PREFACE

A thermal power station is a power plant in which the prime mover is steam driven.
Water is heated, turns into steam and spins a steam turbine which either drives an
electrical generator or does some other work, like ship propulsion. After it passes
through the turbine, the steam is condensed in a condenser and recycled to where it
was heated; this is known as a Rankine cycle.
Almost all coal, nuclear, geothermal, solar thermal electric, and waste incineration
plants, as well as many natural gas power plants are thermal. Natural gas is
frequently combusted in gas turbines as well as boilers.
Commercial electric utility power stations are most usually constructed on a very large
scale and designed for continuous operation. Electric power plants typically use threephase or individual-phase electrical generators to produce alternating current (AC)
electric power at a frequency of 50 Hz or 60 Hz (hertz, which is an AC sine wave per
second) depending on its location in the world.

CONTENTS
1.
2.
3.
4.
5.
6.
7.
8.
9.

Introduction.02
Need For thermal power generation..04
Classification..05
Basic definitions.07
Functioning of thermal power plant...11
ADVANTAGES...17
DISADVANTAGES18
Future Prospects19
BIBLIOGRAPHY21

CHAPTER 1
INTRODUCTION
Almost all coal, nuclear, geothermal, solar thermal electric, and waste incineration
plants, as well as many natural gas power plants are thermal. Natural gas is
frequently combusted in gas turbines as well as boilers. The waste heat from a gas
turbine can be used to raise steam, in a combined cycleplant that improves overall
efficiency. Power plants burning coal, oil, or natural gas are often referred to
collectively as fossil-fuel power plants. Some biomass-fueled thermal power plants
have appeared also. Non-nuclear thermal power plants, particularly fossil-fueled
plants, which do not usecogeneration, are sometimes referred to as conventional
power plants.
In thermal power stations, mechanical power is produced by a heat engine that
transforms thermal energy, often from combustion of a fuel, into rotational energy.
Most thermal power stations produce steam, and these are sometimes called steam
power stations. Not all thermal energy can be transformed into mechanical power,
according to the second law of thermodynamics. Therefore, there is always heat lost
to the environment. If this loss is employed as useful heat, for industrial processes or
district heating, the power plant is referred to as a cogeneration power plant or CHP
(combined heat-and-power) plant. In countries where district heating is common,
there are dedicated heat plants called heat-only boiler stations. An important class of
power stations in the Middle East uses by-product heat for the desalination of water.

Commercial electric utility power stations are most usually constructed on a very large
scale and designed for continuous operation. Electric power plants typically use threephase or individual-phase electrical generators to produce alternating current (AC)
electric power at a frequency of 50 Hz or 60 Hz (hertz, which is an AC sine wave per
second) depending on its location in the world. Other large companies or institutions
may have their own usually smaller power plants to supply heating or electricity to
their facilities, especially if heat or steam is created anyway for other purposes.
Shipboard steam-driven power plants have been used in various large ships in the
past, but these days are used most often in large naval ships. Such shipboard power
plants are general lower power capacity than full-size electric company plants, but
otherwise have many similarities except that typically the main steam turbines
mechanically turn the propulsion propellers, either through reduction gears or directly
by the same shaft. The steam power plants in such ships also provide steam to
separate smaller turbines driving electric generators to supply electricity in the ship.
Shipboard steam power plants can be either conventional or nuclear; the shipboard
nuclear plants are mostly in the navy. There have been perhaps about a dozen turboelectric ships in which a steam-driven turbine drives an electric generator which
powers an electric motor for propulsion.
Thermal power station is a power plant in which the prime mover is steam driven.
Water is heated, turns into steam and spins a steam turbine which either drives an
electrical generator or does some other work, like ship propulsion. After it passes
through the turbine, the steam is condensed in a condenser and recycled to where it
was heated; this is known as a Rankine cycle. The greatest variation in the design of
thermal power stations is due to the different fuel sources. Some prefer to use the
term energy center because such facilities convert forms of heat energy into electrical
energy.
History
Reciprocating steam engines have been used for mechanical power sources since the
18th Century, with notable improvements being made by James Watt. The very first
commercial central electrical generating stations in New York and London, in 1882,
also used reciprocating steam engines. As generator sizes increased, eventually
turbines took over they encres the hose power.

CHAPTER 2
NEED FOR THERMAL POWER GENERATION
Scarcity of water resources: Water resources are not abundantly available and are
geographically unevenly distributed. Thus hydel power plants cannot be installed with
ease and are limited to certain locations.
Widely available alternate flues: Many alternate fuels such as coal, diesel, nuclear
fuels, geo-thermal energy sources, solar-energy, biomass fuels can be used to
generate power using steam cycles.
Maintenance and lubrication cost is lower: Once installed, these require less
maintenance costs and on repairs. Lubrication is not a major problem compared to
hydel power plant.
Coal is abundant: Coal is available in excess quantities in India and is rich form of
energy available at relatively lower cost.
Working fluid remains within the system, and need not be replaced every time thus
simplifies the process.

CHAPTER 3
CLASSIFICATION
Thermal power plants are classified by the type of fuel and the type of prime mover
Installed.
By fuel
Nuclear power plants use a nuclear reactor's heat to operate a steam turbine
generator.
Fossil fuelled power plants may also use a steam turbine generator or in the case of
natural gas fired plants may use a combustion turbine. A coal-fired power station
produces electricity by burning coal to generate steam, and has the side-effect of
producing a large amount of carbon dioxide, which is released from burning coal and
contributes to global warming
Geothermal power plants use steam extracted from hot underground rocks.
Biomass Fuelled Power Plants may be fuelled by waste from sugar cane, municipal
solid waste, landfill methane, or other forms of biomass.
Solar thermal electric plants use sunlight to boil water, which turns the generator.
By prime mover
Steam turbine plants use the dynamic pressure generated by expanding steam to turn
the blades of a turbine
Gas turbine plants use the dynamic pressure from flowing gases (air and combustion
products) to directly operate the turbine.
Combined cycle plants have both a gas turbine fired by natural gas, and a steam
boiler and steam turbine which use the hot exhaust gas from the gas turbine to
produce electricity
Reciprocating engines are used to provide power for isolated communities and are
frequently used for small cogeneration plants. Hospitals, office buildings, industrial
plants, and other critical facilities also use them to provide backup power in case of a
power outage
Microturbines, Stirling engine and internal combustion reciprocating engines are lowcost solutions for using opportunity fuels, such as landfill gas, digester gas from water
treatment plants and waste gas from oil production

Efficiency
Power is energy per unit time. The power output or capacity of an electric plant can be
expressed in units of megawatts electric (MWe). The electric efficiency of a
conventional thermal power station, considered as saleable energy (in MWe) produced
at the plant busbars as a percent of the heating value of the fuel consumed, is
typically 33% to 48% efficient. This efficiency is limited as all heat engines are
governed by the laws of thermodynamics (See: Carnot cycle). The rest of the energy
must leave the plant in the form of heat. This waste heat can go through a condenser
and be disposed of with cooling water or in cooling towers. If the waste heat is instead
utilized for district heating, it is called cogeneration. An important class of thermal
power station is associated with desalination facilities; these are typically found in
desert countries with large supplies of natural gas and in these plants, freshwater
production and electricity are equally important co-products.
Since the efficiency of the plant is fundamentally limited by the ratio of the absolute
temperatures of the steam at turbine input and output, efficiency improvements

require use of higher temperature, and therefore higher pressure, steam. Historically,
other working fluids such as mercury have been experimentally used in a mercury
vapor turbine power plant, since these can attain higher temperatures than water at
lower working pressures. However, the obvious hazards of toxicity, and poor heat
transfer properties, have ruled out mercury as a working fluid.
CHAPTER 4
BASIC DEFINITIONS
Steam is vaporized water and can be produced at 100C at standard atmosphere.
In common speech, steam most often refers to the visible white mist that condenses
above boiling water as the hot vapor mixes with the cooler air.
Turbine A turbine is a rotary engine that extracts energy from a fluid or air flow and
converts it into useful work.
The simplest turbines have one moving part, a rotor assembly, which is a shaft or
drum, with blades attached. Moving fluid acts on the blades, or the blades react to the
flow, so that they move and impart rotational energy to the rotor. Early turbine exare
windmills and waterwheels.
Fig Typical turbine
Electric generator An electric generator is a device that converts mechanical energy to
electrical energy. A generator forces electrons in the windings to flow through the
external electrical circuit. It is somewhat analogous to a water pump, which creates a
flow of water but does not create the water inside.

Fig Typical Generator

A boiler or steam generator is a device used to create steam by applyingheat energy

to water. Although the definitions are somewhat flexible, it can be said that older
steam generators were commonly termed boilers and worked at low to medium
pressure
(1300 psi/0.06920.684 bar; 6.8952,068.427 kPa), but at pressures
above this it is more usual to speak of a steam generator.

A boiler or steam generator is used wherever a source of steam is required. The form
and size depends on the application: mobile steam engines such as steam
locomotives, portable engines and steam-powered road vehicles typically use a
smaller boiler that forms an integral part of the vehicle;
Second law of thermodynamics The second law of thermodynamics is an expression of
the universal principle of entropy, stating that the entropy of anisolated system which
is not in equilibrium will tend to increase over time, approaching a maximum value at
equilibrium; and that the entropy change dSof a system undergoing any infinitesimal
reversible process is given by dq / T, where dq is the heat supplied to the system and
T is the absolute temperature of the system.

CHAPTER 5
FUNCTIONING OF THERMAL POWER PLANT:
In a thermal power plant, one of coal, oil or natural gas is used to heat the boiler to
convert the water into steam. The steam is used to turn a turbine, which is connected
to a generator. When the turbine turns, electricity is generated and given as output by
the generator, which is then supplied to the consumers through high-voltage power
lines.
Fig steam power generation
Typical diagram of a coal-fired thermal power station
1. Cooling tower
10. Steam Control valve
19. Superheater
2. Cooling water pump
11. High pressure steam turbine
20.Forced draught (draft) fan
3. transmission line (3-phase)
12. Deaerator
21. Reheater
4. Step-up transformer (3-phase)
13. Feed water heater
22. Combustion air intake
5. Electrical generator (3-phase)
14. Coal conveyor
23. Economiser
6.Low pressure steam turbine
15. Coal hopper
24. Air preheater
7. Condensate pump
16. Coal pulverizer
25. Precipitator
8. Surface condenser
17. Boiler steam drum
26.Induced draught (draft) fan
9.Intermediate pressure steam turbine
18. Bottom ash hopper
27. Flue gas stack

Detailed process of power generation in a thermal power plant:

Water intake: Firstly, water is taken into the boiler through a water source. If water is
available in a plenty in the region, then the source is an open pond or river. If water is
scarce, then it is recycled and the same water is used over and over again.

