The Central Electricity Regulatory Commission (CERC) has refused to grant compensation to Reliance Power against the unforeseen rise in foreign exchange rates which has considerably increased the debt servicing obligations for the company’s 4,000 mega-watt (MW) Sasan power plant.
The company claimed that due to depreciation of the Indian Rupee, the Sasan plant’s US dollar-denominated debt service obligation over the repayment period will be about Rs 11,392 crore, against Rs 6,516 crore estimated in 2007 when the company had submitted the bid for the project.
In 2014, the regulator had already held that the depreciation of the rupee is not a force majeure event. The latest petition relied on the Supreme Court’s April 2017 order, which had extended a lifeline to three troubled imported-coal-based power plants of Tata, Adani and Essar in Gujarat by allowing CERC to revise tariffs to facilitate pass-through of future fuel price escalation. The apex court had said CERC can allow tariff revisions “in a situation where there are no guidelines framed at all or where the guidelines do not deal with a given situation”.
The exchange rate in July 2007 was Rs 40.27 per US dollar and the depreciation rate was estimated at 0.74% per annum.