Made Public: Details of IPP Contracts

8 years, 9 months ago - February 17, 2013
Friday, the contracts that the Central Electricity Board has signed with seven Independent Power Producers (IPP) were released. Those FUEL Steam and Power Generation Co Ltd and Consolidated Energy Ltd, signed in 1996, are very easy to navigate.

However, those other 5 are very complicated with a series of mathematical formulas. To decrypt, we must have recourse to financial professionals. Like what, these contracts will continue to be controversial for a long time. 

Terragen, ex-Central Thermal Belle-Vue (VBTC) 
Date of signature: 24 June 1998 
Plant Type: Bagasse / coal 
Capacity and supply obligation: 2x25 mw. VBTC is committed to providing a minimum of 62 MW during the inter-section and 46 MW during the cutting season. 

Prices and conditions of sale:
 The average selling price is Rs 2 per KWh. A large number of variants, however, have a direct impact on the price. It is indexed to the price of coal, the exchange rate, inflation in Mauritius and Europe as well as the borrowing rate of the MCB. 

 The contract is valid for a period of 20 years. Provision is made to extend it another five years provided that the Electricity Act be amended in this regard. 

 Bagasse is the energy source that should encourage VBTC. In addition to the Electrical Energy Fee paid by the CEB VBTC, CEB pays Bagasse Premium also to encourage them to make maximum use of bagasse. The purchase and delivery of coal to the back VBTC. It must make sure to get the cheapest coal and CEB must prove she got in with the bills and exercises tender, among others. 

 If VBTC can not provide the minimum amount of electricity that is committed to providing the CEB, it must pay compensation calculated according to a complex mode. That a maximum of Rs 15 million per year. The CEB is also committed to purchase a minimum capacity under penalty of having to pay fines VBTC. 

 Terra (formerly Harel Frères) (59%), Séchilienne-Sidec 
(27%), Sugar Investment Trust (SIT) (20%) 
Profits accumulated since the entry into operation: Rs 2.56 billion 

CT Power 
Date of signature: 23 December 2008 
Plant Type: Coal 
Capacity and supply obligation: 2x50 megawatts.Contractually, CT Power must provide a minimum of 22 MW of electricity for each of these two units. 
Price & Payment Information: The price of each kWh sold by CT Power in CEB was Rs 3.01 average at the time of signing the contract. This rate results from an extremely complicated calculation taking into account a twenty parameters and variations. 

As the rate is indexed to the cost of living and takes into account the fluctuating coal prices and the exchange rate between the U.S. dollar and the rupee, the price would have been higher today if the plant was in operation. 

Coal: coal that all CT Power needs will be purchased and supplied by the CEB. This will not only place the order, but also to transport coal to the port. CT Power will pay the CEB for it. Per day, it is expected that the plant will burn 1248 tonnes of fuel. 

If the CEB considers it more convenient to deliver coal and should also build new port facilities, CEB "shall make arrangements for the construction of this new facility, including its financing. ' 

Penalties: The number of possible penalties is high. The most notable are probably the CEB must pay compensation to CT Power in many cases of force majeure, including strikes when there are affecting the plant.CEB must also pay significant damages if the application is endessous a certain threshold. Under certain conditions, such as the inability of CT Power to continue to manage the plant, the CEB can take control of CT Power, but he must pay large sums in return. This amount depends on many factors and varies depending on the circumstances. But even if the CEB takes control, the owner remains CT Power. 

Shareholders at the time of signing the agreement, the main shareholders were two Malaysians known, namely Mariappan Subramaniam and his partner Chan Kwong Min. A few months later, however, they sold all their shares to CT Power Holdings Ltd, a company registered in Malaysia, whose shareholders are unknown to this day. 
Profits accumulated since the entry into operation: Nil 

National Energy Commission (NEC) - Manraj: "We must know where is wrong" 
Dev Manraj, president of the National Energy Commission (NEC) has emphasized the independence of the NEC. It came after reports that the Independent Power Producers (IPP) were released. "The commission has worked as an independent team. We will examine all aspects of a scientific, technical, financial and environmental. It is not to attack one and doing favors to another. Each player in the energy industry has a right to equal treatment, "he would say to reporters after the meeting. The purpose of the committee is to review all aspects of the energy sector and to make recommendations "to enable the Government to make informed decisions." He added: "We must know where the evil." 