Boiler heating: The boiler is heated with the help of oil, coal or natural gas. A furnace
is used to heat the fuel and supply the heat produced to the boiler. The increase in
temperature helps in the transformation of water into steam.
Steam Turbine: The steam generated in the boiler is sent through a steam turbine.
The turbine has blades that rotate when high velocity steam flows across them. This
rotation of turbine blades is used to generate electricity.
Generator: A generator is connected to the steam turbine. When the turbine rotates,
the generator produces electricity which is then passed on to the power distribution
systems.
Special mountings: There is some other equipment like the economizer and air preheater. An economizer uses the heat from the exhaust gases to heat the feed water.
An air pre-heater heats the air sent into the combustion chamber to improve the
efficiency of the combustion process.
Ash collection system: There is a separate residue and ash collection system in place
to collect all the waste materials from the combustion process and to prevent them
from escaping into the atmosphere.
Apart from this, there are various other monitoring systems and instruments in place
to keep track of the functioning of all the devices. This prevents any hazards from
taking place in the plant.
A Rankine cycle with a two-stage steam turbine and a single feedwater heater.
The second law of thermodynamics states that any closed-loop cycle can only convert
a fraction of the heat produced during combustion into mechanical work. The rest of
the heat, called waste heat, must be released into a cooler environment during the
return portion of the cycle. The fraction of heat released into a cooler medium must
be equal or larger than the ratio ofabsolute temperatures of the cooling system
(environment) and the heat source (combustion furnace). Raising the furnace
temperature improves the efficiency but also increases the steam pressure,
complicates the design and makes the furnace more expensive. The waste heat
cannot be converted into mechanical energy without an even cooler cooling system.
However, it may be used in cogeneration plants to heat buildings, produce hot water,
or to heat materials on an industrial scale, such as in some oil refineries, cement
plants, and chemical synthesis plants.
Typical thermal efficiency for electrical generators in the electricity industry is around
33% for coal and oil-fired plants, and up to 50% for combined-cycle gas-fired plants

CHAPTER 6
ADVANTAGES
The fuel used is quite cheap.
Less initial cost as compared to other generating plants.
It can be installed at any place irrespective of the existence of coal. The coal can be
transported to the site of the plant by rail or road.
It requires less space as compared to Hydro power plants.

Cost of generation is less than that of diesel power plants.

This plants can be quickly installed and commissioned and can be loaded when
compare to hydel power plant
It can meet sudden changes in the load without much difficulty controlling operation
to increase steam generation
Coal is less costlier than diesel
Maintenance and lubrication cost is lower

CHAPTER 7
DISADVANTAGES
It pollutes the atmosphere due to production of large amount of smoke and fumes.
It is costlier in running cost as compared to Hydro electric plants.
well, stations always take up room for the environment which could be cultivated for
the use of growing food etc. which is a great disadvantage is our day and age, as food
is necessary to live.
However, this could create more jobs for a lot of people thus increasing in a good way
our current economic situation which by is failing miserably.
Over all capital investment is very high on account of turbines, condensers, boilers
reheaters etc .maintenance cost is also high on lubrication, fuel handling, fuel
processing.
It requires comparatively more space and more skilled operating staff as the
operations are complex and required precise execution
A large number of circuits makes the design complex
Starting of a thermal power plant takes fairly long time as the boiler operation and
steam generation process are not rapid and instantaneous

CHAPTER 8
FUTURE PROSPECTS
Effective Use of Fossil Fuels and Reduction in CO2 Emissions by Improving the
Efficiency of Thermal Power Generation
At present, thermal power generation accounts for approximately 70% of the total
amount of electricity produced around the world. However, thermal power generation,
which uses fossil fuels, causes more CO2 emissions than other power generation
methods. In order to reduce CO2emissions per unit power produced, Toshiba Group is
developing next-generation thermal power technologies aimed at improving plant
efficiency and commercializing the CCS*1 (CO2 capture and storage) system.
To improve the efficiency of thermal power generation, it is of vital importance that
the temperature of the steam or gas used to rotate the turbines is raised. Toshiba
Group is working on the development of ultra-high-temperature materials and cooling
technologies in order to commercialize an A-USC*2 system (Advanced Ultra-Super

Critical steam turbine system) more efficient than previous models, which is designed
to increase steam temperature from 600C to above the 700C mark. In the
area of combined cycle power generation using a combination of gas and steam
turbines, we are also engaged in jointly developing a power generation system
designed to increase gas temperature to the level of 1,500C with the U.S.
Company General Electric, which is starting commercial operation in July 2008 in
Japan.

Accelerating the Development of CO2 Capture and Storage Technology

The Key to Realizing Next-generation Power Generation System
Toshiba Group is engaged in the development of CO2 capture and storage (CCS)
technology designed to separate and capture CO2 emitted from thermal power plants
and other such facilities and then store it underground. More specifically, this
development is aimed at commercializing CCS technology. In order to commercialize
this technology, it is essential that we develop a system that makes it possible to
separate and capture CO2 without reducing the economic performance of a power
plant. In the course of its basic research, Toshiba Group has developed a highperformance absorbent that minimizes the energy consumption required for the CO2
capture process. Experiments conducted using small-scale test equipment have
confirmed that its level of performance is the best in the industry.
Preventive Maintenance Technologies That Support the Long-term, Stable Operation of
Facilities and Extension of the Service Life of High-temperature Gas Turbine Parts
The use of combined cycle power generation facilities using gas turbines is increasing
year by year for the purpose of achieving the reduction in CO2 emissions required to
create a low-carbon society, increasing energy use efficiency and improving economic
performance. Toshiba Group is developing various technologies that support the longterm, stable operation of facilities.
In order to analyze and assess high-temperature gas turbine parts, which are used in
harsh environments and to determine their remaining service lives based on the level
of degradation, we developed a technology for making highly accurate diagnoses by
combining a number of methods, including the finite element method (FEM) and
methods for testing cleavage strength, tensile strength, durability and fatigue
strength. We are also working to commercialize service life extension and repair
technologies aimed at recycling gas turbine rotor/stator blades and extending their
service lives. Based on the BLE (Blade Life Extension) concept unique to our
company group, we repeatedly reuse old rotor blades that meet our repair standards
instead of simply discarding them. The repair and recycling of these parts not only
reduces running costs and improves economic performance, but also effectively
minimize the environmental impact.

Fig- Concept of the BLE Process

BIBLIOGRAPHY
1. British Electricity International (1991).Modern Power Station Practice: incorporating

modern power system practice (3rd Edition (12 volume set) ed.). Pergamon. ISBN 008-040510-X.
2. Babcock & Wilcox Co. (2005).Steam: Its Generation and Use (41st edition ed.).
ISBN 0-9634570-0-4.
3. Thomas C. Elliott, Kao Chen, Robert Swanekamp (coauthors) (1997).Standard
Handbook of Powerplant Engineering (2nd edition ed.). McGraw-Hill Professional.ISBN
0-07-019435-1.
4. Air Pollution Control Orientation Coursefrom website of the Air Pollution Training

Reference:http://seminarprojects.com/Thread-thermal-power-generation-fullreport#ixzz3qDVaL7KN

SUMMER INTERNSHIP REPORT PROJECT APPRAISIAL AND FINANCIAL MODELLING OF A

THERMAL POWER PLANT UNDER THE GUIDANCE OF Mrs Indu Maheshwari, Dy

Director, CAMPS, NPTI & Mrs. Priya Kumar, Senior Manager, Project Division,
Power Finance Corporation Limited At Power Finance Corporation, New Delhi
Submitted By Ankit Doveriyal Roll No. 15 MBA (POWER MANAGEMENT) (Under
ministry of Power, Govt. of India) Affiliated to MAHARSHI DAYANAND UNIVERSITY,
ROHTAK AUGUST 2013 i DECLARATION I, Ankit Doveriyal, Roll No 15, student of
MBA-Power Management (2012-14) at National Power Training Institute,
Faridabad hereby declare that the Summer Training Report entitled PROJECT
APPRAISIAL AND FINANCIAL MODELLING OF A THERMAL POWER PLANT is an
original work and the same has not been submitted to any other Institute for the
award of any other degree. A Seminar presentation of the Training Report was
made on ________________________ and the suggestions as approved by the faculty
were duly incorporated. Presentation In-Charge Signature of the Candidate
(Faculty) Countersigned Director/Principal of the Institute ii ACKNOWLEDGEMENT
It is often said that life is a mixture of achievements, failures, experiences,
exposures and efforts to make your dream come true. There are people around
you who help you realize your dream. I acquire this opportunity with much
pleasure to acknowledge the invaluable assistance of Power Finance Corporation
and all the people who have helped me through the course of my journey in
successful completion of this project. I wish to express my sincere gratitude to
my Company Guide, Mrs. Priya Kumar (Senior Manager, Project Appraisal
Division, PFC) for her guidance, help and motivation. Apart from the subject of
my study, I learnt a lot from her, which I am sure, will be useful in different
stages of my life. I would like to thank Mrs. Shweta Vithal (Dy Manager, Project
Appraisal Division) for her help in understanding and formulating the model
design and methodology as well as help me in acquitting to the Power Sector and
clearing my concepts and Mr. Natesh Sarma (Officer, Project Appraisal Division)

