitary landfill has to be developed by the NSWPMPL at

Ranchi as per the Concession Agreement. The Commission

has approved the Useful Life on the basis of JERC

Regulations, 2016

5.9.7. The Commission observes that NSWPMPL has considered useful life of 20 years for its

Jabalpur MSW Project whereas 25 years for its Surat MSW Project. Further the

Commission has also issued Tariff Orders for MSW Projects in Solapur, Pune and

Kolhapur, where the Commission has considered 20 years of useful life and also 20 year

of Tariff period.

5.9.8. NSWPMPL has requested to consider 13 years of useful life considering the tenure of

Concession Agreement as 15 years (13 years operation). Though, in case of Pune and

Kolhapur the Concession Agreement period was 30 years, the Commission has

determined the Tariff for 20 year period considering useful life of 20 years. Further,

relevant extracts of provisions of RE Tariff Regulations, 2015 stipulate the „Useful Life‟

as under:

(mm) „Useful Life‟, in relation to a Unit of a Generating Station, including the evacuation

system, means the following duration from the date of commercial operation („COD‟) of

such generation facility, namely: —

a. Wind Energy Power Projects 25 years

b. Biomass-based Power Project, Non-Fossil Fuel-based Co-Generation. 20 years

c. Mini/Micro and Small Hydro Power Projects 35 years

d. Solar PV/Solar Thermal Power Projects 25 years

e. Solar Roof-top PV systems Power Projects 25 years

Provided that the Useful Life of other RE Projects shall be as stipulated by the

Commission while determining the Project specific tariff, taking into consideration

the norms of the Central Commission;

5.9.9. The CERC under its RE Tariff Regulations, 2017 also considers, the useful life of MSW

Projects as 20 years as below:



cc) „Useful Life‟ in relation to a unit of a generating station including evacuation system

shall mean the following duration from the date of commercial operation (COD) of such

generation facility, namely: -

(e) Municipal Solid Waste (MSW)/ and Refuse Derived Fuel (RDF)

based power Project 20 years

As shown in the table above, the other SERCs also have considered useful life 20 years

or more and determined the Tariff for 20 years or more period.

5.9.10. The Commission is of the view that, the technical or operational life is to be considered

while determining the useful life of the power plant. Further, the same will have to be

governed as per the provisions of the RE Tariff Regulations, 2015 and it will not be

appropriate to link useful life to the Concession Agreement.

5.9.11. Further, the Commission has noted NMC‟s submission that it will take possession of

Plant post Concession Agreement and shall appoint new agency for operation through

tendering process.

5.9.12. Further, the Commission observes that Useful Life and Tariff Period are two distinct

concepts. Even in case of other RE technologies such as wind energy, biomass power,

non-fossil fuel based cogeneration, small hydel power (above 5 MW) and solar PV, the

Commission has determined Tariff for Tariff Period of 13 years whereas their Useful Life

varied from 20 years to 35 years.

5.9.13. Hence, the Commission considers useful life of NSWPMPL‟s MSW Project as 20 years

and Tariff period as 13 years.

5.10. Debt-Equity Ratio


NSWPMPL has considered a debt-equity ratio of 70:30 and has calculated the interest by

assuming a normative debt of 70% of the Project cost, in line with the methodology

adopted. Further, submitted that NMC has committed a VGF support of Rs. 70 Crore as

per clause 39.1 of the Concession Agreement.

5.10.1. Therefore, NSWPMPL has accordingly reduced the capital cost of the Project by the

grant amount earmarked for setting up of waste to energy facility i.e. Rs. 70 Crore and

has then computed the normative debt and equity in the ratio of 70:30.


5.10.2. Regulation 14 of the RE Tariff Regulations, 2015, specifies as below:



“14.2 For Project-specific tariff determination, if the equity actually deployed is more

than 30% of the Capital Cost, the equity in excess of 30% shall be treated as

normative loan:

Provided that, where the equity actually deployed is less than 30% of the Capital

Cost, the actual equity shall be considered for determination of tariff;”

5.10.3. Accordingly, Commission has considered the debt-equity ratio of 70:30 after excluding

VGF of Rs. 7000 Lakh from the Capital cost of Rs. 20,671.71 Lakh.

5.11. Depreciation


5.11.1. NSWPMPL has projected depreciation at the rate of 7% per annum for the first 10 years

of the Tariff Period and at the rate of 6.67% per year for balance period of Concession

Agreement for next 3 years. ( upto 13 years)

5.11.2. Regulation 16 of the MERC RE Tariff Regulations, 2015, pertaining to depreciation is as

follows: -

“16.1 The value base for the purpose of depreciation shall be the capital cost of the

asset as admitted by the Commission. The salvage value of the asset shall be

considered as 10%, and depreciation shall be allowed up to a maximum of 90% of

the capital cost of the asset.

16.2 Annual Depreciation shall be based on the „Differential Depreciation Approach‟

using the „Straight Line Method‟ over two distinct periods comprising loan tenure

and the period beyond loan tenure over the useful life. The depreciation rate for

the first 12 years of the Tariff Period shall be 5.83% per annum, and the

remaining depreciation shall be spread over the remaining useful life of the

Project from the 13th year onwards.

16.3 Depreciation shall be chargeable from the first year of commercial operation.”

5.11.3. NSWPMPL has submitted that the RBI guidelines specifies that the tenor of loan cannot

be more than 80% of the initial Concession Period. Since the Concession period leaves

only 13 years of operating life of the proposed Project, loan tenor of 10 years is

considered in the Tariff Petition. Below is the extract of the provision: -

“The tenor of the Amortization Schedule should not be more than 80% (leaving a

tail of 20%) of the initial Concession period in case of infrastructure Projects

under public private partnership (PPP) model; or 80% of the initial economic life

envisaged at the time of Project appraisal for determining the user charges / tariff

in case of non-PPP infrastructure Projects; or 80% of the initial economic life



envisaged at the time of Project appraisal by Lenders Independent Engineer in the

case of other core industries Projects; “

5.11.4. NSWPMPL further submitted that in line with the MERC RE tariff regulations 2015, the

capital expenditure is to be funded with 70% of debt, and the amount towards repayment

of loan by should be funded through depreciation charged on the fixed assets on Straight

Line Method. NSWPMPL has projected depreciation at the rate of 7% per annum for the

first 10 years of the Tariff Period. The remaining depreciation amount (up to 90% of

capital cost) has been spread over the remaining Useful Life of the Project (3 years),

leading to depreciation rate of 6.67% per annum for years 11 till 13 in line with the RE



5.11.5. NSWPMPL has considered the useful life as 13 years and proposed to depreciate 90% the

MSW Plant within 13year period. Further, NSWPMPL has also considered Loan

repayment period as 10 years. As discussed in Para 5.9 of this Order, the Commission has

considered useful life of NSWPMPL‟s MSW plant as 20 Years.

5.11.6. Further in this context, the Commission observes that, as per the provisions of

Regulations 8.2 of RE Tariff Regulations, 2015, except Capital Cost and O&M expenses

all other financial norms shall be ceiling norms while determining the Project specific

Tariff.

8. Project-specific tariff

…………..

8.2 The determination of Project-specific tariff for generation of electricity from such

RE sources shall be in accordance with such terms and conditions as may be stipulated

in the relevant Orders of the Commission:

Provided that the financial norms specified in Chapter 2, except with regard to Capital

Cost and O&M expenses, shall be the ceiling norms while determining such Project-

specific tariff.

5.11.7. Further, the Commission in Case No. 87 of 2015, for Kolhapur MSW Project which

operate on similar technology has also considered depreciation at the rate of 5.83% per

annum for the first 12 years of the Tariff Period. The remaining depreciation amount (up

to 90% of capital cost) spread over the remaining Useful Life of the Project (8 years).

5.11.8. Further, Commission observes that even in case of other RE technologies despite Tariff

period and PPA tenure of 13 years, debt service over loan tenure of 12 years has been

considered. Further, as highlighted in earlier paragraphs, the provision for depreciation and

debt repayment will have to be governed as per provisions stipulated under RE Tariff

Regulations, 2015. Further, the Commission observes that there is no provision of advance



against depreciation under the RE Tariff Regulations, 2015 as sought to be considered by the

NSWPMPL.

