6.26

Repair & Maintenance Expenses

6.26.1

GRIDCO has proposed an expenditure of Rs.27.16 Crore in their BST application for the FY 2001-02 and Rs.28.73 Crore in the ARR for the FY 2002-03 towards repair and maintenance expenses.

6.26.2

As per the audited accounts of the year 1998-99, the total R&M expenses was Rs.12.36 crore and provisional figure for the year 1999-00 was Rs.13.64 crore which constitutes an increase of about 9% over and above the figure of 1998-99. The Commission, while approving the R&M expenses for the year 2000-01 had assumed the same percentage rise of 9% for the FY 2000-01 over 1999-00. GRIDCOís proposal of Rs.27.16 Crore for the FY 2001-02 and 28.73 Crore for the FY 2002-03 appears to be very much on the higher side as no logical explanation has been offered about the sudden jump over the approved figure of 2000-01 for which the Commission this time also as assumes annual escalation of 9% over the year 2000-01 for the next two years. The Commission approves Rs.15.99 Crore for the FY 2001-02 and Rs.17.43 Crore for FY 2002-03 towards R&M expenses. A comparative figure of R&M expenses is given in the Table : 32.

Table : 32
(Rs. in Crore)

2000-01

2001-02

2002-03

Commissionís Approval

GRIDCOís Propposal

Commissionís Approval

GRIDCOís Propposal

Commissionís Approval

14.67

27.16

15.99

28.73

17.43

6.27

Approved investment for restoring damages

6.27.1

The commission while approving the expenditure towards restoration of damages due to super cyclone in its order dt.13.07.2000 had accorded approval for Rs.13.27 Crore and directed GRIDCO for treatment of the same as deferred revenue expenditure for recovery over a period of three years. The Commission had accepted a sum of Rs.4.42 Crore as an admissible expenditure for calculation of revenue requirement for the year 2000-01.

6.27.2

GRIDCO in para 3.1.4 of its BST application of 01-02 and ARR application of 2002-03 has proposed recovery of Rs.4.42 Crore in each of the years which, is hereby allowed for recovery through revenue.

6.28

Administration and General Expenses

Administration and General Expenses include property related expenses like license fee, rent, taxes, insurance, communication charges, professional charges like legal expenses, consultancy charges, conveyance, travel expenses and other expenses on account of advertisement, printing, stationery and material related expenses like demurrage and wharfage expense, clearing and forwarding charges, etc. for the year 2001-02. GRIDCO proposes an amount of Rs.21.74 Crore for the FY 2001-02 excluding capitalization expenses of Rs.1.73 Crore and Rs.27.65 Crore for the FY 2002-03 excluding capitalization of Rs.4.59 Crore. The Commission had approved an amount of Rs.12.25 Crore towards A&G expenses excluding capitalization of Rs.1.47 Crore for 2000-01 by escalating them at the then inflation rate of 8% over the previous years approved figure. During the course of the public hearing, it was stated on behalf of GRIDCO that A&G expenses per month are around one Crore per month for which the Commission considers it prudent to project an annual escalation of 5% over the approved figure of FY 2001 for the next two years. Accordingly, the Commission approves Rs.12.86 Crore for the FY 2001-02 and Rs.13.51 crore for the FY 2002-03, chargeable to revenue under the heads Administration and General Expenses.

Table : 33
(Rs. in Crore)

2000-01

2001-02

2002-03

Commissionís Approval

GRIDCOís Proposal

Commissionís Approval

GRIDCOís Proposal

Commissionís Approval

12.25

21.74

12.86

27.65

13.51

6.29

Interest on Loan

6.29.1

In para 3.1.6 of the BST application for the FY 2001-02, GRIDCO has proposed an interest expense of Rs.253.73 Crore for the FY 2001-02. In the revenue requirement application for the FY 2002-03, GRIDCO has proposed an interest expenditure of Rs.267.95 Crore for the FY 2002-03. A loan-wise interest payment for both the above years as called from Table 12 of the RR application is reproduced below :-

Loan-wise Interest Payment of RR application

Loan

FY 2002 Projection

FY 2003 Projection

Interest

Average Base Rate

Interest

Average Base Rate

LIC

39.53

14%

44.20

14%

Central Government Loan

1.01

8.95%

1.24

9.25%

State Government Loan

21.84

13%

21.88

13%

IBRD Loan

61.02

13%

92.00

13%

Short Term Loan/Cash credit

6.10

5.24

PFC

49.44

16.04%

54.30

16.5%

REC

79.16

14.66%

51.30

14.66%

Public Bonds

4.10

11.84%

5.30

11.5%

Pension Bonds

18.00

12%

18.00

12%

GRIDCO Bonds

114.19

14.57%

111.90

15.25%

HIW Loan

0.33

14%

0.00

ICICI Bond

8.17

14%

6.30

14%

IDBI Bill Discounting

-

-

-

-

Total

402.88

411.66

Less Interest Capitalised

78.12

80.00

Less Interest on Back to Back Loan to DISTCOs

71.03

63.70

Interest Chargeable to Revenue

253.73

267.95

6.29.2

Subsequently, GRIDCO at the time of public hearing submitted a revised statement a loan as interest payable (TRF-3) as per which the interest for the FY 2002-03 would Rs.236.61 Crore and Rs.284.07 Crore respectively. The changes are made are in respect of REC loans and public bonds. The revised table of interest payable for the year 2001-02 and 2002-03 is reproduced below.