for his review and helpful comments. I would like to thank Mr. Rakesh Mohan,
Senior Manager (HR) for providing me with this wonderful opportunity to work at
Power Finance Corporation. I express my thanks to Mrs. Indu Maheshwari, Dy.
Director, Faculty guide, NPTI for her kind cooperation during the period of my
summer internship. I feel deep sense of gratitude towards Mr S.K.Chaudhary,
Principal Director, CAMPS(NPTI), NPTI and Mrs. Manju Mam, Director, Mrs. Indu
Maheshwari, Dy. Director, NPTI for arranging my internship at Power Finance
Corporation and being a constant source of motivation and guidance throughout
the course of my internship. I am grateful to my friends who gave me the moral
support in my times of difficulties. Last but not the least I would like to express
my special thanks to my family for their continuous motivation and support.
Regards, Ankit Doveriyal Class of 2012- 2014 (NPTI) iii EXECUTIVE SUMMARY
Rapid economic growth has increased the burden of Indias infrastructure, one of
the countrys week spots. An infrastructure deficit is widely considered to be one
of the factors that could severely affect the economic growth of the country. In
the past few years, policy makers have recognized the importance of
infrastructure in economic growth and have made concrete efforts to accelerate
infrastructure development. Power Sector continues to lag behind despite the
introduction of progressive measures. Power shortages, increased tariffs,
shortage of coal and dependence on imported fuel are on rise, while the poor
health of the distribution continues to inhibit the inflows of investments which
have possessed growth risk for the Indian Electricity Sector. India's demand for
electricity is likely to cross 300 GW, in few years earlier than most estimates.
Meeting this demand will require a fivefold to tenfold increase in the pace of
capacity addition. With the growing demand of power, there is huge potential of
investment in power sector of India. The power sector which is in the concurrent
list of the Indian Constitution is under the purview of both the central
government and the state government. The power sector which was earlier
dominated by public sector undertaking is now seeing effective participation of
the private sector which is now accountable for 28% of power generation in the
country. Power Finance Corporation Ltd. (PFC) a public financial institution
established In 1986 by the Ministry Of Power as a Financial Institution (FI) to
provide financing solution to large capital intensive power project across India
including generation, transmission, distribution and RM&U projects. My Summer
Internship Project is Project & Entity Appraisal of Thermal Power Plant. It
resolves around the appraisal of the power project promoted by the company
ABC Power Limited, which has come for financial assistance of its Capital
Expenditure and Working Capital Requirements. The project is being appraised
after evaluating it on the various parameters set by Central Electricity Regulatory
Commission (CERC) and the set parameters at PFC. My work also include
appraisal of Promoters of the project which is based on set parameters at PFC
.The aim of the appraisal is to finally arrive at the decision: whether PFC should
finance the project or not. As per the guidelines of PFC the project is evaluated
into two parts: Project Appraisal and Entity Appraisal. The format of the project
report will be in the form of Agenda Note as per PFC norms. Project Appraisal is
carried out by Project Appraisal Department which evaluate the financial and
technical viability of the project. iv Entity Appraisal is carried out by Entity

Appraisal Department and involves evaluation of the promoter of the company

on its financial flexibility and stability, the analysis of their business operations
and the competence of the management. In the end the project involves the
subjective analysis on both Project & Entity fronts and come up with the risk
involved. The project reports ends with the Recommendations on whether to
finance the project or not. v LIST OF ABBREVIATIONS BTG Boiler, Turbine &
Generator BU Billion Units CEA Central Electricity Authority CERC Central
Electricity Regulatory Commission COD Commercial Operation Date DPR Detailed
Project Report EPC Engineering, procurement & construction Contract FSA Fuel
Supply arrangement/agreement FTA Fuel Transport Agreement GCV Gross
Calorific Value GoI Government of India IPP Independent Power Producer IDC
Interest During Construction Kcal Kilo Calories KV Kilo Volts KWh Kilo Watt Hour
MoP Ministry of Power MoEF Ministry of Environment & Forest NOC No Objection
Certificate O&M Operations & Maintenance PFC Power Finance Corporation Ltd.
PGCIL Power Grid Corporation of India Limited PLF Plant Load Factor PPA Power
Purchase Agreement REC Rural Electrification Corporation vi LIST OF FIGURES
Figure 1: Power Sector Structure...4
Figure 2: Energy Production in Billion kWh (2010)..5
Figure 3: All India Generation capacity.7
Figure 4: Business Strategy of PFC.13
Figure 5: Project Finance Structure..19
Figure 6: Actual power supply position in Tamil Nadu...40 vii
LIST OF TABLES Table 1: All India Region wise generation
capacity..6 Table 2: Different Rating by major rating
agencies.11 Table 3: Sanctions & Disbursements for
the respective financial years..14 Table 4: Major Projects Funded by
PFC..14 Table 5: Financial Highlights for the
year 2011-12.14 Table 6: Approvals and Agreement
Status...22 Table 7: Preliminary
appraisal.24 Table 8: Detailed
Appraisal..26 Table 9: Approval and
Agreement Status........38 Table 10: Project Cost
Details..39 Table 11: Power
requirement and availability for Tamil Nadu40 Table 12: Project
details...41 Table 13: Snapshot of
project financial projections.45 Table 14: Sensitivity
analysis sheet.46 viii TABLE OF CONTENTS
DECLARATIONi
ACKNOWLEDGEMENT ii EXECUTIVE
SUMMARY. iii LIST OF
ABBREVIATIONS... v LIST OF
FIGURES. vi LIST OF
TABLES.. vii CHAPTER 1:
INTRODUCTION...1 1.1 INDIAN POWER
SECTOR....1 1.2 POWER SECTOR
REFORMS2 1.3 INTRODUCTION TO INDIAN
POWER SECTOR...5 1.4 POWER SECTOR: DEVELOPMENTS &

CURRENT STATUS..7 1.5 MAJOR

ISSUES..8 1.6
INITIATIVES..8 1.7
OPPORTUNITIES...9 CHAPTER 2:
COMPANY PROFILE.....10 2.1 BACKGROUND...
.....10 2.2 MISSION..
..10 2.3 CREDIT RATINGS...
10 2.4 OBJECTIVE OF PFC..
...11 2.5 CLIENTS OF PFC.....12
2.6 RANGE OF SERVICES12 2.7
REFORMS.13 2.8 SWOT
ANALYSIS....15 CHAPTER 3: OBJECTIVE
AND SCOPE..16 3.1 OBJECTIVE OF THE
PROJECT..16 3.2
SCOPE........16 ix CHAPTER 4:
LITERATURE REVIEW AND RESEARCH
METHODOLOGY...17 4.1 LITERATURE
REVIEW...17 4.2 PROJECT
FINANCE.18 4.3 PROJECT
APPRAISAL19 4.4 CALCULATION OF
TARIFF...20 4.5 RESEARCH
METHODOLOGY...21 CHAPTER 5: PROJECT
APPRAISAL & FINANCIAL MODELLING....22 5.1 GUIDING PRINCIPAL FOR
PROJECT APPRAISAL22 5.2 PROJECT & ENTITY
APPRAISAL.23 5.3 FINANCIAL
MODELLING..28 CHAPTER 6: CASE
STUDY29 6.1 PROJECT PURPOSE &
SCOPE...29 6.2 PROJECT DETAILS.
.29 6.3 PROJECT
COST....38 CHAPTER 7: RISK ANALYSIS
& SWOT ANALYSIS...47 7.1 RISK
ANALYSIS..47 7.2 SWOT
ANALYSIS49 7.3
LIMITATIONS..50 CHAPTER 8:
CONCLUSION, RECOMMENDATION & LEARNING52 8.1
CONCLUSION..52 8.2
RECOMMENDATIONS...53 8.3
LEARNING....53
BIBILIOGRAPHY.....54
ANNEXURE...55
1 | Page
Project Appraisal & Financial Modeling CHAPTER 1: INTRODUCTION 1.1. INDIAN
POWER SECTOR Electricity is one of the most vital infrastructure inputs for
economic development of a country. The demand of electricity in India is
enormous and is growing steadily. The vast Indian electricity market, today offers
one of the highest growth opportunities for private developers. At the time of
independence in 1947, the country had a power generating capacity of 1,362
MW. Prior to independence the power sector was regulated by The Indian

Electricity Act, 1910 which was the first basic legal framework for the electricity
sector in the country. Supply of energy was the main concept around which
various provisions were woven. The act talked about the Licence for generating
and supplying electricity, Competition in generation and supply areas,
Framework of wires and works, Licensee and Consumer relationship, Safety
Measures and Theft of electricity in the power sector. Post independence our
priorities changed, the supply of electricity which was limited to cities and towns
was to be spread across the country, especially in rural areas. This was seen as a
social responsibility of the Government to provide electricity to all. Thus The
Electricity Supply Act, 1948 was passed in the Central legislature to facilitate
the establishment of regional co-ordination in the development of electricity
which envisaged formation of State Electricity Boards (SEB) as an arm of State
Government to discharge their responsibility of providing electricity to all. The
act mandated that every State shall constitute a SEB. SEBs were entrusted with
the task of developing power generation, transmission as well as distribution
facilities. The Act also called for formation of Central Electricity Authority (CEA),
which was envisaged as the main technical arm of the Central Government. It
also had to perform the role of technical advisor to the State Government, SEB,
Generation Company or any other agency and form regulations on certain
aspects of which the most important was the technoeconomic clearance of
generation projects. However, in 1970s SEBs started making losses largely on
account of political interference, mismanagement and inefficiencies in
operations. Flat rate tariff (near zero usage charge) were introduced for the
agricultural connections and high tariff was imposed on industrial & commercial
users, such cross-subsidy led to increase in theft and the losses increased. As the
boards were not able to make money, they became increasingly dependent on
the government for funding. Because of the shortage of funds, SEBs were unable
to increase generation capacity and were not maintaining their assets. Therefore,
SEBs went into a vicious cycle that led to further drop in the performance of
their operations and subsequently increased their losses. In 1980s, the SEBs
were able to show about 3% of statutory returns with the help of flawed
accounting system but in practice the accruals were not sufficient for growth and
the boards sought assistance from state governments. In this situation, the
government decided to create central generating utilities i.e. National thermal
power corporation (NTPC) & National Hydro Power Corporation (NHPC) to improve
the condition of power sector. The government also tried to connect the
generating entities scattered all over the country non-uniformly
2 | Page
Project Appraisal & Financial Modeling by forming The National Grid and thus
trying to overcome generation demand supply gap prevalent in different states.
In response to the balance-of-payment crisis in 1991, the government of India
decided to open up various sectors in the economy including power sector. The
power generation sector was de-licensed and the private parties were allowed to
setup generating facilities. The change in notification gave numerous incentives
to private sector such as 16% return on equity for plants that operated at plant
load factor (PLF) of 68.5%, five year tax holiday, two part tariff, equity
requirements as low as 20% of project cost and selective guarantees from
central government for payment default by SEBs. This liberal set of policies

initially created excitement among the private investors to setup plants.