5.11.9. In view of above the Commission considers depreciation at the rate of 5.83% per annum

for the first 12 years of the Tariff Period. The remaining depreciation amount (up to 90%

of capital cost) spread over the remaining Useful Life of the Project (8 years).

5.12. Operation and Maintenance(O&M) Expenses


5.12.1. NSWPMPL has estimated O&M expenses for first year of operation as Rs. 2052.13 Lakh

comprising of O&M expense towards power plant operation as Rs. 1308 Lakh and O&M

expense towards Pre-processing facilities as Rs.744.13 Lakh.

5.12.2. NSWPMPL has estimated the O&M expenses for power block to be Rs. 1,308 Lakh for

the first year of operation as tabulated below.

Table 19: O&M Expenses for the plant as estimated of the by NSWPMPL

S. No Particulars

O&M Cost for Yr-

1(power Plant)

(Rs. Lakh )

A Employee expenses /Expats 473

Admin cost 59

Ash handling and SLF management cost 235

Electricity charges 152

B Administrative and General expenses 446

Maintenance (Electrical and mechanical) 90

LDO (For start-up) 4

Diesel Cost (For SLF) 45

Consumable & Spare parts 78

Activated carbon 50

hydrated lime 112

ETP, R.O, CT, BOILER chemical 10

C Total Repair and Maintenance expenses 389

TOTAL O&M Expenses for the Plant 1308

5.12.3. NSWPMPL has further submitted that the estimated O&M expenses work out to be

5.98% of the capital cost which is within the range anticipated in the National Master

Plan by MNRE, where the comparison of the available technological options in terms of

O&M cost was done.

5.12.4. Further, the technology has pre-processing facility which involves MSW unloading,

manual/ mechanical segregation, pre-processed MSW preparation and bio-drying section

for organic fraction.



5.12.5. The O&M Cost for the pre-processing Facility at Nagpur has been projected as Rs.

744.13 Lakh incurred during the first year of operation, as tabulated below:

Table 20: O&M Expenses for pre-processing facility as estimated of the by NSWPMPL

S.

No Particulars

O&M Cost (Yr-1) for

Pre-processing facility

(Rs Lakh)

A Employee expenses

Operational and Service Manpower 237.22

B Administrative and General expenses

Admin Cost 148.95

Cost of Inert handling for Pre-processing

plant (including cost of its disposal in SLF) 327.96

C Repair and Maintenance expenses

Maintenance (Electrical & Mechanical ) 30.00

Total O&M Expenses for preprocessing

facility 744.13

5.12.6. NSWPMPL has proposed to escalate this O&M expense for the power plant as well as

pre-processing unit by 5.72% as specified in CERC Regulations. In addition to the above

O& M expense NSWPMPL has also estimated periodic maintenance and overhaul

expenses to be carried out in 5th

year and 10th

year, Accordingly the O&M cost claimed

by NSWPMPL has 3 components-

Power Plant O&M expense of Rs. 1,308.00 Lakh in the first year, escalated every

year by 5.72%.

O&M expense towards pre-processing facility of Rs 744.13 Lakh in the first year,

escalated every year by 5.72%.

Overhaul expense towards periodic maintenance in 5th

year and 10th

year for Rs

1,169.86 Lakh and Rs. 1,423.31 Lakh respectively.

5.12.7. Total O&M cost as estimated by NSWPMPL is summarized in the following table:

Table 21: Summary of O&M expenses proposed by NSWPMPL (Year 1 to 7)

(In Rs. Lakh)

Years 1 2 3 4 5 6 7

O&M expenses of plant 1308.00 1382.82 1461.91 1545.54 1633.94 1727.40 1826.21

O&M expenses of pre-

processing unit 744.13 786.69 831.69 879.27 929.56 982.73 1038.94

Additional O&M expense

for periodic maintenance 1169.86

Total O&M expense 2052.13 2169.51 2293.61 2424.80 3733.36 2710.13 2865.15



Table 22: Summary of O&M expenses proposed by NSWPMPL (Year 8 to 13)

(In Rs. Lakh)

Years 8 9 10 11 12 13

O&M expenses of plant 1930.67 2041.10 2157.85 2281.28 2411.77 2549.73

O&M expenses of pre-processing

unit 1098.37 1161.20 1227.62 1297.84 1372.07 1450.56

Additional O&M for periodic

maintenance 1423.31

Total O&M expense 3029.04 3202.30 4808.78 3579.12 3783.85 4000.28

5.12.8. The Commission sought detailed break up of O&M expenses for Power Plant and Pre-

processing facility separately for various heads such as employee expenses for

Import/Expat services and local services, details of A&G Cost such as admin cost, Ash

handling and SLF management cost, details of R&M expenses which includes

maintenance of electrical and mechanical spares, fuel expense, chemicals etc.

NSWPMPL submitted the break up as below.

Table 23: Detailed Break up of O&M expenses as submitted by NSWPMPL

Particulars O&M Expense for Plant O&M expense for


Total

Import/

Expat

Local Sum Import/

Expat

Local Sum

Employee

Expense / Expats

41 432 473.00 0 237.22 237.22 710.22

Admin cost 10 49 59 0 148.95 148.95 207.95

Ash handling and

SLF management

cost

0 235 235 0 327.96 327.96 562.96

Electricity

charges

0 152 152 0 0 0 152.00

Total A&G

Expense

10 436 446.00 0 476.91 476.91 922.91

Maintenance

(Electrical and

mechanical)

42 48 90 0 10 10

LDO ( start-up) 0 4 4 0 0 0

Diesel Cost (SLF) 0 45 45 0 15 15

Consumable &

Spare parts

27 51 78 0 5 5

Activated carbon 0 50 50 0 0 0

hydrated lime 0 112 112 0 0 0

ETP, R.O, CT,

BOILER

chemical

0 10 10 0 0 0

Total R&M

Expense

69 320 389.00 0 30.00 30.00 419.00

TOTAL 120 1188 1308.00 0 744.13 744.13 2052.13



5.12.9. NSWPMPL has considered employee expense and expat costs of Rs. 710.22 Lakh for

Plant and Pre-processing facilities. Following are the details of Expat services.

Employee expense:

a) Expat Services for Plant –

Waste to Energy Projects are technologically complex. NSWPMPL has selected a

technology from the vendors with the proven track record. Europe and Japan are the

global leaders for direct controlled combustion of MSW for waste-to-energy and has

maximum number of installation of waste-to-energy plants in the world. These Projects

cannot afford a long down time owing to a need to process huge quantum of incoming

MSW.

5.12.10. NSWPMPL has therefore considered services of expat personnel for plant for the

preventive health checkup of the plant and machinery for the entire Project life. Such

preventive maintenance would involve hiring expats from India and abroad from Japan

and Europe. Such expats will be staying at a site and shall monitor the health checkup of

plant and machinery.

5.12.11. NSWPMPL submitted that it has estimated the employee expense based on manpower

requirement for each activity associated in the execution of the entire project.

NSWPMPL has followed the norms of minimum wages prevalent in the State of

Maharashtra while estimating the expense towards manpower. The details of category

wise break-up of employees proposed by NSWPMPL is tabulated as below:

Table 24: Category wise break-up of Employees as submitted by NSWPMPL

Sr.

No.

Category Power plant

operation

Pre-processing

facility

Total

1 Sr. Management Team 1 1 2

2 Plant Management staff 6 4 10

3 Engineering and Supervisory

Staff

23 8 31

4 Administrative Staff 3 3 6

5 Operating Staff (Skilled) 58 25 83

6 Operating Staff (Semi-skilled

/Unskilled)

90 60 150

Total 181 101 282

5.12.12. NSWPMPL further submitted that, half yearly small duration shutdown is also taken to

check the system to ensure that everything is fine. It is during these shutdowns that Expat

and Indian experts come for inspection of condition of the plant and also for review of



plant performance review whenever required during the year. The costs mentioned above

include the costs for Expat Experts, cost of their travel, stay in India, etc.

Administration and General Expense (A&G):

5.12.13. NSWPMPL has considered Administration and General Expense (A&G) of Rs. 922.91

Lakh for the costs associated with the plant and preprocessing section namely for

Administration expense, Ash handling and SLF management and electricity charges

Following are the details of A&G Expenses submitted by NSWPMPL.