Loan-wise Interest Payment

Loan

FY02 Projection

FY03 Projection

Interest

Average Base Rate

Interest

Average Base Rate

LIC

39.53

14%

44.20

14%

Central Government Loan

1.01

8.95%

1.24

9.25%

State Government Loan

21.84

13%

21.88

13%

IBRD Loan

61.02

13%

92.00

13%

Short Term Loan

6.10

5.24

PFC

49.44

16.04%

54.30

16.5%

REC

56.18

14.66%

50.60

14.66%

Public Bonds

4.10

11.84%

4.12

11.5%

Pension Bonds

18.00

12%

18.00

12%

GRIDCO Bonds

114.19

14.57%

111.9

15.25%

HIW Loan

0.33

14%

0.00

ICICI Bond

8.17

14%

6.3

14%

IDBI Bill Discounting

-

-

-

-

Total

379.90

409.77

Less Interest Capitalised

72.26

62.00

Less Interest on Back to Back Loan to DISTCOs

71.03

63.70

Interest Chargeable to Revenue

236.61

284.07

6.29.3

Item wise analysis of loans has been made in the succeeding paragraphs.

6.29.4

In the tariff filing of 2000-01, GRIDCO had projected only the loan component meant for its Transmission Business (Additional DF-21 to 29 of BST clarification) and had not shown the loans figures taken for the investments made in the distribution business prior to separation of its distribution activity due to non-finalization of accounts by the DISTCOs. In the current year filing for 2001-02 as well as for the revenue requirement filing for the year 2002-03 GRIDCO has projected its loan liability both for transmission and distribution business prior to its dis-investment. However, due to back to back arrangement of servicing of loans by the DISTCOs @ 13.837% to the GRIDCO, the interest burden on loan utilised for distribution project is not being passed on to transmission business as GRIDCO has shown in its income statement (form TRF-26) a sum of Rs.71.03 Crore for the FY 2001-02 and Rs.63.70 Crore for the FY 2002-03 towards interest recoverable from DISTCOs. There has been back to back arrangement in respect of IBRD loan and loans from PFC, REC, OSEB Bond and Pension Trust Bond. A statement of loan transferred to DISTCOs as per 1998 account is given in Table : 34.

Table : 34
Loan transferred to DISTCOs as per 1998-99 accounts
(Rs. in Crore)

Sl.No.

Name of the DISTCOs

CESCO

NESCO

SOUTHCO

WESCO

TOTAL

1

PFC Loan related project

32.86

7.36

7.29

19.48

66.99

2

REC loan related project

75.60

75.87

88.17

73.44

313.08

3

Public bond related project

7.44

6.38

5.49

6.08

25.39

4

Pension trust

46.21

23.42

23.22

26.91

119.76

5

SPA loan related project

2.72

3.14

1.72

1.86

9.44

6

IDBI

0.61

 

0.12

0.14

0.87

7

IBRD loan related project

37.55

6.51

7.49

9.85

61.40

 

TOTAL

202.98

122.68

133.50

137.76

596.92

 

Current liability and current asset mismatch adjusted against loan

39.58

(17.61)

(2.03)

5.40

25.34

 

As per transfer scheme total loan transferred to DISTCOs

242.56

105.07

131.47

143.16

622.26

6.29.5

GRIDCO in TRF-3 has shown that the position of back to back loan to DISTCOs as on 31.03.2000, 31.03.2001, 31.03.2002 and 31.03.2003 would be Rs.744.71 crore, Rs.718.63 crore, Rs.640.94 and Rs.527.39 crore respectively. But the figures shown by DISTCOs are different with the figures given by GRIDCO. The four DISTCOs in their RST filing for 2001-02, audited accounts for tax purposes for 2000-01 as well as ARR 2002-03 have given a different set of figures in respect of loan taken from GRIDCO. A comparative statement of the figures given by GRIDCO and four DISTCOs is given in Table : 35.

Table : 35
(Rs. in Crore)

Loan Balance

GRIDCO

CESCO

NESCO

SOUTHCO

WESCO

TOTAL

(Loan recoverable from DISTCOs)

Loan taken from GRIDCO

 

As on 31.03.00

744.71

292.63
(RST 01-02)
F-3

119.90
(Audited)

159.16
(Audited)

146.95
(RST 01-02 in F-3)

718.64

As on 31.03.01

718.63

384.06
(ARR 02-03)
F-3

65.17
(ARR 02-03)

161.75
(ARR 02-03 in F-3)

126.55
(ARR 02-03 in F-3)

737.53

As on 31.03.02

640.94

376.77
(ARR 02-03)
F-3

65.17
(ARR 02-03)

142.16
(ARR 02-03 in F-3)

107.34
(ARR 02-03 in F-3)

691.44

As on 31.03.02

527.39

368.35
(ARR 02-03)
F-3

65.17
(ARR 02-03)

113.69
(ARR 02-03 in F-3)

81.73
(ARR 02-03 in F-3)

628.94

6.29.6

It is pertinent to mention here that GRIDCO in the last year tariff application of 2000-01 has not shown any interest recoverable from DISTCOs in respect of back to back loan. In reply, Director (Finance) GRIDCO told that the funding agencies like PFC, REC would realize the interest from GRIDCO in respect of loan utilized for distribution works executed by GRIDCO. Since the audited accounts for the year 1998-99 were not available at the time of filing of BST for the FY 2000-01, they were not in a position to reflect the back to back loan and interest thereon in revenue requirement and clear profit for 2000-01.

6.29.7

Commission after going through the filing made by GRIDCO and DISTCOs in details, directs that all the five licensees should reconcile their figures and intimate their results to the Commission by 30 June 2002. However, for the purpose of calculation of revenue requirement and capital base, Commission considers the loan amount shown by GRIDCO and DISTCOs and interest accrued thereon on provisional basis.

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