However, the excitement soon subsided because of the large political risks and
payment capacity of the already bleeding SEBs. The state boards losses were
increasing mainly due to theft and had to increasingly depend upon government
subsidy. Less than 17,000 MW were added vis--vis a planned addition 40,000
MW in the period 1971-1992. Further, such generous incentives given by the
government to the foreign investors wherein almost all the risks were borne by
the state board drew lot of criticism. SEBs were earning 12.2% internal rate of
return on their own plants and therefore paying 16% return to IPPs which did not
make sense. Under the 1910 and 1948 Acts, powers of regulation including tariff
regulations were vested on the Government. This concentration of power in the
Government and Government organizations resulted in inefficiencies of various
sorts, the most prominent manifestation was being lack of rational and
professional approach to tariff fixation. As part of reforms strategy, it was,
therefore, considered necessary to distance the sensitive aspect of tariff
regulation from the political executives on the independent Regulatory
Commissions. Thus, Government brought in The Electricity Regulatory
Commissions (ERC) act, 1998 which was the first step taken by the government
to move itself away from the regulatory aspect of the power sector and fixation
of tariff for the energy being used by the consumer. By this act the various losses
occurring at the SEBs level and the bottleneck caused due to bureaucracy
prevalent in the government organizations and political interference were tried to
minimize by formation of Central Electricity Regulatory Commissions (CERC) at
central level and State Electricity Regulatory Commissions (SERC) at every state.
The CERC and SERC had main responsibility of tariff determination for Central
Government and State Government owned generating stations respectively.
Bullish economic growth story of any country depends on a robust power
generation & delivery model. 1.2. POWER SECTOR REFORMS 1.2.1. THE
ELECTRICITY ACT 2003: A REVOLUTION Competition with regulatory oversight is
the framework around which the Electricity Act, 2003 is woven - competition to
encourage efficiency in performance and regulatory oversight, to safeguard
consumers interest and at the same time ensure recovery of costs for the
investors. The journey of distancing of Government from regulations that started
in 1998 has culminated in The Electricity Act of 2003. According to the new law
The
3 | Page Project Appraisal & Financial Modeling Government is distanced
from all forms of regulation, viz., licensing, control over generation, captive
generation, tariff fixation etc. Now the Government remains there only as a
facilitator. The Act talks about the need and ways of implementing Competition
in the power sector while considering the concerns associated with it, about the
electrification of rural areas and about liberalization of power sector. While
Liberalization is the mantra, the Electricity Act does not encourage an unbridled
growth for the sector. The regulatory Commission have been envisaged as the
watchdogs which have a responsibility to put a check on the cost of generation
through powers to regulate tariffs for supply of electricity from a generating
company to the distribution licensees on long term power purchase agreements,
as also with power to look into the costs of generation. The act also provides the
bases for formation of National Electricity Policy (NEP), National Tariff Policy

(NTP), Rural Electrification, Open access in transmission, phased open access in

distribution, Mandatory SERCs, licence free generation and distribution, power
trading, mandatory metering and stringent penalties for theft. SERCs provide
Regulatory guidelines on quality of service standards that are to be achieved and
maintained by the utility and ensure their compliance by providing for Complaint
Redressal Mechanism & Appointment of Ombudsman. SERCs mentions about the
consequences that are to be followed by the utility for non-compliance of the
guidelines. 1.2.2. NATIONAL ELECTRICITY POLICY In pursuance of the provisions
of the Electricity Act, 2003 the Central Government came out with National
Electricity Policy on 6th February 2005. The policy prescribes the following
objectives: Providing universal access in next five years for which significant
capacity addition and expansion would be required. Meeting the demand fully
by 2012 and to have spinning reserves after meeting peak requirements.
Bringing about improvements in quality of supply at reasonable rates.
Increasing per capita availability to over 1000 kWh per year by 2012. Ensuring
a minimum lifeline consumption of 365 kWh per year per household as a merit
good by 2012. Financial turnaround and attainment of commercial viability of all
entities in the sector. Protection of consumers interest. 1.2.3. NATIONAL
TARIFF POLICY In pursuance with section 3 of the Electricity Act 2003, the Central
Government notified the Tariff Policy on 6th January 2006. According to the Act,
the CERC and SERCs are to be guided by the Tariff Policy in framing its
regulations. It lays out the following objectives: Ensuring availability of
electricity to consumers at reasonable and competitive rates; Project Appraisa
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Subsid which electrif @ 150 is unde scheme connec 1.2.5. I Sour al & Financia
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aimed stribution B on Infrastru ge or hamle h generation penditure to for implem
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5 | Page Project Appraisal & Financial
Modeling 1.3 INTRODUCTION TO INDIAN POWER SECTOR Electricity is one of the
most vital infrastructure inputs for economic development of a country. The
demand of electricity in India is enormous and is growing steadily. The vast
Indian electricity market, today offers one of the highest growth opportunities for
private developers. Since independence, the Indian electricity sector has grown
many folds in size and capacity. The generating capacity has increased from a
meagre 1,362 MW in 1947 to more than 225,113 MW by May 2013, a gain of
almost 200 times in capacity addition. India's per capita energy consumption is
778kWh in 2011 -- a rise of almost 400 percent since 1980. Although, India's
energy consumption per unit of output is still rising, but it is expected to level off
and to decline in the future. India consumes two-thirds more energy per dollar of
gross domestic product (GDP) as the world average. India consumes only about
18 percent of the energy per person as the world average. Over 65 per cent of
India's electricity is produced in thermal facilities using coal or petroleum
products. Almost 19 per cent electricity is generated by hydroelectric facilities. In
its quest for increasing availability of electricity, the country has adopted a blend
of thermal, hydro and nuclear sources. Out of these, coal based thermal power
plants and in some regions, hydro power plants have been the mainstay of
electricity generation. Of late, emphasis is also being laid on non-conventional
energy sources i.e. solar, wind and tidal which constitutes about 12 percent of
the total energy generation. Figure 2: Energy Production in Billion kWh (2010)
Source: wikipedia.org India is one of the main manufacturers and users of
energy. Globally, India is presently positioned as the fifth largest manufacturer of
energy, representing roughly 2.4% of the overall energy output per annum. It is
also the worlds fifth largest energy user, comprising about 3.3% of the overall
global energy expenditure per year. In spite of its 4,326 4,207 1,145 1,037 922
630 621 573 497 485 381 0 500 1,000 1,500 2,000 2,500 3,000 3,500 4,000
4,500 5,000
6 | Page Project Appraisal & Financial Modeling extensive yearly
energy output, Indian Power Sector is a regular importer of energy, because of
the huge disparity between oil production and utilization. Usually energy,
especially electricity, has a major contribution in speeding up the economic
development of the country. The existing production of per capita electricity in
India is above 778 kWh per annum. Ever since 1990s, Indias gross domestic
product (GDP) has been increasing very rapidly and it is estimated that it will
maintain the pace in couple of decades. The rise in GDP should be followed by an
increase in the expenditure of key energy other than electricity. The gross
electricity production capability of Indian Power Sector is placed at around
2,25,133 MW as on May 2013. Though, this is still not enough. All the Regions in
the Country namely Northern, Western, Southern, Eastern and NorthEastern
regions continued to experience energy as well as peak power shortage of
varying magnitude on an overall basis, although there were short-term surpluses
depending on the season or time of day. The energy shortage varied from 19.1%

in the Southern Region to 1.2% in the Western Region. As per CEAs forecast for
2013-2014 among the regions, only the Eastern region would have a surplus of
10.2%. Region-wise picture in regard to actual power supply position in the
country during the year 2013 -14 is given below: Table 1: All India Region wise
generation capacity Sl No. Region Coal Gas DSL Total Nuclear Hydro R.E.S Total 1
Northern 33073.50 5031.26 12.99 38117.75 1620.00 15467.75 5589.25
60794.75 2 Western 49584.51 8988.31 17.48 58590.30 1840.00 7447.50
8986.93 76864.73 3 Southern 25182.50 4962.78 939.32 31084.60 1320.00
11353.03 12251.85 56009.48 4 Eastern 23727.88 190.00 17.20 23935.08 0.00
4113.12 454.91 28503.11 5 N. Eastern 60.00 1187.50 142.74 1390.24 0.00
1242.00 252.68 2884.92 6 Islands 0.00 0.00 70.02 70.02 0.00 0.00 6.10 76.12 7
All India 131628.39 20359.85 1199.75 153187.99 4780.00 39623.40 27541.71
225133.10 Source: Power ministry as on 31-5-2013 In the past, the power sector
growth has not kept pace with the economic expansion and this has resulted in
India experiencing a 13 per cent shortage in peak capacity and 8 per cent in
energy terms, on an overall basis. Driven by the requirement to enhance the
budgetary allocations to social sectors to meet the emerging requirements of
sustainable growth, the Government has envisaged a manifold increase in the
role of the private sector in the financing and operations of the power sector.
Significant structural and regulatory reforms have paved the way for increased
private sector participation in all aspects of the sector. Many of the legal and
regulatory requirements to enable this are in place, while the operational
provisions are in different stages of implementation in different states. As per
CEAs forecast for 2013-14 18,432 MW of capacity is expected to be added,
comprising 15,234 MW of thermal power, 1,198 MW of hydropower and 2000 MW
of nuclear power. Capacity addition during 2012-13 stood at 20,502 MW.
7|
Page Project Appraisal & Financial Modeling 1.4 POWER SECTOR: KEY
DEVELOPMENTS AND CURRENT STATUS Indian government forecasted the
economic growth to be 6.1% - 6.7% for the year 2013- 2014 and to sustain this
growth it is imperative for the power sector to grow with the same pace.
Therefore, it becomes essential to assess the power sector by analysing its
current status, the key challenges faced by it, and its future growth drivers.
Power is considered to be a core industry as it facilitates development across
various sectors of the Indian economy, such as manufacturing, agriculture,
commercial enterprises and railways. Though India currently has the fifth largest
electricity generation capacity in the world pegged at 2,25,133 MW, the growth
of the economy is expected to boost electricity demand in coming years. Figure
3: All India Generation Capacity Source: powermin.gov.in India saw a total
capacity addition of approximately 54,000 MW during the 11th Five Year plan, of
which approximately 47 per cent was contributed by the central government, 34
per cent from the state government, and a little over 19 per cent from the
private sector. As per the Planning Commission report capacity addition of
88000MW is estimated in 12th five year plan. Some examples of top public
sector companies include National Thermal Power Corporation (NTPC), Damodar
Valley Corporation (DVC) and National Hydroelectric Power Corporation (NHPC).
Some key companies in the private sector include Tata Power and Reliance
Energy Limited. In India, power is primarily generated from thermal and nuclear