Table 25: Detailed break up of A&G expense as submitted by NSWPMPL

Particulars O&M Expense for Plant O&M expense for Pre-

processing facility TOTAL

Import

/Expat Local Sum

Import

/Expat Local Sum

Admin cost 10 49 59 0 148.95 148.95 207.95

Ash handling

and SLF

management

cost

0 235 235 0 327.96 327.96 562.96

Electricity

charges 0 152 152 0 0 0 152

Total A&G

Expense 10 436 446 0 476.91 476.91 922.91

5.12.14. NSWPMPL submitted that, it has estimated Rs. 207.95 Lakh towards administration cost

which includes Rs. 59.00 Lakh for power plant operation and Rs. 148.95 Lakh for pre-

processing facility.

5.12.15. NSWPMPL submitted that, Ash handling and SLF management includes inert and mixed

waste handling at pre-processing section, Bottom ash and Fly ash handling process. A lot

of inert come along with the mixed waste received from the NMC. Pre- processing

section would separate materials such as stones, boulders, glass, bones, etc. accumulate

them to send to SLF. Further, some of inert material which will be fed to the boiler shall

generate the ash after combustion. The ash will be in two forms: bottom ash and fly ash.

Bottom ash is discharged by draining the bed periodically. The fly ash typically amounts

to 10-20% by weight of total ash. Bottom ash and fly ash generated in the processing

plant need to be disposed of in the landfill.

5.12.16. NSWPMPL has submitted that, there will be some electricity consumption during power

generation plant shutdown and also during start-up of generation plant. NSWPMPL has

estimated a demand of 1150 kVA and total power procurement of 1.68 MUs per year

from Distribution Licensee to meet the power requirement of its WtE power plant.



NSWPMPL has referred the rates approved by the Commission in MYT Order of

MSEDCL for HT-1 category for FY 2016-17 while estimating the electricity charges.

The rates are as provided below:

Category Demand Charge

Rs./kVA/month

Energy charge

Rs/kWh

HT 1 (A):

Industry(General)

235 7.13 7.13

Correspondingly electricity charges have been computed as Rs. 152.00 Lakh per year.

Repair and Maintenance (R&M) Expense:

5.12.17. NSWMPL has considered Repair and Maintenance (R&M) Expense of Rs. 419 Lakh. It

includes the share of costs associated with plant and preprocessing that includes costs for

maintenance, LDO, Diesel, consumables, spares, Activated Carbon, Hydrated Lime and

Boiler chemicals. The Commission asked NSWPMPL to submit the detailed break-up of

the parameters considered under R&M and its basis.

5.12.18. NSWPMPL submitted that, it has considered imported items like Grate control unit, Ram

feeder Control unit, Ram feeder position Measurement unit, Power supply module etc.

which will be expected to replace annually. Similarly, some of the spares of waste crane

shall be replaced regularly. Additionally, Turbine spares, ACC spares, various pumps

will be required to be maintained periodically. Electrical and Mechanical Maintenance

charges considered by NSWPMPL are as below:

For Power Plant For Pre-processing Fig in

Lakh

Import/Expat Local Sum Import/Expat Local Sum Total

Maintenance

(E&M)

42 48 90 0 10 10 100

5.12.19. Regarding requirement of fuel for vehicles NSWPMPL submitted that, for handling large

quantity of ash and inert and its subsequent disposal in landfill, NSWPMPL would

require vehicles along with manpower to perform and supervise the same. Since, the

plant operates round the clock and throughout the year, this handling work is done

continuously and this cannot be stopped even in case of breakdown of some equipment or

vehicle. Excavators and other vehicles are required in the preprocessing section for

handling waste and for turning around organic waste in the drying section.

5.12.20. In addition, bottom ash and fly ash from power plant and inert from the preprocessing

section are transported to the landfill for disposal, where ash and inert have to spread

properly using JCBs/poclains. This handling work will happen throughout the day and

year. The vehicles also need routing and preventive maintenance; especially tires which

are get damaged due to working in harsh environment.




5.12.21. The Commission scrutinized the O& M expenses submitted by NSWPMPL. NSWPMPL

has submitted the breakup of O&M expenses as below:

Table 26: Detailed Break up of O&M expenses as submitted by NSWMPMPL

Particulars O&M Expense for Plant O&M expense for


Total

Import/

Expat

Local Sum Import/

Expat

Local Sum

Employee

Expense / Expats

41 432 473.00 0 237.22 237.22 710.22

Total A&G

Expense

10 436 446.00 0 476.91 476.91 922.91

Total R&M

Expense

69 320 389.00 0 30.00 30.00 419.00

Total 120 1188 1308.00 0 744.13 744.13 2052.13

% of Capital

Cost

5.97% 3.40% 9.37%

5.12.22. NSWPMPL has considered employee expenses of Rs. 710.22 Lakh as part of O&M

expenses towards 1st year of operation. This includes Rs. 473.00 Lakh towards power

plant operation and Rs. 237.22 Lakh towards pre-processing facility. NSWPMPL has

considered total 181 employees for plant operation and 101 employees for pre-processing

facility. NSWPMPL has also submitted the organization chart which shows that,

elaborate manpower has been considered by NSWPMPL, separately for operation and

maintenance of Power plant and Pre-processing facilities.

5.12.23. The Commission also noted that the DPR (November, 2017) submitted by NSWPMPL

for this Project envisages the requirement of total 93 employees during operational phase

of Plant. This includes both power plant operation and pre-processing facility. Hence, the

Commission observes that, there is discrepancy in the employee requirement submitted

by NSWPMPL in the DPR and subsequent replies to the data gaps. While under the DPR,

NSWPMPL has estimated manpower Cost as Rs. 437.00 Lakh for Power Plant and

Rs.237.22 Lakh for Pre-processing facility (it has estimated total manpower requirement

as 93 for both the activities of Power Plant Operation and Pre-processing facilities.) The

Estimates under DPR has formed basis for filing of Petition and determination of Tariff.

5.12.24. However, in response to data gaps sought by the Commission, NSWPMPL has shown

total manpower requirement as 282 comprising 181 for Power Plant Operation and 101

for Pre-processing facilities. The Commission opines that the estimation of manpower

requirement is significantly higher. In response, NSWPMPL submitted details of actual

manpower of 168 at its currently operational Jabalpur MSW power plant. While Jabalpur

MSW power plant does not have pre-processing facility but its power plant operations are

similar to that proposed for Nagpur MSW power project.



5.12.25. In view of above and considering the salary expenses as proposed by NSWPMPL, the

revised employee expenses works out as Rs. 670.45 Lakh as against Rs. 710.22 Lakh as

claimed by NSWPMPL. The Commission has considered the employee expenses towards

Import/Expat services and towards pre-processing facility same as proposed by

NSWPMPL.

5.12.26. NSWPMPL has considered Rs. 207.95 Lakh towards administration cost which includes

Rs. 59.00 Lakh for power plant operation and Rs. 148.95 Lakh for pre-processing facility.

Upon seeking clarifications, NSWPMPL submitted that administrative costs for

administration and monitoring of pre-processing operations are significant. The

Commission has considered the admin expenses of Rs. 207.95 Lakh as proposed by

NSWPMPL.

5.12.27. NSWPMPL has considered expenses of Rs.152.00 Lakh towards electrical charges.

NSWPMPL has submitted that, there will be some electricity consumption during power

generation plant shutdown and also during start-up of generation plant. NSWPMPL has

considered total power procurement of 1.68 MUs per year from Distribution Licensee to

meet this power requirement.

5.12.28. The Commission notes that, NSWPMPL has also prayed for waiving off Contract

demand charges for this energy consumption and netting off of energy consumed during

plant shut down and start-up operation.

5.12.29. The Commission vide its MYT Order dated 3 November, 2016 for MSEDCL in Case No.

48 of 2016 has addressed the issue of requirement of Start-up power for generating units.

The Commission has ruled that, the start-up power requirement for power plants may be

availed from the Distribution Licensee through a separate connection or through the

existing evacuation infrastructure. However, if power plants are having PPAs under

Section 62 of the EA, 2003, the energy drawn by such power plants shall be netting off

with the energy injected into the grid.