Thermal Company Limited South 
Date of signature of the contract: 15 October 2003 
Contract Period: 15 years 
Capacity 'Net Dependable Capacity, 30 MW 
Price paid by the CEB: The price is through a very complicated calculation and is subject to change each year. At the end of each year, an Annual Capacity Payment is made. It is calculated by the Final Annual Capacity Charges multiplied by the Equivalent Availability Factor. Among the factors that are taken into account in these calculations, the number of hours of production plant, power cuts during the year and possible cuts during the year, etc.. Each month, the CEB pays a Provisional Monthly Energy Payment. 

Among the factors taken into account in these calculations: the coal used in the past month, the cost of handling the same coal during the month or the cost of fuel consumed by the plant. Each year, the CEB pays Annual Energy Charges Adjustment. Among the factors that are taken into account in the calculations: the price of coal purchased.From a general point of view, inflation, the Consumer Price Index, the exchange rate or interest rates charged by banks are considered as variables to make changes to the price charged. 

Penalties: Under the item 'Change in Law', the CEB is obliged to pay any tariff reductions at the plant. Several penalties are provided for in the contract: Performance Liquidated Damages, Delay Damages to the Operating Penalties or the Limitation on Delay Damages. 

Plant Type: Charcoal only. 
Shareholders Omnicane (60%), Séchilienne - Sidec (25%) and Sugar Investment Trust (15%). 
Accumulated profits since 2005: Rs 641.5 million 

Power Plant Limited Savannah 
Date of signature of the contract: 18 February 2005 
Capacity: 72 MW and 73 MW in coal as bagasse 
Price paid by the CEB: According to a table of reference rates of the contract, Variable O & M Charge of Re 0.05 per kw / h, the Coal Handling Charge of Rs 281 per tonne, Coal Commodity Charge Rs 791 per tonne and Bagasse Bagasse Transfer Price and Incentive Charge of Re 0.02 per kWh and Rs 0.16 per kwh respectively.Payments are made according to the Provisional Annual Capacity Charges and Energy Charges Provisional.Annual adjustments are provided in relation to the reference rates. Prices are indexed to the exchange rate, inflation or interest rates. 

Plant Type:
 Coal and bagasse 
Shareholders Omnicane (60%), Séchilienne - Sidec (25%) and Sugar Investment Trust (15%). 
Accumulated profits since 2005: Rs 738 million. 
FUEL Steam and Power Generation Co Ltd 
Date: August 5, 1997 
Duration: 20 years 
Type: Bagasse and coal 
Capacity: 2 units of 36.7 MW each 
Supply: 160 GWH per unit 
Guaranteed production: A minimum of 45 GWh per annum of the bagasse 
Price: 1.43 KWH Re (coal) and Re 1.36 (bagasse) in which 22 as Bagasse Transfer Price 
Indexing: The price is indexed to the price fluctuation of coal on the international market, exchange rate and cost of living. 
Maintenance time: Maximum of 45 days 
Penalties: Rs 3250 per hour for low production or interruption of production within 24 hours. An additional penalty of Rs 40,000 if the time exceeds 24 hours. Besides a penalty of Rs 120,000 to sudden or drastic interruption. 

Consolidated Energy Ltd 
Date: September 14, 1996 
Duration: 18 years from August 1997 
Type: Coal and Bagasse 
Capacity: 24.5 MW 
Guaranteed production: Between 13 and 22 MWH 
Supply: 95, 45 GWH bagasse 
Minimum price:
 Rs 1.43 kWh (coal), Rs 1.36 (bagasse) and 22 as under Bagasse Transfer Price 
 The price is indexed to the price fluctuation of coal on the international market, exchange rate and cost of living. 
Maintenance time:
 Maximum of 45 days 
 Rs 3250 per hour for low production or interruption of production within 24 hours. An additional penalty of Rs 40,000 if the time exceeds 24 hours. The total annual these penalties must not exceed Rs 4.48 million, the equivalent of 38 consecutive days of interruption of supply. 
Amendments of May 16, 2001 
 1.53 Re KWH for 55 GWH, Re 1.42 for 5 additional GWH and Re 1.09 for more 
60 GWH. 
Penalties: Rs 100,000 for any interruption in supply.


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