fuels, hydro energy and renewable sources. Indias power generation capacity
has significantly increased since 2008, and is also expected to show a strong
growth in the future. However, India faced a power deficit of approximately 8.5
per cent and a peak demand deficit of over 10 per cent in FY11 primarily due to
fuel shortage. This shortage can be attributed to aggregate technical and
commercial (AT&C) losses, which is about 30 per cent with a high variance across
various utilities. Therefore, it is essential for the government to work proactively
to increase the sectors generation capacity in a sustainable manner by
addressing key 153188 4780 39623 27542 225133.1 34444.12 0 50000 100000
150000 200000 250000 Thermal Nuclear Hydro RES Total Captive
8 | Page
Project Appraisal & Financial Modeling challenges, such as supply shortage and
distribution losses without damaging the environment, to attain a high growth
rate during the 12th Five Year Plan. To cope with the demand deficit, the Indian
government has implemented various progressive measures to maximise the
countrys power generation capacity and improve distribution. Some examples of
such measures include rural electrification programmes and ultra mega power
projects. In particular, the inflow of foreign direct investments is expected to step
up capacity addition significantly. The government has allowed FDI of up to 100
per cent through the automatic route in all segments of the power sector except
for nuclear energy. Consequently, the sector has drawn about US$ 4.6 billion
investment over the past decade, of which US$ 1.6 billion came in FY12 alone.
Hence, we can comfortably say that the Indian power sector has strong future
growth prospects. Consequently, we need to assess the various policy initiatives
that have had a positive impact on the sector, and capitalise upon them further
to ensure a strong future growth. 1.5 MAJOR ISSUES The most important sector in
infrastructure is the power sector. There is about 90 GW of capacity under
various stages of construction and attending to the outstanding issues facing
these projects must be given a high priority. However, given the time lag
involved in implementing power projects, it is necessary to ensure that projects
which will be commissioned only in the Thirteenth Plan can also move ahead
satisfactorily. Almost half the capacity in the Twelfth Plan is projected to come
from the private sector and the position is likely to be the same in the Thirteenth
Plan. Private sector investors in power generation have faced many problems in
recent times. They include (i) Inadequate supply of domestic coal and
unanticipated increase in prices of imported coal. (ii) Difficulties with clearances
for captive mines, as well as for generating stations. (iii) Land availability (iv)
Poor financial health of some state electricity distribution companies which are
the main customers and which suffer from insufficient tariff adjustment plus
inefficiencies in collection. (v) Inadequate availability of domestic natural gas.
(vi) Inadequate fuel supply agreements for coal. (vii) More recently, difficulties in
obtaining finance from both external and domestic sources. 1.6 INITIATIVES PPP
IN POWER To attract private sector participation, government has permitted the
private sector to set up coal, gas or liquid-based thermal, hydel, wind or solar
projects with foreign equity participation up to 100 per cent under the automatic
route. The government has also launched Ultra Mega Power Projects (UMPPs)
with an initial capacity of 4,000 MW to attract 160200 billion of private
investment. Out of the total nine UMPPs, four UMPPs at Mundra (Gujarat), Sasan

(Madhya Pradesh), Krishnapatnam (Andhra Pradesh) and Tilaiya Dam (Jharkhand)

have already been awarded. The remaining five UMPPs,
9 | Page Project
Appraisal & Financial Modeling namely in Sundergarh District (Orissa), Cheyyur
(Tamil Nadu), Girye (Maharashtra), Tadri (Karnataka) and Akaltara (Chattisgarh)
are yet to be awarded. To create Transmission Super Highways, the government
has allowed private sector participation in the transmission sector. A PPP project
at Jhajjar in Haryana for transmission of electricity was awarded under the PPP
mode. Further, to enable private participation in distribution of electricity,
especially by way of PPP, a model framework is being developed by the Planning
Commission. ADVANCED TECHNOLOGIES It has already been announced that 50
per cent of the Twelfth Plan target and the coalbased capacity addition in the
Thirteenth Plan would be through super-critical units, which reduce the use of
coal per unit of electricity produced. Supercritical (SC) power plants, which
operate at steam conditions 560o C/250 bars, can achieve a heat rate of 2,235
kCal/kWh as against a heat rate of 2,450 kCal/kWh for sub-critical power plants.
The specific CO2 emission for super-critical plants is 0.83 kg/ kWh as against
0.93 kg/kWh for sub-critical plants. Super-critical technology is now mature and
is only marginally more expensive than sub-critical power plants. Determined
efforts are needed to achieve these results, and prioritisation of coal linkages will
be necessary to incentivise adoption of super-critical technology. ULTRA SUPER
CRITICAL An Ultra Super Critical (USC) coal-based power plant has an efficiency
of 46 per cent compared with 34 per cent for a sub critical plant and 40 per cent
for a Super Critical (SC) plant. Thus, with an USC or SC plant, the savings in coal
consumption and reduction in CO2 emission can be substantial. A 10,000 MW
power plant will generate 60 billion units of electricity per year at around 70 per
cent load factor. It has a specific heat of 1,870 kcal/kwh compared to 2,530
kcal/kwh for a sub-critical plant. Thus, every unit generated with USC will save
0.165 kg [(2,530-1,870)/4,000] coal of 4,000 kcal/kg; and 60 billion units will
save 9.9 million tonnes of coal per year. 1.7 OPPORTUNITIES 1. Long-term health
of power sector seriously undermined (losses Rs 70,000 crore per year).
However, aggregate technical and commercial (AT&C) losses are slowly coming
down. State Governments must push distribution reform. 2. Hydropower
development seriously hindered by forest and environment clearance
procedures. Need to look at special dispensation for these States, especially
Arunachal Pradesh. 3. A time-bound plan to operationalize development and
evacuation of hydropower from NER required. Road connectivity is an issue for
expeditious project completion. 4. Given limited connectivity of NER with other
parts of the country (through Siliguri corridor), access through Bangladesh needs
to be explored. 5. Electricity tariffs not being revised to reflect rising costs.
Regulators are being held back from allowing justified tariff increases.
10 |
Page Project Appraisal & Financial Modeling CHAPTER 2: COMPANY PROFILE 2.1
BACKGROUND PFC was established in July 1986 as a Development Public
Financial Institution (PFI) under Section 4A of the Companies Act, 1956. It is
dedicated to the Power Sector. It is a wholly owned by Government of India. A
Nav-Ratna public Sector Undertaking. It has highest safety ratings from domestic
and international credit rating agencies and also ISO 9001-2000 Certification for
the Project Appraisal System. PFC provides financial assistance to all types of

power projects like Generation, R&M, Transmission, Distribution, system

improvement, etc. PFC encourages optimal growth and balance development of
all segments of power sector through assigning priorities for financing different
categories of projects. The state sector utilities are the main beneficiary of PFCs
financial assistance. PFC has also been funding private sector projects for last 56 years. 2.2 MISSION PFC's mission is to excel as a pivotal developmental
financial institution in the power sector committed to the integrated
development of the power and associated sectors by channelling the resources
and providing financial, technological and managerial services for ensuring the
development of economic, reliable and efficient systems and institutions. *
Consistently rated Excellent for its overall performance against the targets set
in Memorandum of Understanding (MoU) by the Government of India (GoI) since
1993-94. * Nav-Ratna Public Sector Undertaking. * Ranked among the top 10
PSUs for the last four years. 2.3 CREDIT RATINGS Placed at Sovereign Rating by
International Rating Agencies - Moodys and Standard & Poors for long term
foreign currency debt. Placed at the highest safety ratings by accredited rating
agencies in India - CRISIL and ICRA Domestic borrowings include term loans and
bonds; External borrowings take the form of Syndicated Loans, Fixed & Floating
Notes. Consistently rated Excellent by the Government of India (GOI) for overall
performance against the targets set in Memorandum of Understanding (MoU)
between GOI and PFC. Project Appraisa DOM CRISIL ICRA Interna Moody Finch
Standa Source 2.4 O PFC in al & Financia MESTIC RA L ational Ratin ys ard &
Poors e: PFC webs BJECTIV n its present To rise the rates and t the power To act
as improvem To assist s sector duri al Modeling Table 2: D ATING AG ng Agency s
site VE OF PF t role has the e resources terms and co projects in catalyst to ent in
the fu state power ing transitio Different Ra GENCY FC e following from intern
onditions an India. o bring inst unctioning o sector in ca onal period o ating by
maj Long A LA B BB BB g main objec national and nd on-ward titutional, m of the
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agencies ORROWING Sho At p sovere sources at t funds on op operationa ties d
to support 11 | P a G ort Term P1+ A1+ par with eign Rating the compet ptimum
bas al and finan the state po a g e g titive sis to ncial ower Project Appraisa 2.5
CL 2.6 RA Fu al & Financia LIENTS State Elect State
Powe State Elect Other Sta Departmen the power Central Po Joint Sec operative S
Municipal Private Sec ANGE O nd Based Rupee Ter Foreign Cu Buyers Li Working
C Loan to Eq Debt Restr Take out F Bridge Lo Lease Fina Bill Discou al Modeling
OF PFC tricity Boar er Utilities tricity/Powe ate Departm nt) engaged project ower
Utilitie ctor Power Societies Bodies ctor Power F SERVI rm Loan urrency Ter ine of
Credi Capital Loan quipment m ructuring/ R Financing an ancing unting ds er
Departme ments (like d in the deve es r Utilities Utilities ICES rm Loan it n
manufacturer Refinancing ents e irrigation elopment o and Co rs n f - 12 | P a g e
Project Appraisa No 2.7 RE PFC ha power initiativ al & Financia on-Fund
Ba Guarantee Exchange EFORMS as been acti sector in ves have be PFC is pr
lending cri PFC has d Utilities fo Reform G Utilities to al Modeling ased s Risk
Manag S & REST ively persua order to m een taken:- roviding fin iteria/expos
decided to p or structural Group consti o formulate F gement TRUCTU ading