5.12.30. Since the present proceeding of Tariff determination are under Section 62 of EA, 2003,

Commission accepts the prayer of NSWPMPL for Netting off of the energy consumed

during plant shutdown and start-up power requirement and allows NSWPMPL, to net off

the power drawn from the grid with the power injected into the grid from its MSW power

plant. The Commission has considered this estimated energy consumption of 1.68 MUs

as additional energy consumption during plant shut down and start-up power requirement

and accordingly has reduced the Net energy generation from its MSW power plant.

5.12.31. Considering the provision of netting off is available with NSWPMPL and the

Commission has considered this energy consumption as discussed above, the separate

provision of energy expenses of Rs. 152 Lakh as a part of A&G expenses will not be

required. Hence the Commission has reduced the A&G expenses accordingly.



5.12.32. Accordingly, the Commission has considered the total Rs. 1860.36 Lakh as against Rs.

2052.13 Lakh towards Operation and Maintenance expenses of the 1st year of the

operation.

5.13. Escalation factor for Annual O&M expenses:


5.13.1. NSWPMPL has proposed to escalate the Regular O&M expenses for the Power Plant as

well as pre-processing unit by 5.72% p.a. as specified in the CERC RE Tariff

Regulations, 2017. Regular O&M expense of Rs. 1,308.00 Lakh in the first year,

escalated every year by 5.72% p.a., O&M expense towards pre-processing facility of Rs.

744.13 Lakh in the first year, escalated every year by 5.72% p.a.


5.13.2. The Commission notes that, the O&M escalation of 5.72 % p.a. considered by

NSWPMPL is not as per the MERC RE Tariff Regulations, 2015.

5.13.3. Regulations 19 of the RE Tariff Regulations stipulates that the Base Year O&M is to be

escalated at the rate specified in the MYT Regulations over the Tariff Period for

determination of the levellised Tariff. The Commission amended the provisions

Regulations 45.1(c), of the MERC (Multi-Year Tariff) Regulations, 2015 („MYT

Regulations‟) vide amendment dated 29 November, 2017. The amended provisions as

applicable for generation projects specify the norms for escalation of O&M expense in

subsequent years beyond the base year as follows:

“ (c) The Operation and Maintenance expenses for each subsequent year shall be determined

by escalating these Base Year expenses of FY 2015-16 by an inflation factor with 50%

weightage to the average yearly inflation derived based on the monthly Wholesale Price

Index of the past five financial years as per the Office of Economic Advisor of Government of

India and 50% weightage to the average yearly inflation derived based on the monthly

Consumer Price Index for Industrial Workers (all-India) of the past five financial years as

per the Labour Bureau, Government of India, as reduced by an efficiency factor of 1% or as

may be stipulated by the Commission from time to time, to arrive at the permissible

Operation and Maintenance expenses for each year of the Control Period:”

5.13.4. Accordingly, the Commission has analyzed the last 5 year average WPI and CPI indices

from FY 2012-13 to FY 2016-17 considering 50% and 50% weightage to WPI and CPI,

which works out to 5.27% per annum.

Average WPI rates for 2012-13 to 2016-17 3.31%

Weightage of WPI 50%



Effective Wt. avg. Value of WPI 1.65%

Average CPI rates for 2012-13 to 2016-17 7.23%

Weightage of CPI 50%

Effective Wt. Avg. Value of CPI 3.61%

Wt. Avg. value of inflation rate considering

WPI (50%)+CPI(50%) for 2012-13 to 2016-17

5.27%

Accordingly, the Commission has considered annual escalation factor for projecting

O&M expenses works out to 5.27% per annum.

5.14. Periodic Maintenance expenditure:


NSWPMPL submitted that, it has considered Rs. 1000 Lakh (at current cost) as Periodic

Maintenance cost to be incurred in the 5th

year and 10th

year. The expense for 5th

year and

10th

year works out to be Rs. 1,169.86 Lakh and Rs. 1,423.31 Lakh respectively,

considering 4% p.a. as an inflation escalation factor on such Periodic Maintenance. The

detailed breakup of periodic maintenance activities proposed by NSWPMPL is tabulated

as below:

Periodic Maintenance Amount in Lakh

Refractories 150

Bags, FGT 200

Tubes 100

Grate Elements 50

Grab Cranes, etc. 100

Rotating Equipment 100

Pre-processing Equipment 200

Electrical Instruments 100

Total 1,000

5.14.1. The Commission sought justification from NSWPMPL for consideration of Periodic

Maintenance expenditure of Rs. 1000 Lakh during 5th

and 10th

year of Operation, over

and above the regular O&M expenses.

5.14.2. NSWPMPL stated that this Periodic Maintenance activities of the Plant are over and

above the regular maintenance of the plant. In order to ensure that the plant functions at

its optimum capacity, this Periodic Maintenance expense is essential. NSWPMPL has

estimated to incur such expense at the end of 5th

and 10th

year i.e. after every 5 years.




5.14.3. The Commission has noted the justification submitted by NSWPMPL for requirement of

Periodic Maintenance expenditure. NSWPMPL has submitted the breakup of activities to

be carried out under periodic maintenance and cost associated with it.

5.14.4. The Commission is of the view that some of the activities such as maintenance of FGD or

replacement of Bag filters, Maintenance of rotating equipment such as compressors,

steam turbines, generator, fans, pumps etc. are expected to be covered under regular

O&M practices and need not require to have separate provision of expenses under

periodic maintenance expenses. However, the Commission notes that experience of

MSW power plant operations in Indian context is limited. The Commission notes the

submission of the NSWPMPL that due to toxic environment, the wear and tear of the

rotating equipment is high necessitating periodic maintenance to be able to accomplish

the operating performance parameters and annual CUF of 80%.

5.14.5. Accordingly, considering the justification submitted by NSWPMPL, the Commission has

considered amount of Rs. 1000 Lakh (at current cost) as proposed by NSWPMPL

towards periodic maintenance expenditure during 5th

and 10th

year of power plant

operation.

5.14.7. Further, with regards to escalation factor for computation of cost of periodic maintenance

expenditure in the 5th

and 10th

year of power plant operation, the Commission notes that,

NSWPMPL has not provided any justification for consideration of 4% as inflation

escalation factor. Since, Wholesale Price Index(WPI) represents the average rate of

Inflation related to equipment/ items of Capital nature, the Commission has considered the

last five year average WPI as shown in the Table No. 27 below:

Table 27: Annual inflation escalation for computation of Capex

Financial Year Annual WPI % Annual

Change in WPI

2012-2013 167.62 7.36%

2013-2014 177.64 5.98%

2014-2015 181.19 2.00%

2015-2016 176.67 -2.49%

2016-2017 183.20 3.70%

Average from FY 2012-13

to FY 2016-17 3.31%

5.14.8. Accordingly, the Commission has considered average rate of last 5 years WPI for

inflation escalation factor which works out as 3.31% for expenditure towards periodic

maintenance as well as for the capex required for Post closure obligations as against 4%

as considered by NSWPMPL.



5.14.9. Considering annual escalation factor of 3.31% p.a., cost of periodic maintenance

expenditure estimated at Rs. 1000 Lakh (at current cost) works out to Rs. 1139 Lakh in

the 5th

year and works out to Rs 1340 Lakh in the 10th

year. The same has been

considered by the Commission for the purpose of Tariff determination.

5.15. Interest on Term Loan


5.15.1. NSWPMPL has considered a loan repayment period of 10 years. Further NSWPMPL has

taken the interest on long term debt at 300 basis points above the State Bank of India

(SBI) Base Rate for the period of 1st April 2017 to 30

th September 2017. Accordingly, the

Base Rate (9.30%) plus 300 basis points has been applied, and interest on debt computed

as 12.30% per annum.


5.15.2. The Commission notes that, NSWPMPL has not provided copy of the Loan Agreement

or any sanction letter for the terms of loan for its Project. Infact, in response to the

Commission‟s query, NSWPMPL has submitted that Financial Closure is yet to be

achieved pending regulatory process for Tariff determination and hence it has assumed

Interest Rate on normative basis.

5.15.3. Regulation 15.1 specifies a loan tenure of 12 years for determination of the Tariff for RE

Projects. Regulation 15.2 provides for consideration of the rate of interest on loan as

follows:

“For the purpose of computation of tariff, the Base Rate of the State Bank of India

prevailing during the previous year plus 300 basis points shall be considered as the

normative interest rate.

Notwithstanding any moratorium period availed, the repayment of loan shall be

considered from the first year of commercial operation of the Project and shall be equal

to the annual depreciation allowed.”

5.15.4. However, the Commission observes that, the reference rate for sanction of new loan has

been shifted to MCLR instead of SBI Base Rate. Accordingly, the Commission while

determining generic RE Tariff for FY 2017-18 vide its Order dated 28April,2017 in Case

33 of 2017 considered as below:

However, as per the RBI guidelines dated 3 March, 2016 (updated on 29 March, 2016),

“All rupee loans sanctioned and credit limits renewed w.e.f. April 1, 2016 shall be priced

with reference to the Marginal Cost of Funds based Lending Rate (MCLR) which will be

the internal benchmark for such purposes.”



SBI will continue to declare its Base Rate for existing loans, but new loans will be

sanctioned on the basis of MCLR.

5.15.5. Considering this difficulty of unavailability of new loan with reference of SBI Base Rate,

the Commission invoked the provision of Regulation 82 of MERC RE Tariff

Regulations,2015 as below:

Regulation 82 of the RE Tariff Regulations empower the Commission as follows:

“82. Power to remove difficulties

If any difficulty arises in giving effect to the provisions of these Regulations, the

Commission may, by general or specific order, make such provisions not inconsistent

with the provisions of the Act, as may appear to be necessary for removing the difficulty.”

The Commission has invoked the provisions of Regulation 82 in view of the change in the

circumstances and dispensation concerning interest rates and the consequent issues in

persisting with consideration based on the SBI Base Rate.

5.15.6. Hence, the Commission determined the Interest Rate as 11% for determination of

Generic RE Tariff for FY 2017-18. Further the Commission also amended the provisions

of MERC (MYT) Regulations, 2016 vide amendment dated 29 November,2017, wherein

the Commission has amended the definition of Base Rate as below:

2. Amendment to Regulation 2.1 (10)

Regulation 2.1 (10) of the principal Regulations shall be substituted by the following:

“Base Rate” shall mean the one-year Marginal Cost of Funds-based Lending Rate

(„MCLR‟) as declared by the State Bank of India from time to time;”

5.15.7. Considering the above discussed difficulties in implementing provisions of RE Tariff

Regulations related to Interest Rate, the Commission invokes the provisions of

Regulation 82 of MERC RE Tariff Regulations, 2015, Power to remove difficulties in

view of the change in the circumstances and dispensation concerning interest rates and

the consequent issues in pursuing rate to be linked to MCLR instead of SBI Base Rate.

Accordingly, the Commission has determined the Interest on loan considering 1-year

average (from January, 2017 to December, 2017) of 1 year MCLR of SBI as shown in the

Table below:

Table 28: Monthly 1 Year MCLR declared by SBI

Date of Revision of 1 Yr MCLR by SBI MCLR by SBI

01-Jan-17 8%

01-Feb-17 8%

01-Mar-17 8%



Date of Revision of 1 Yr MCLR by SBI MCLR by SBI

01-Apr-17 8%

01-May-17 8%

01-Jun-17 8%

01-Jul-17 8%

01-Aug-17 8%

01-Sep-17 8%

01-Nov-17 7.95%

01-Dec-17 7.95%

Average 1 year MCLR 7.99%

1 Year MCLR + 300 Basis points 7.99% + 3.00%

=10.99%

5.15.8. Hence, the Commission has considered the Interest on term Loan as 7.99% + 3% =

10.99% for the purpose of determination of Tariff in this Case.

5.16. Interest on Working Capital


5.16.1. NSWPMPL has computed the working capital in accordance with Regulation 18.1 of the

RE Tariff Regulations, 2015 comprising (a) O&M cost for one month, (b) receivables

equivalent to 2 months of tariff for sale of electricity calculated on the normative CUF

and (c) maintenance spares @15% of O&M expenses.

5.16.2. Accordingly, NSWPMPL has considered IoWC as the SBI Base Rate for the period of 1st

April 2017 to 30th

September 2017 plus 350 basis points, which works out to 12.80 %.


5.16.3. Regulation 18.3 provides for computation of the rate of IoWC as follows:

"Interest on Working Capital shall be the average of the Base Rate of State Bank of

India prevalent during the previous year, plus 350 basis points.”

As discussed earlier in Para 5.15, the SBI Base Rate-linked interest rate for working

capital is no longer available for new RE Projects. The Commission has worked our

Average of 1 year MCLR as 7.99%. Hence the Commission considers the Interest on

Working Capital as 7.99% + 3.5% = 11.49 %. In view of the above, as in the case of

Interest on long term Loan, the Commission invokes its powers under Regulation 82 to

remove difficulties and to apply, for the purposes of this Order, interest rate of 11.49% to

the IoWC for NSWPMPL‟s MSW Project.



5.17. Return on Equity


5.17.1. NSWPMPL has submitted that the Regulation 17 of the MERC RE Tariff Regulations,

2015 allows RoE at the Base Rate of 16%, to be grossed up as per the applicable Income

Tax rate. Accordingly, NSWPMPL has considered a post-tax RoE as 16 %

5.17.2. The Commission asked NSWPMPL to submit the reasons for estimating Pre-Tax ROE

with uniform corporate tax rate of 34.61% over 13 years‟ period for tariff computation,

without consideration of MAT and detail computation of Income Tax considering

accelerated depreciation for income tax purposes and to clarify whether MAT will be

applicable or otherwise.

5.17.3. NSWPMPL submitted that since the provisions of Income Tax Act granting holiday of 10

years for income tax under section 80IA has been discontinued from March, 2017. The

Minimum Alternate Tax (MAT) would no longer be the appropriate rate for gross-up to

derive tax expenses. Therefore, NSWPMPL has considered the corporate tax rate of

34.61% for grossing up the RoE. Relevant provision of Clause 4 (iv) of the income tax

notification is as below:

80-IA. (1) Where the gross total income of an assesse includes any profits and gains

derived by an undertaking or an enterprise from any business referred to in sub-

section (4) (such business being hereinafter referred to as the eligible business), there

shall, in accordance with and subject to the provisions of this section, be allowed, in

computing the total income of the assesse, a deduction of an amount equal to hundred

per cent of the profits and gains derived from such business for ten consecutive

assessment years.

(4) This section applies to—

(iv) an undertaking which, —(a) is set up in any part of India for the generation or

generation and distribution of power if it begins to generate power at any time during

the period beginning on the 1st day of April, 1993 and ending on the 31st day of

March, 80[2017];


5.17.4. The regulation 17 of RE Tariff Regulations,2015 specifies that

“17.1 The value base for the equity shall be 30% of the Capital Cost, or the actual equity

(in case of Project-specific tariff determination) as determined under Regulation 14.

17.2 The Return on Equity shall be computed at the base rate of 16%, to be grossed up as

per the applicable tax rate.



17.3 The rate of Return on Equity shall be computed by grossing up the base rate with

the tax rate equivalent to the weighted average of the Minimum Alternate Tax („MAT‟)

during the year for the first 10 years from COD, and the weighted average of normal tax

rate during the year for the remaining years of Project life.”

5.17.5. The Commission notes that while benefit of Tax holiday under Section 80IA of Income

Tax Act may not be available but the benefit of accelerated tax depreciation and

provisions of Minimum Alternate Tax continue to be applicable.

5.17.6. Accordingly, the Commission has considered the RoE as 16% Post Tax and grossed up

the same with MAT rate of 21.34% for initial 10 years of operation and IT rate of 34.61%

for remaining useful life of the Project in accordance with provisions under MERC RE


5.18. Tipping Fee and Other Income


5.18.1. NSWPMPL has submitted that as per the clause 17.1.1 of the Concession Agreement, a

Tipping Fee of Rs 225 per MT for the first year with an annual rise of 4.5% on

negotiation, shall be payable by NMC. Tipping Fee shall be payable from the COD and

shall be payable for the remaining period of Concession Agreement.

5.18.2. Concession Agreement mandates closure of all SLFs created and its maintenance for

post-closure period of 15 years. There will be no source of revenue for NSWPMPL for

funding the post closure capex and O&M during post closure period. Therefore,

NSWPMPL has proposed to fund those expenses from the reserves created from the

receipt of Tipping Fees from NMC under the Concession Agreement.