State make them nancial assi sure limit no rovide tech l reforms of ituted in PF
suitable res Figure 4: Bu Sourc URING IN Govt. to ini commercia istance to orms.
hnical/financ f the State P FC to advic structuring p usiness Stra ce: PFC We
NITIATIV itiate reform ally viable. reform-min cial assistan Power Secto ce and
assis programmes ategy of PF Website VES m and restru In this re nded States
nce to State or. sts the State s. C 13 | P a ucturing of t egard follow s under rela
Govts. / Po te Govt. /Po a g e their wing axed ower ower
14 | Page Project
Appraisal & Financial Modeling Table 3: Sanctions & Disbursements for the
respective financial years Particulars Financial Year 2007-08 2008-09 2009-10
2010-11 2011-12 Sanctions 69498 57030 65466 75197 69024 Disbursement
16211 21054 25808 34121 41418 Source: PFC website Table 4: Major Projects
Funded by PFC Name of the Project Capacity (MW) Cost (Crs) Amount funded
Malwa TPS 2x500 4054 2730 Khaperkheda TPS Extn. 1x500 2191 1753 Kameng
HEP 4x150 2485 1740 Koradi TPS 3x660 10019 6250 Mejia Extn. Unit 2x250
2800 1456 Sagardighi TPS PH1 2x300 2754 1925 Chandrapura Extn. Unit 7&8
2x250 2053 1435 Panipat TPS Stage V 2x250 1785 1428 Source: PFC website
Table 5: Financial Highlights for the year 2011-12 Profit after Tax Rs 3032 Crore
Loans and Grants Sanctioned Rs 69024 Crore Loans and Grants Disbursed Rs
41418 Crore Net Worth Rs 19493 Crore Reserves and Surplus Rs 19388 Crore No.
of Employees 379 Source: PFC website
15 | Page Project Appraisal & Financial
Modeling 2.8 SWOT Analysis Strengths Govt. of Indias undertaking. Good
quality management Well established, long standing relations in the power
industry Implementing agency for Mops schemes including AG &SP and APDRP
Highest credit rating (due to government ownership) Weaknesses Poor asset
quality with most of the lending to SEBs, whose loan repayment capabilities in
the long run is doubtful. Concentration risk attributed to lending in single
sector. Opportunities Power sector presents significant investment
opportunities. Providing investment gateways & consultancy for domestic and
external financial agencies. Having new business opportunities to cover the
entire range of activities in the Power sector. Threats PFC has significant
exposures entities which are loss making, financially weak an dare defaulting to
most of their creditors. Delinquencies by these entities to PFC could impair the
currently sound Balance Sheet of PFC. With increasing exposure to SEBs, their
weak balance sheet may affect PFCs creditworthiness.
16 | Page Project
Appraisal & Financial Modeling CHAPTER 3: OBJECTIVE AND SCOPE 3.1 OBJECTIVE
OF THE PROJECT The objective of the Project Report is: 1. Finding out the factors
affecting a projects capital and operational expenditure which in turn have an
impact on the cash outlay and revenue flow of the project and their study. Thus,
performing Project Appraisal of a 660 MW Coal Based Supercritical Thermal
Power Project. 2. A financial model of a 660 MW Coal Based Super-critical
Thermal Power Project so as to study the effect of above factors on tariff and
revenue flows. 3. To find out probable values of IRR, DSCR among other ratios
using the financial model to study the feasibility and attractiveness of a 660 MW
Coal Based Supercritical Thermal Project. 3.2 SCOPE Scope of project covers
installation, commissioning, operation and maintenance of 660 MW coal fired
Thermal Power Plant and associated systems. Indian power sector wants to ramp

up the installed capacity to meet the growing demand. Large Power Projects
enjoy economics of scale and help in lowering the tariff of supply. This project
helps to find out the factors that will affect the project cost and thus have an
impact on total investment and operational expenses of the project. The
assessment and analysis of these factors will help in determining the project
cost, the associated risks and ultimately the tariff for supply from the project and
thus the revenue and cash flows. Such information is vital in making financial
decisions and project appraisal. The study may also help in understanding of
ways to mitigate the risks.
17 | Page Project Appraisal & Financial Modeling
CHAPTER 4: LITERATURE REVIEW AND RESEARCH METHODOLOGY 4.1.
LITERATURE REVIEW The literature survey was carried out by reviewing various
journals on project appraisal and financial model of a power plant. Few journals
reviewed are: P.L.Kingston [1973] in IBM System Journals suggested, The use of
computers in financial planning has become an area of increasing interest to
financial management and data processing users. Computing systems facilitate
the use of financial models in that they allow for the storage and retrieval of a
representation of a financial plan and also for the evaluation of the
consequences of what if conditions. Thus a financial model is a tool that can
assist in the entire business planning process whether it be forecasting, cash
management, or projection of profits. This paper presents introductory concepts
that provide a basis for systems design and implementation of financial models.
Described are the terminology, the basic components of financial models, and
two general approaches to the construction of these models. W Wetekamp
[2011] suggests how Net Present Value (NPV) can be used as a proper tool to
ensure effective project management. The author proves that investment
project's appraisal methods, such as e.g. NPV, can and should be used as an
ongoing monitor of project health. What is more, even in case of project
turbulences Net Present Value can be used as a key instrument for finding the
most appropriate solutions. Robert Lundmark et al [2012] analyzed how market
and policy uncertainties affect the general profitability of new investments in the
power sector, and investigate the associated investment timing and technology
choices. They developed an economic model for new investments in three
competing energy technologies in the Swedish electric power sector. The model
takes into account the policy impacts of the EU ETS and the Swedish green
certificate scheme. By simulating and modeling policy effects through stochastic
prices the results suggest that bio-fuelled power is the most profitable
technology choice in the presence of existing policy instruments and under our
assumptions. The likelihood of choosing gas power increases over time at the
expense of wind power due to the relative capital requirement per unit of output
for these technologies. Overall the results indicate that the economic incentives
to postpone investments into the future are significant. Reports of similar
projects for thermal power plants were also reviewed. The reports of previous
batches on similar topic and the referenced data were helpful in determining
data for this project. The literature available within the company helped a lot in
understanding Project Finance and factors of project cost which are summarized
as:
18 | Page Project Appraisal & Financial Modeling 4.2 PROJECT FINANCE
Project financing is an innovative and timely financing technique that has been

used on many high profile corporate projects, including infrastructural and

power. Employing a carefully engineered financing mix, it has long been used to
fund large scale natural resource projects, from pipelines and refineries to
electric-generating facilities and hydroelectric projects. Increasingly, project
financing is emerging as the preferred alternative to conventional methods of
financing infrastructure and other large-scale projects worldwide. Project
financing discipline includes understanding the rationale for project financing,
how to prepare the financial plan, assess the risks, design the financing mix, and
raise the funds. In addition, one must understand the cogent analyses of why
some project financing plans have succeeded while others have failed. A
knowledge base is required regarding the design of contractual arrangements to
support project financing; issues for the host government legislative provisions,
public/private infrastructure partnerships, public/private financing structures;
credit requirements of lenders, and how to determine the project's borrowing
capacity; how to analyze cash flow projections and use them to measure
expected rates of return; tax and accounting considerations; and analytical
techniques to validate the project's feasibility. Project finance is different from
traditional forms of finance because the credit risk associated with the borrower
is not as important as in an ordinary loan transaction rather the identification,
analysis, allocation and management of every risk associated with the project is
given more importance. Project finance is the financing of long term
infrastructure and industrial projects based upon a complex financial structure
where project debt and equity are used to finance the project. Usually, a project
financing scheme involves a number of equity investors, known as sponsors. As
well as a syndicate of banks which provide loans to the operations. The loans are
most commonly non-recourse loans, which are secured by the project itself and
paid entirely from its cash flow, rather than from the general assets or
creditworthiness of the project sponsors. The financing is typically secured by all
of the project assets, including the revenue-producing contracts. Project lenders
are given a lien on all of these assets, and are able to assume control of a project
if the project company has difficulties complying with the loan terms. Generally,
a special purpose entity is created for each project, thereby shielding other
assets owned by a project sponsor from the detrimental effects of a project
failure. As a special purpose entity, the project company has no assets other
than the project. Capital contribution commitments by the owners of the project
company are sometimes necessary to ensure that the project is financially
sound. Project finance is often more complicated than alternative financing
methods. It is most commonly used in the mining, transportation,
telecommunication and public utility industries.
19 | Page Project Appraisal &
Financial Modeling Figure 5: Project Finance Structure Source: PFC Library Risk
identification and allocation is a key component of project finance. A project may
be subject to a number of technical, environmental, economic and political risks,
particularly in developing countries and emerging markets. Financial institutions
and project sponsors may conclude that the risks inherent in project
development and operation are unacceptable (unfinanced able). To cope with
these risks, project sponsors in these industries (such as power plants or railway
lines) are generally completed by a number of specialist companies operating in

a contractual network with each other that allocates risk in a way that allows
financing to take place. The various patterns of implementation are sometimes
referred to as "project delivery methods." The financing of these projects must
also be distributed among multiple parties, so as to distribute the risk associated
with the project while simultaneously ensuring profits for each party involved.
4.3 PROJECT APPRAISAL It is an assessment of a project in terms of its economic,
social and financial viability. A lending financial institution makes an independent
and objective assessment of various aspects of an investment proposition. It is
defined as taking a second look critically and carefully at a project by a person
who is in no way involved or connected with its preparation. He is able to take
independent, dispassionate and objective view of the project in totality, along
with its various components. There are some steps for Project appraisal.
Management Appraisal: Management appraisal is related to the technical and
managerial competence, integrity, knowledge of the project, managerial
competence of the promoters etc. The promoters should have the knowledge
and ability to plan, implement and operate the entire project effectively. The past
record of the promoters is to be appraised to clarify their ability in handling the
projects. Construction Contracts O&M Support Licenses Certification Zoning Local
Permits Tariff for such electricity Obligation to buy electricity Electricity Deliveries
Electricity Payments Debt Debt Service Dividend Sponser(s) Lenders Project
Company Equipment Provider Connections Civil Works Regulatory Authorities
Power Purchaser Equity
20 | Page Project Appraisal & Financial Modeling
Technical Feasibility: Technical feasibility analysis is the systematic gathering
and analysis of the data pertaining to the technical inputs required and
formation of conclusion there from. The availability of the raw materials, power,
sanitary and sewerage services, transportation facility, skilled man power,
engineering facilities, maintenance, local people etc are coming under technical
analysis. This feasibility analysis is very important since its significance lies in
planning the exercises, documentation process, and risk minimization process
and to get approval. Financial feasibility: One of the very important factors that
a project team should meticulously prepare is the financial viability of the entire
project. This involves the preparation of cost estimates, means of financing,
financial institutions, financial projections, break-even point, ratio analysis etc.
The cost of project includes the land and sight development, building, plant and
machinery, technical know-how fees, preoperative expenses, contingency
expenses etc. The means of finance includes the share capital, term loan, special
capital assistance, investment subsidy, margin money loan etc. The financial
projections include the profitability estimates, cash flow and projected balance
sheet. The ratio analysis will be made on debt equity ratio and current ratio.
Commercial Appraisal: In the commercial appraisal many factors are coming.
The scope of the project in market or the beneficiaries, customer friendly
process and preferences, future demand of the supply, effectiveness of the
selling arrangement, latest information availability an all areas, government
control measures, etc. The appraisal involves the assessment of the current
market scenario, which enables the project to get adequate demand. Estimation,
distribution and advertisement scenario also to be here considered into.
Economic Appraisal: How far the project contributes to the development of the