5.18.3. NSWPMPL has proposed to set aside Tipping fee of Rs. 95.90 Lakh per year to post

closure reserve account to meet its post closure obligations. Accordingly, the expenses

for post closure maintenance are not claimed separately for tariff determination.

5.18.4. NSWPMPL has considered remaining Tipping Fee as Non-Tariff income to offset the

revenue required from electricity tariff. Tipping fees in the form of non-tariff income

have reduced the need for levellised tariff by almost Rs. 1.15/ kWh.


5.18.5. The Commission has noted that, the provision of Tipping fee was the basis of bidding

process carried out by NMC for selection of developer for its MSW Project. Provision of

Tipping fee and post closure obligations of NSWPMPL are also provided in the

Concession Agreement.



5.18.6. The Commission also noted the post closure obligations of NSWPMPL and its proposed

provisions for creating reserve for meeting post closure obligations after 13 years.

Further, the Commission has considered escalation factor of 3.31% (5 years WPI as

discussed in Para 5.14.7 and 5.14.8 of this Order) as against 4% as considered by

NSWPMPL for estimation of Capital Cost and Operating expense towards Post-Closure

Operations. Accordingly, fund requirement to be set aside for Post-closure operations

have been considered by the Commission at Rs.90.13 Lakh per year instead of Rs.95.90

Lakh per year as estimated by NSWPMPL. The computation of revenue from Tipping

fees and creation of reserve are as shown in the Table below:

Table 29: Computation of Revenue from tipping fees

As submitted by

NSWPMPL

As considered by the

Commission

Parameter Year-1 Sum for 13

years Year-1

Sum for 13

years

Quantity of waste (MT) 292,000 3,796,000 292,000 3,796,000

Tipping fee (Rs. per MT) 225.00 escalation

of 4.5%

p.a.

225.00 escalation

of 4.5%

p.a.

Income from Tipping fee (Rs. Lakh) 657.00 11274.06 657.00 11274.06

Amount set aside to post closure reserve

account (Rs. Lakh)

95.90 1246.70 90.13 1171.60

Net income from Tipping fee considered for

Tariff determination (Rs. Lakh)

561.10 10027.36 566.87 10102.43

Total Capex and Opex required for meeting

post closure obligations upto 28 years. (Rs

Lakh)

95.90 1246.70 90.13 1171.60

5.18.7. Accordingly, the Commission has considered Net revenue of Rs. 566.89 Lakh for the first

year of Tariff determination and Rs. 10102.43 Lakh for 13 years Tariff period as against

Rs. 561.10 Lakh (Yr-1) and Rs. 10027.36 Lakh for 13 years as considered by

NSWPMPL.

5.18.8. Further the Commission also asked NSWPMPL regarding any options studied for

utilization of bottom ash and fly ash from MSW power plant. NSWPMPL submitted that,

the total ash generated due to combustion of waste in the plant is estimated to be 192

TPD on wet basis. Out of this 192 TPD ash, 80% i.e. 154 TPD is bottom ash and balance

20% i.e. 38 TPD is fly ash.

5.18.9. NSWPMPL submitted that only nontoxic bottom ash can be used in road embankments

and pavement blocks, provided due chemical treatment to remove toxic elements is

performed. If toxic metals exceed the permissible limit in ash, it becomes unfit for any

application.



5.18.10. NSWPMPL has carried out Toxicity assessment test for its already operating WtE

Project. It is found that both bottom ash as well as fly ash contained high toxicity on

account of the contaminated material. Further, bottom ash is also hygroscopic in nature

i.e. it is porous in nature and if it comes in contact with water, it absorbs the water in its

pores and undergoes volumetric expansion. Volumetric expansion of bottom ash also

causes cracking in roads if used for filling. Also, the water picks up the toxic elements in

bottom ash and this leachate when mixes with ground water or surrounding water bodies,

it pollutes them. Therefore, treatment to remove bottom ash toxicity is essential before

any use and this treatment is very costly and yet to be commercially tested in India.

Therefore, for the proposed Project, they shall be sent to the SLF for proper disposal.

5.18.11. NSWPMPL has confirmed that, there will not be any non-tariff income from selling

bottom ash or fly ash generated from its MSW Power Plant. Accordingly, Commission

has not considered any non-tariff income from Ash generated from the MSW power

plant.

5.19. Discount Rate

NSWPMPL’S submission

5.19.1. NSWPMPL has considered a discount rate of 8.75% which is the weighted average cost

of capital for determination of levellised tariff as per Regulation 11.2 of RE Tariff

Regulations, 2015.


5.19.2. With regards to determination of levellised Tariff, Regulation 11.2 and Regulation 11.3

of MERC RE Tariff Regulations, 2015 specifies as below:

11.2 For the purpose of computation of levellised tariff, a discount factor equivalent to

the normative post-tax weighted average cost of capital shall be considered.

“11.3 Levellisation shall be carried out for the „useful life‟ of the RE Project, while

tariff shall be determined for the period equivalent to the Tariff Period.”

5.19.3. In accordance with Regulation 11.3, the Commission has undertaken levellisation for the

entire Useful Life of 20 years, however Tariff for NSWPMPL‟s MSW Project is

determined for 13 years Period.

5.19.4. Further, in accordance with Regulation 11.2 of the RE Tariff Regulations, 2015, for

levellised tariff computation, the Commission has taken the discount rate as equivalent to

the weighted average cost of capital, which works out to 9.83% considering the interest

rate of 10.99% and post-tax RoE of 16% as approved in this Order.



5.20. Status of Statutory Clearances:


5.20.1. The Commission sought NSWPMPL to clarify the status update for availing all statutory

clearances as mentioned in clause 2.1.1 of the Concession Agreement. NSWPMPL

submitted that, it is required to obtain certain clearances prior to the Appointed Date.

Accordingly, the clearances as tabulated below are to be obtained before achieving

financial closure for the proposed Project. The land for the proposed Project is handed

over to NSWPMPL on 17 November, 2017. NSWPMPL would initiate the process for

obtaining clearances as tabulated below:

Table 30: Status of Statutory Clearances

Approval/Clearance Concerned agency Consent to establish under Air and water act MPCB

Airport authority clearance ATC/AAI

Electricity Approval Distribution Company/MSEDCL

Environmental clearance MPCB

Site Authorization under MSW rules MPCB

License in accordance with the rules and

provisions of Labour (Regulation and

Abolition)Act 1970

MOLE

Consent to operate under Air and water act MPCB

NOC from Maharashtra fire services Director of fire services

Disaster management plan Maharashtra State Disaster

Management authority

Vehicle registration RTO

Power generation and purchase MERC / Distribution Licensee

Industrial set up approval Department of Industries, GoM

All drawings and document approval Authority

Water supply Authority


5.20.2. The Commission notes that, NSWPMPL has considered the requirement of various

statutory clearance for its MSW power plant and same has been stipulated as Condition

Precedent in the Concession Agreement as well. The Commission hereby rules that, the

applicability of the Tariff determined under this Order shall be subject to the availability

of all the statutory clearances specified in the Concession Agreement between

NSWPMPL and NMC.

5.21. The summary of various parameters and assumptions

5.21.1. Following table covers capital cost, financial parameters, operating parameters and

performance parameters, as considered for the Project-specific Tariff determination in

this Order, as summarized below:



Table 31: Summary of Project Specific Parameters

Sl.

No.

Assumption

Head Sub-Head Sub-Head (2) Unit

NSWPMPL

(submission)

Approved by

Commission

1 Power

Generation

Capacity Installed Power Generation

Capacity MW 11.5 11.5

Auxiliary Consumption during

plant operation % 18.32% 17.17%

Annual Energy Consumption

during start-up and plant shut-down MUs 1.68* 1.68

PLF(during 1st year) % 65% 65%

PLF(2nd

year onwards) % 80% 80%

Useful Life Years 13 20

Tariff Period Years 13 13

2 Project Cost Capital

Cost/MW Per MW Capital Cost

Rs.

lakh/MW 1,877.76 1,797.54

Total Hard Cost Rs. lakh 18,208.05 17,856.35

Total Soft Cost(Excl. IDC) Rs. lakh 2,038.81 1,467.94

IDC Rs. lakh 1,633.72 1,347.42

Capital Cost Rs. lakh 21,880.57 20,671.71

Capital Subsidy (or VGF), if any Rs. lakh 7,000.00 7,000.00

Net Capital Cost Rs. lakh 14,880.57 13,671.71

3 Financial

Assumptions

Debt: Equity Debt % 70% 70%

Equity % 30% 30%

Total Debt Amount Rs lakh 10,416.40 9,570.20

Total Equity Amount Rs lakh 4,464.17 4,101.51

Debt

Component

Loan Amount Rs lakh 10,416.40 9,570.20

Moratorium Period years 0.00 0.00

Repayment Period years 10 12

Interest Rate % 12.30% 10.99%

Equity

Component

Equity amount Rs lakh 4,464.17 4,101.51

RoE for first 10 years (grossed up

for I. Tax) % p.a. 21.54% 20.34%

RoE 10th

year onwards (grossed up

for I. Tax) % p.a. 21.54% 24.47%

Discount rate % 8.75% 9.83%

Depreciation Depreciation rate % 7.00% 5.83%

Depreciation rate for balance useful

life % 6.67% 2.50%

Incentive Generation based Incentives, if any Rs. L p.a. Not applicable Not applicable

Period for GBI Years Not applicable Not applicable

4 Operation &

Maintenance O&M

Expenses Power Plant (year-1)

Rs. Lakh

in the

first year

1308 1116.23

Pre-Processing facility (year-1)

Rs. Lakh

in the

first year

744.13 744.13

Total O&M during 1st year of Rs. Lakh 2,052.13 1,860.36



Sl.

No.

Assumption


NSWPMPL

(submission)

Approved by

Commission

Operation in the

first year

O&M as % of Capital Cost % 9.37% 8.87%

Annual

Escalation

Factor

2nd

year onwards % 5.72% 5.27%

Periodic

Maintenance

expenditure

To be carried out in 5th

& 10th

year

Rs. Lakh

Current

cost

1,000 1000

Annual

Escalation

Factor

For periodic maintenance

expenditure 2nd

year onwards % 4.00% 3.31%

O&M

Expenses of

Post closure

of new SLF-3

cells

To be incurred till 30th

year

Rs. Lakh/

cell for

the first

year

15.0 15.0

O&M

Expenses of

Post closure

of existing

SLF

To be incurred till 15th

year

Rs. Lakh

for the

first year

25.0 25.0

Annual

Escalation

Factor

During Post Closure Period % 5.72% 5.27%

Fixed Lease

Rent and

Premium

Rs.

Lakh/yea

r

2.61 2.61

5 Working

Capital

O&M

Expense Months 1 1

Maintenance

Spare (% of O&M expenses) % 15.00% 15.00%

Receivables

Months 2 2

Fuel Stock Months - -

Interest On

Working

Capital

% p.a. 12.80% 11.49%

6 Tipping Fee Tipping Fee yr-1 Rs/MT 225.00 225.00

Annual increment % p.a. 4.50% 4.50%

Tipping fees set aside for post

closure reserve account

Rs.

Lakh/ye

ar

95.09 90.13

7

Post Closure Post Closure

period Years 15.00 15.00

Capital To be incurred in 5th, 10

th Year Rs. 60.00 60.00



Sl.

No.

Assumption


NSWPMPL

(submission)

Approved by

Commission

Expenditure

for Post

Closure

obligation

each (estimated at current cost) lakh/clo

sure at

present

cost

Annual

Inflation rate

on Capex

amount

For post closure obligation % 4% 3.31%

8 Fuel Related Fuel type MSW as fuel % 100% 100%

GCV of pre-processed MSW kCal/kg 1,800 1,800

5.22. Tariff Rate and Other Conditions

5.22.1. Based on the parameters, assumptions and methodology outlined in earlier paragraphs,

the Commission has determined the Levellised Tariff for the Project as Rs.7.00/ kWh,

which shall be applicable over a Tariff Period of 13 years from date of commercial

operation or for tenure of Concession Agreement, whichever is earlier. The computations

are shown in Annexure-1 of this Order.

5.22.2. NSWPMPL shall be responsible for generation of power from the Waste to Energy Plant

and sell the power to Distribution Licensee(s) in the State as per the terms and conditions

of the PPA, to be in line with the conditions and provisions as stipulated under this Order.

5.23. Other Commercial aspects:

Must Run Status, and Exemption from Merit Order Despatch


5.23.1. NSWPMPL has prayed to grant exemption to the proposed power plant from Merit Order

Dispatch (MoD) principles and grant it “Must Run” status like other RE projects. MSW

being challenging fuel for power generation, and need for highly sophisticated effluent

treatment system makes its cost of operation so high that it cannot compete with thermal

power plants to get selected under merit order despatch. Further, the incoming quantity

and quality of MSW is beyond the control of the Project developer.


5.23.2. NSWPMPL‟s MSW Power Plant is considered as RE power plant and Regulation 12.1 of

MERC RE Tariff Regulations, 2015 specifies that, “Subject to the provisions of the

Indian Electricity Grid Code and the State Electricity Grid Code, all RE Power Projects,



except for Biomass-based Power Projects and Co-Generation Project, shall be treated as

„Must Run‟ Projects and shall not be subjected to „Merit Order Despatch‟.”

5.23.3. Further, the Commission also notes that, the basic purpose of operation of the MSW

based Waste to Energy plants is to dispose and mange waste in scientific manner as

envisaged under SWM Rules, 2016.

5.23.4. Hence, as per the provisions of RE Tariff Regulations, 2015, NSWPMPL‟s Nagpur MSW

power plant shall be treated as a “Must Run” Power Plant and shall not be subject to

Merit Order Despatch (MOD) principles but shall be subject to scheduling and despatch

requirements as per State Grid Code.

CSS and Additional Surcharge


5.23.5. The cross-subsidy surcharge and additional surcharge be waived to promote the

development of the waste-to-energy Project even for third-party sale as the Project is

required to support sustainable urban development by building Solid Waste Management

disposal and processing capacity.


5.23.6. NSWPMPL has filed the present Petition for determination of Tariff for its MSW power

plant for generation and sale of entire power to Distribution Licensee(s) in the State.

Hence, the question of applicability of CSS and additional surcharge does not arise, under

present circumstances. The Commission is of the view that, NSWPMPL‟s prayer is not

relevant with the present proceedings of determination of Tariff for sale of electricity to

Distribution Licensee(s).

Netting off of power drawn during plant shut down and start-up power and Zero

Contract Demand Charges for power drawn:


5.23.7. Waste-to-Energy plants are subject to frequent shutdowns for periodic cleaning and

maintenance due to corrosive nature of MSW. Keeping in perspective the operational

requirements and the need for such Projects in the context of promoting sustainable waste

processing and disposal and development of waste to energy, such Projects should get the

benefit of zero contract demand charges.

5.23.8. Power drawn during shut-down or start-up should be net metered instead of charging as

consumers as a promotional measure for waste to energy Project owing to plant being



subject to frequent shut-downs for periodic cleaning and maintenance. The above facility

is also requested for third party sale.


5.23.9. The Commission vide Para 5.12.30 and 5.12.31 of this Order has already accepted the

prayer of NSWPMPL and specified the treatment to the power drawn during plant shut

down and start-up power. Since the present Tariff Determination is under Section 62 of

the EA,2003, the Commission has considered that, the energy consumed by the MSW

plant shall be net off with the energy injected into the grid by the MSW plant.



6. SUMMARY OF COMMISSION’S DIRECTIVES AND APPLICABILITY OF

ORDER

6.1.1. In pursuance of Regulation 8 of MERC RE Tariff Regulations,2015 the Commission

hereby determines the project specific levellised Tariff for the said MSW-based power

project of NSWPMPL as Rs 7.00/ kWh, which shall be applicable over a period of 13

years from the date of Commercial Operation of said Project or for tenure of Concession

Agreement, whichever is earlier. This Tariff Order shall be valid subject to fulfillment of

Condition Precedent as outlined under Concession Agreement with NMC.

6.1.2. The Commission hereby directs NSWPMPL to submit the detailed break up of actual

Capital Cost of its Nagpur MSW plant with Pre-processing facility as on Commercial

operation date (CoD) duly certified by Statutory Auditor within six months from CoD of

the Project.