sector; industrial development, social development, maximizing the growth of

employment, etc. are kept in view while evaluating the economic feasibility of
the project. Environmental Analysis: Environmental appraisal concerns with the
impact of environment on the project. The factors include the water, air, land,
sound, geographical location etc. 4.4 CALCULATION OF TARIFF BASED ON CERC
REGULATIONS The tariff for supply of electricity from a thermal generating
station shall comprise two parts, namely, capacity charge (for recovery of annual
fixed cost consisting of the components) and energy charge (for recovery of
primary fuel cost and limestone cost where applicable). Annual Fixed Cost: The
annual fixed cost (AFC) of a generating station or a transmission system shall
consist of the following components Return on equity: 15.5% tax free return on
total equity. Only 30% of the project cost can be treated as equity.
21 | Page
Project Appraisal & Financial Modeling Interest on loan capital: Year to year loan
interest is calculated on full debt amount by weightage average rate of interest.
Depreciation: Depreciation up to 90% of the capital cost of asset is allowed.
Depreciation shall be calculated annually based on Straight Line Method and rate
defined in CERC guidelines. Interest on working capital: Working capital shall
include Cost of coal or lignite and limestone, if applicable, for 1 months for pithead generating stations and two months for non-pit-head generating stations.
Cost of secondary fuel oil for two months. Operation and maintenance
expenses for one month. Maintenance spares @ 20% of operation and
maintenance expenses. Receivables equivalent to two months of capacity
charges and energy charges for sale of electricity. Energy Cost: It is also
calculated on norms of CERC, the yearly consumption of primary fuel and
secondary fuel is taken for the calculation. DPR (Detailed Project Report) of
various projects of similar kinds helped in understanding the project technically.
Reports and notifications available on various websites listed in bibliography also
helped in adding value to the project. The data mainly obtained by interviews
with experts and experience of plant operations and form the basis of
assumptions taken for modelling. The data thus analysed was processed in
model for finding out the required ratios and check the project feasibility. 4.5
RESEARCH METHODOLOGY Methodology used for the project: Project Appraisal:
To evaluate the project rating and conducting the feasibility report of a project
based on the DPR/information memorandum/application form and other related
materials submitted by the borrower. Assesses the capital needs of the business
project and how these needs will be met. Calculating the cost of generation and
relevance Calculation of DSCR, IRR and sensitivity analysis. Entity Appraisal: To
assess the financial health of organizations that approach PFC for credit for
power projects. This would entail undertaking of the following procedures:
Analysis of past and present financial statements Examination of Profitability
statements
22 | Page Project Appraisal & Financial Modeling CHAPTER 5:
OVERVIEW OF PROJECT APPRAISAL & FINANCIAL MODELLING 5.1. GUIDING
PRINCIPAL FOR PROJECT APPRAISAL AT PFC Offering credit is an operation
fraught with risk. Before offering credit to an organization, its financial health
must be analysed. Credit should be disbursed only after ascertaining satisfactory

financial performance. Based on the financial health of an organization, PFC

assigns integrated ratings. These credit ratings are used to fix the interest rate,
exposure limit and security criteria. 5.1.1. ENTITY ELIGIBILITY CRITERIA: While
considering the eligibility of an entity, last two year Auditors report and notes to
annual accounts along with Income tax assessment order for last three years be
also examined. Type of securities and mode of repayments is also to be
suggested by the help of entity rating. 5.1.2. STATUTORY CLEARANCES: All
statutory clearances requires at Central/State level for the implementation of the
project are to be ensured. Depending on the cost of project, techno economic
clearances of CEA/SEB may be asked. Clearances/Agreements required for
implementation of project: 1. Land Acquisition 2. Water Availability 3. Stack
Height: Airport Authority of India 4. Forest Clearance: Such that no sanctuary,
reserve, national park within the project 5. No defence establishment 6. Ministry
of environment and Forest 7. Fuel Supply Arrangement/Agreement through
various coal linkages 8. Fuel Transportation Arrangement 9. PPA for selling
Electricity 10. Transmission agreement with Transmission agency 11. Pollution
Control Board Table 6: Approvals and Agreement Status Major Clearances/
Agreements S No Requirement Agency Status 1 Consent to establish / NoC
Tuticorin Airport Certified 2 Environment Clearance MoEF The Company has
applied for the clearance. 3 Forest clearance MoEF The Company has applied for
the clearance 4 Water Drawl SG Agreement made
23 | Page Project Appraisal
& Financial Modeling 5 Stack height Clearance Airport Authority of India (AAI)
Approved 6 Pollution control board NOC for power plant Tamil Nadu Pollution
control board (TNPCB) All the required standards of Pollution control board are
met 7 Land Availability State Government 600 acres has been acquired 8 Primary
Fuel Coal India Limited Long term agreement made on 15 April 2010 9
Transportation of Fuel Aspinwall Co Ltd Fuel Transport Agreement made 10
Transmission Line PGCIL Open Access and Transmission Agreement made 11
EPC / package contract Consolidated Construction Consortium Ltd. Agreement
made on 18 June 2010 5.1.3. COST ESTIMATE: The base date for estimation of
cost shall not be more than six month old at the time of talking up the project for
appraisal. Physical contingencies and the price contingencies shall be made
depending on the project completion period of 1,2,3,4 and 5 years as per PFC
guidelines. Also IDC, to be considered to arrive at project cost. 5.1.4. PROJECT
COST-BENEFIT ANALYSIS: Calculate Financial Internal rate of return (FIRR).
Techno-economically sound with Financial IRR not less than the minimum
required rate. Sensitivity analysis is also done. 5.1.5. PROJECT ANALYSIS: The
project is evaluated on various parameters and then ranked according to the PFC
guidelines. The method is explained later on. 5.2. PROJECT & ENTITY APPRAISAL
The Project Analysis is intended for arriving at a relative measure of merit for the
project. This model involves: 1. Entity rating 2. Project rating 5.2.1. ENTITY
APPRAISAL METHODOLOGY Analysis and critical comments on the strength and
weakness of organization, management, its working result, financial position etc.
are made on the basis of organization set up, capital/financial structure,
operating/working results, credit worthiness, financial result, entity related risks
and mitigation measures proposed. Power Sector entities are evaluated with
reference to a set of qualitative and quantitative factors to arrive at the

Aggregate Entity Score. In addition to the performance parameters, milestones

giving weightage to core reform activities have also been included in the overall
grading mechanism. Both the public and private entities are evaluated
separately on set of measures.
24 | Page Project Appraisal & Financial
Modeling It is a two-stage process i.e. preliminary evaluation and detailed
evaluation in which all the promoters are evaluated for their ability to contribute
equity, carry the project to completion and operate the project as per the
contracts. PRELIMINARY APPRAISAL In this, the scrutiny is based on the analysis
of quantitative parameters, so as to access the financial strength of the
promoters, track record of the project implementation and the credit worthiness.
The scoring of all the factors is on a six- point scale, with 6 being the best and 1
being the worst. It involves analysis under two categories for Preliminary
Evaluation: Business analysis Financial flexibility I. BUSINESS ANALYSIS
Business analysis evaluates the performance of the present business of the
promoters. The analysis involves evaluation of the market position and financial
position of the company along with a view on management expertise and
integrity of the promoters. The parameters and factors used in business analysis
have been enumerated below: a) Market Position Here relative market share of
the company is determined. It is calculated as the ratio of the turnover of the
promoting company divided by the turnover of the market leader in the business.
In case of diversified companies the same process is repeated for each division.
b) Financial Risk It evaluates the past financial performance of the promoting
companies. Performance of at least the last three years is evaluated. Financial
risk parameter is represented by 5 ratios, which cover various aspects of
companys financial performance: Table 7: Preliminary appraisal Ratios Meaning
of Scoring Attribute Return on Capital Employed (ROCE) Quantitative Return on
Investment Operating Margin Quantitative Profitability of the Business Debt
Service Coverage Ratio (DSCR) Quantitative Coverage Ratio Total Debt to Net
Worth Quantitative Gearing Cash Flow From Operation to Total Debt Quantitative
Cash Flow Source: PFC Library Return on Capital Employed (ROCE) ROCE =
PBIT/ Opening capital employed
25 | Page Project Appraisal & Financial
Modeling Here, Capital Employed = (Capital + Reserves + Short term debt +
Long term debt evaluation reserves Capital work in progress)ROCE is scored as
a simple average of the last three years but if the latest ROCE is lower than one
for the preceding year then the latest ROCE should be used for calculation
instead of the average. Operating Margin OM = Operating Profit before
Depreciation, Interest and Taxes/ Income from operations Debt Service Coverage
Ratio (DSCR) DSCR = (PBIT Taxes)/ (Repayment due to Long term Loan +
Interest on long term and Short term loans) Total Debt/Total Net Worth Total
debt/ total net worth = (Long term loans + Short term loans + Working Capital
loans)/(Capital + Reserves Revaluation reserve Loss brought forward
Intangible Assets) Cash Flow from Operation / Total Debt Cash flow f
operations/ Total debt = Cash flow from Operations/ (Long term loans + Short
term loans + Working Capital Loans from Banks) II. FINANCIAL FLEXIBILITY It is
used to judge the ability of promoters to financially manage the project. Thus,
key points evaluated are: Ability to contribute equity to the project Ability to

bring the project to financial closure Ability to fund temporarily funding

mismatches Ratios Meaning Attribute being Evaluated Equity Funding Potential
Quantitative Equity Raising Potential Bridge Finance Ability Quantitative
Quarterly cash surplus from operations Track Record of Fund raised Quantitative
Funds raised in last 10 years Aggregate Project cost Handled Quantitative
Projects established in last 10 years Source: PFC Library Equity Funding
Potential: A Promoting company can contribute equity to the project by raising
debt on its books or raising equity or through cash surpluses in the books.
Bridge Financing Ability: This parameter basically judges the ability of company
to fund short term cash flow imbalances in the project. This attribute is useful to
prevent delay in project implementation due to small disbursals from the
institutions.
26 | Page Project Appraisal & Financial Modeling Track Record of
Fund Raised: This technique is basically used to judge the promoters ability to
achieve financial closure and tie up funds for the project. This factor is scored by
comparing the aggregate fund raised in the last ten years as a proportion of the
project cost with the benchmark, to arrive at a score. Aggregate Project Cost:
This factor evaluates the ability of the promoters to manage new project.
Scoring is done by comparing the aggregate cost of the project implemented by
the promoting group in the last years as a proportion of the cost of the present
projects with the benchmark, to arrive at a score. DETAILED APPRAISAL It
involves Qualitative Analysis of Promoter Company. The scoring of all the factors
is on a four-point scale. The factors are judgmental and the model provides broad
guidelines for the evaluation for the same. It involves analysis under two
categories parameters for Detailed Evaluation: Management risk Management
past experience I. MANAGEMENT RISK It evaluates two factors: Table 8: Detailed
Appraisal Ratios Meaning Attribute being Evaluated Managerial Competency
Quantitative Competency in running the business Business and Financial Policy
Quantitative Risk Propensity Source: PFC Library II. MANAGEMENT EXPERIENCE
Ratios Meaning Attribute being Evaluated Experience in Power Sector
Quantitative Power Sector Experience Experience in Setting the Project Size
Quantitative Project Management Capability Experience in India Quantitative
Experience in dealing with Developed Economies Project Preparedness
Quantitative Preparedness of the group to Execute the Project Source: PFC
Library
27 | Page Project Appraisal & Financial Modeling 5.2.2. PROJECT
RATING The project is rated against a set of qualitative and quantitative
parameters. The qualitative parameters being Cost/MW, first full year of
generation, levellised cost of generation and DSCR. The qualitative parameters
are type of implementation structure, security of fuel, power sale agreement and
satisfactory operation and maintenance. The weightage of parameter in
calculating the score of qualitative and quantitative parameters is assigned on
the company norms and policies. The upper and lower limits of qualitative and
quantitative parameters are fixed and then on basis of pro-rata basis, assigning
of rank is done. The parameters point and their allocation are also discussed on
the set of standards. Quantitative Parameters First full year cost of generation
w/o RoE. Levellised tariff/ cost of generation with RoE and tax Average DSCR
Qualitative Parameters Power off take Fuel supply o Long term agreement o