6.1.3. The Commission rules that, in case any additional subsidy or grant is received by

NSWPMPL other than VGF of Rs 70 Crore to be received from NMC, NSWPMPL and

MEDA shall inform the Distribution Licensee(s) regarding any such grant, subsidy or

incentives received by a NSWPMPL and Distribution Licensee(s) shall deduct any such

grant, subsidy or incentives received by a NSWPMPL in subsequent bills raised by

NSWPMPL towards sale of electricity in suitable installments or within such period as

may be stipulated by the Commission.

6.1.4. The said Project shall be treated as a “Must Run” Power Plant and shall not be subject to

MoD) principles but shall be subject to scheduling and despatch requirements as per the

provisions of State Grid Code.

6.1.5. NSWPMPL‟s prayer to waive off cross-subsidy surcharge and additional surcharge is

not relevant with the present proceedings of determination of Tariff for sale of electricity

to Distribution Licensee(s). Hence, the question of applicability of CSS and additional

surcharge does not arise, under present circumstances.

6.1.6. The energy consumed by NSWPMPL‟s MSW Plant during Plant shut down and start-up

power shall be netted off with the energy injected into the grid by the said Plant.

In view of above, the Petition of M/s Nagpur Solid Waste Processing & Management Pvt. Ltd.

(NSWPMPL) in Case No. 158 of 2017 stands disposed of accordingly.

Sd/- Sd/-

(Deepak Lad) (Anand B. Kulkarni)

Member Chairperson



Appendix – 1

List of persons at the Technical Validation Session held on 22 November, 2017

Sr. No. Name Organisation

1. A. Vidhyavathsal NMSWPMPL

2. Mahesh Ghagare NMSWPMPL

3. Jeevan Sonawane NMSWPMPL

4. Nitin Upadhye NMSWPMPL

5. Brijesh Kumar NMSWPMPL

6. Aastha Bhatia PWC, Consultant to the NSWPMPL

7. Ghanshyam Thakkar Reliance Infrastructure

8. Girish Pednekar The Tata Power Company Limited

9. Ajit Pandit Idam Infra- Consultant to the Commission

10. Krishnajith M.U, Idam Infra- Consultant to the Commission

11. Anant Sant Idam Infra- Consultant to the Commission



Appendix – 2

List of persons at the Public Hearing held on 29 December 2017

Sr.

No.

Name Organisation

1. Mahesh Ghagare NMSWPMPL

2. Jeewan Sonwane NMSWPMPL

3. Nitin Upadhye NMSWPMPL

4. A. Vidhyavathsal NMSWPMPL

5. Satish Chavan MSEDCL

6. SS Rajput MSEDCL

7. Manish Kharote BEST

8. Ajit Pandit Idam Infra- Consultant to the Commission

9. Anant Sant Idam Infra- Consultant to the Commission

10. Bhagavatheeswaran H. Idam Infra- Consultant to the Commission

11. Ankit Choudhary PWC

12. Sahil Tamarkar Tata Institute of Social Sciences

13. Trishna Roy Tata Institute of Social Sciences

14. Akshita Bansal Tata Institute of Social Sciences

15. Manas Tata Institute of Social Sciences

16. Aruja Pandey Tata Institute of Social Sciences

17. Aditya Menon Tata Institute of Social Sciences

18. Sarthak Shukla Tata Institute of Social Sciences

19. Saurav Suman Tata Institute of Social Sciences

20. Manish Tata Institute of Social Sciences

21. Ila Singh Tata Institute of Social Sciences

22. Joan Shilpa Kiran Tata Institute of Social Sciences



Annexure-1: Summary of Levellised Tariff

2.2 Form Template for (Nagpur MSW based power project): Determination of Tariff Component

Units Generation Unit Year---> 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

Discount Factor 1.00 0.91 0.83 0.75 0.69 0.63 0.57 0.52 0.47 0.43 0.39 0.36 0.32 0.30 0.27 0.24 0.22 0.20 0.18 0.17

Installed Capacity MW 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50 11.50

Gross Generation MU 65.48 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59 80.59

Elect. Consumption during Start-Up MUs 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68 1.68

Auxiliary Consumption MU 11.24 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84 13.84

Net Generation MU 52.56 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08 65.08

Fixed Cost Unit Year---> 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

O&M Expenses Rs Lakh 1,860 1,958 2,062 2,170 3,424 2,405 2,532 2,665 2,806 4,294 3,109 3,273 3,446 3,627 3,819 4,020 4,232 4,455 4,690 4,937

Depreciation Rs Lakh 798 798 798 798 798 798 798 798 798 798 798 798 342 342 342 342 342 342 342 342

Interest on term loan Rs Lakh 1,008 920 833 745 657 570 482 394 307 219 131 44 -0 0 -0 0 0 -0 0 -0

Interest on working Capital Rs Lakh 113 131 132 140 146 136 138 139 146 156 145 147 152 67 69 71 73 75 77 79

Return on Equity Rs Lakh 834 834 834 834 834 834 834 834 834 834 1,004 1,004 1,004 1,004 1,004 1,004 1,004 1,004 1,004 1,004

Total Fixed Cost Rs Lakh 4,613 4,641 4,658 4,687 5,859 4,743 4,784 4,831 4,891 6,301 5,187 5,265 4,943 5,040 5,233 5,436 5,650 5,875 6,112 6,362

Per unit Fixed Cost Rs/kWh 8.78 7.13 7.16 7.20 9.00 7.29 7.35 7.42 7.52 9.68 7.97 8.09 7.60 7.74 8.04 8.35 8.68 9.03 9.39 9.78

Tipping Fees

Less Revenue from Tipping fees Rs Lakhs 567 596 627 660 693 729 765 804 844 886 930 976 1,024 - - - - - - -

Net Fixed Cost Rs. Lakhs 4,046 4,045 4,031 4,028 5,166 4,015 4,018 4,027 4,046 5,415 4,257 4,289 3,919 5,040 5,233 5,436 5,650 5,875 6,112 6,362

Levallised tariff corresponding to Useful life

Per Unit Cost of Generation Unit Levellised 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20

O&M expn Rs/kWh 4.45 3.54 3.01 3.17 3.34 5.26 3.70 3.89 4.10 4.31 6.60 4.78 5.03 5.30 5.57 5.87 6.18 6.50 6.85 7.21 7.59

Depreciation Rs/kWh 1.11 1.52 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 1.23 0.53 0.53 0.53 0.53 0.53 0.53 0.53 0.53

Int. on term loan Rs/kWh 0.80 1.92 1.41 1.28 1.14 1.01 0.88 0.74 0.61 0.47 0.34 0.20 0.07 -0.00 0.00 -0.00 0.00 0.00 -0.00 0.00 -0.00

Int. on working capital Rs/kWh 0.20 0.21 0.20 0.20 0.22 0.22 0.21 0.21 0.21 0.22 0.24 0.22 0.23 0.23 0.10 0.11 0.11 0.11 0.11 0.12 0.12

RoE Rs/kWh 1.39 1.59 1.28 1.28 1.28 1.28 1.28 1.28 1.28 1.28 1.28 1.54 1.54 1.54 1.54 1.54 1.54 1.54 1.54 1.54 1.54

Total COG Rs/kWh 7.96 8.78 7.13 7.16 7.20 9.00 7.29 7.35 7.42 7.52 9.68 7.97 8.09 7.60 7.74 8.04 8.35 8.68 9.03 9.39 9.78

Less Revenue from Tipping Fees Rs/kWh -0.95 1.08 0.92 0.96 1.01 1.07 1.12 1.18 1.24 1.30 1.36 1.43 1.50 1.57 - - - - - - -

Net COG adj. tipping fee Rs/kWh 7.00 7.70 6.22 6.19 6.19 7.94 6.17 6.17 6.19 6.22 8.32 6.54 6.59 6.02 7.74 8.04 8.35 8.68 9.03 9.39 9.78

Levellised Tariff Rs/kWh 7.00

Documents

Before the MAHARASHTRA ELECTRICITY … 58 42/Order-158_of _2017-05022018.pdfEmail: [email protected] Website: ... Nagpur is one of largest city in the state of Maharashtra having