Short term agreement o Captive Coal mine o Transportation facility Construction

Contract o Warranty o Market standard o Performance Type of contract and
bidding Experience of the EPC contractor Commercial terms of Contract
O&M o Past Experience o Management Team and efforts The criteria of two
parameters are evaluated, assessed and quantified on the above factors, there is
a set of scoring range and on the basis of that model project is ranked.
28 |
Page Project Appraisal & Financial Modeling 5.3. FINANCIAL MODELING: A TOOL
FOR PROJECT APPRAISAL In every project finance deal, where everyones
financial security rests on the future performance of a new undertaking, a
thorough analysis of the projects finances under a arrange of assumptions is
prerequisite for arranging debt and equity funding, financial model play a crucial
role in decision-making. 5.3.1. STEPS TAKEN FOR DESIGNING A MODEL The
essential steps to be taken for designing a financial model for any infrastructure
project financing through private participation are as follow: Determining the
scope of the project and the related EPC cost. Determining other expenditure
such as Development expense, Preliminary & Preoperative expenses, financial
costs, etc. Determine the total Cost of the project with interest during
construction. Assessment of tariff in order to determine revenue potential for
the project. Determine O&M cost through the concession period. Calculating
the fixed and variable cost relating to the project. Financial analysis to
determine the most efficient means of financing. 5.3.2. PURPOSE AND USES OF
FINANCIAL MODEL The financial model provide a basic analysis, usually based on
relatively raw, preliminary data and simplified financing assumptions, to
establish weather a given project is worth pursuing further. The required output
may be: Basic Project IRR Debt service Coverage Ratios and other debt ratios.
Establishing a financial structure that is sustainable by the project. An
indication of tariff levels required for achieving appropriate returns. Preparation
of sensitivity analysis.
29 | Page Project Appraisal & Financial Modeling
CHAPTER 6: CASE STUDY 6.1 PROJECT PURPOSE AND SCOPE PURPOSE To bridge
the nations energy deficit, both average and peak load, by capacity addition of
660 MW by setting-up Coal fired Thermal Power Project based on super critical
technology at Tamil Nadu, India. SCOPE Scope of this project covers installation,
commissioning, operation and maintenance of 660 MW with Super critical &
Pulverised Coal fired boiler and associated systems. The Scope shall broadly
cover: 660 MW power plant and associated systems. Construction and
commissioning of the Balance of Plants (BoP) required for efficient reliable and
safe operation of the plant. Installation of BTG, their auxiliaries and
commissioning. Construction of water intake system for the project site.
Transportation Arrangement for Coal to the Project site. Power evacuation
system including transmission lines. Construction of facilitation infrastructure
such as administration building. 6.2 PROJECT DETAILS 6.2.1 LOCATION The
location of the proposed plant is in Tamil Nadu. The project site is located at a
distance of about 14 kms from the National High way and 15 kms from
Trichendur town. The site elevation is +12 m above mean sea level. The site
terrain is generally plain requiring minimum efforts to grade them suitable for
construction of the project. The site was selected considering the followings: SNo

Geographic Items Details 1 Location Tamil Nadu State 2 Nearest Railway Station
Thoothukkudi 3 Road Approach Madurai Tiruchendur- Manapad 4 Altitude +12 m
above MSL 5 Nearest Airport Thoothukkudi
30 | Page Project Appraisal &
Financial Modeling 6 Nearest Port Thoothukkudi 7 Rainfall (Annual) 600 mm 8
Climatic Conditions Tropical Climate 9 Latitude / Longitude 8o48N / 78o10E 10
Soil bearing capacity 25 T/M There is no cultivation in the project site and
rehabilitation of resident population from the project site does not arise. Around
the project site there is no reserve forest within 15 Km radius. 6.2.2 LAND The
project is being implemented in Tamil Nadu. The company has already acquired
600 acres of land and site development works will commence shortly. The land is
currently not in use and there are no inhabitants requiring rehabilitation or
resettlement. Specifications Land area(Acres) Plant area 260 Ash disposal 130
Colony 10 Green belt others 100 Others 100 Total 600 The site identified for the
Project is generally plain requiring minimum efforts to grade them suitable for
construction of the project. . Around the project site there is no reserve forest
within 15 Km radius. The Company has paid Rs. 50 Crore towards allotment of
land and development works. The Company proposes to use the allotted land for
setting up Main Power Plant, colony and Ash Dyke requiring about 400 acres. The
remaining allotted land, about 100 acres, would be used for Green Belt
development. The balance land of about 100 acres would be acquired by the
Company in due course. The site development for the Proposed Project site,
covering levelling, boundary wall, internal and approach roads and other
miscellaneous requirements, is estimated to cost about Rs. 20 Crore. 6.2.3
WATER The requirement of water for the plant will be for meeting the
requirement of make up for the water system, dust suppression system in coal
handling plants, ash disposal
31 | Page Project Appraisal & Financial Modeling
system and the D.M. water plant which will be supplying the power cycle make
up requirements. In addition the water requirements will be for drinking and
service purposes. The total requirement of water for the plant will be around 150
m/hr for the project. Water requirement for the plant Sl No. Item Quantity
(m/hr) 1 ACW System make up 80 2 Power Cycle make up 45 3 Service Water
Requirement 15 4 Portable Water Requirement 10 Total 150 ABC Ltd. has made
an agreement of minimum SG portable water supply of 4000m3 /day of SG
portable water by SG. A raw water reservoir of 25200m3 capacity to hold 7 days
requirement for plant requirement of water will be constructed at the plant site.
Air cooled condenser for turbine is proposed. Water drawl approval has been
obtained by the company. The basic features of the sweet water system and
auxiliary cooling water for the proposed station will be proposed to buy from
prospective water suppliers. Air cooled condenser is proposed for condensing
steam. At the Plant, a water reservoir will be installed to meet 7 days
requirement of the plant. The overall cost of water arrangement as estimated by
the Company is about Rs. 90 Crore and has been considered in the Project cost.
6.2.4 SUPER CRITICAL TECHNOLOGY The Proposed Project is based on Super
Critical Boiler Technology instead of more prevalent Sub-Critical Boiler
Technology in India. The basic difference between the two technologies is the
steam pressure at which the boiler is operated. In case of Sub Critical Technology
the operating pressure in boiler is less than 19 MPa as against 24 MPa in typical

subcritical power plant. The supercritical power plant can achieve considerably
higher cycle efficiencies with resulting savings in fuel costs and reductions in
CO2 and other emissions. Plant costs are comparable for both the technologies.
However, overall economics for super critical technology are more favorable
because of the increase in cycle efficiency. Economic performance is also
influenced by other factors, including plant availability, flexibility of operation
and auxiliary power consumption. The once-through boiler design used in super
critical technology based plants is inherently more flexible than drum designs
used in subcritical technology based plant, due to fewer thick section
components allowing increased load change rates. Typical average availability of
super
32 | Page Project Appraisal & Financial Modeling critical technology
based power plants is about 85%. However, with appropriate design and
materials, a plant availability of >90% is achievable. Efficiencies of supercritical
power generation are also less affected by part load operation, with efficiency
reductions less than half those experienced in subcritical plant. The major
environmental benefit of supercritical power generation is from reduced coal
consumption per unit of electricity generated, leading to lower CO2 and other
emissions. CO2 emissions for supercritical plant would be 17% lower than for a
typical subcritical plant. Similarly, all other emissions e.g. NOx and SOx, would
also be reduced pro-rata with the reduction in coal consumption. However, for
optimum environmental performance, supercritical power generation technology
can benefit from advanced emissions-control technologies to minimize harmful
emissions. These include flue gas desulphurization (FGD), low-NOx combustion,
selective catalytic reduction (SCR), selective non-catalytic reduction (SNCR), air
staging and reburn technologies. The lower CO2 emissions from super critical
plants are quantifiable and the project can be registered as a CDM project for
accruing CERs which can be traded with international markets. This can
potentially work as an additional revenue stream for the project. 6.2.5
TECHNOLOGY Thermodynamic cycle Thermodynamic reheat cycle. The
thermodynamic reheat cycle consists of steam generator, steam turbine
generator with condenser, the Condensate extraction and boiler feed pumps
along with H.P & L.P feed water heaters & deaerator. Technical and performance
parameters This project is based on supercritical technology. The critical pressure
point of water and steam is 22.1 MPa, below this pressure it is called sub-critical
pressure and above this pressure it is called as supercritical pressure. In the
supercritical region, co-existence of water and steam is not present, therefore in
the absence of steam/water mixture, the recalculating boiler technology adopted
for subcritical pressure could not be used. This was the key to the advancement
of cycle efficiency through the adoption of economic and reliable once-through
supercritical boilers. The drive for enhancing the efficiency of generating plants
in and environmentally friendly manner has been realized mainly through
advancing the steam conditions, i.e. increasing pressure and temperature. This
led to the development of some new power generation technologies like
integrated gasification combined cycle (IGCC) and pressurized fluidized bed
boilers (PFB). Boiler Feed Pump Three nos., horizontal, multistage, centrifugal
type boiler feed pumps will be provided. Two nos. pumps will be turbine driven
with steam extracted from turbine & one no pump will be motor driven as

standby. Each boiler feed pump will have one matching capacity single stage
booster pump. The booster pump will take suction from feed water storage tank
and discharge into the suction of corresponding main boiler feed pump
33 |
Page Project Appraisal & Financial Modeling which in turn, will supply feed water
to boiler through the high pressure heaters and feed control station. Condensate
extraction pumps The condensate extraction pumps will be vertical, multi stage
enclosed canister type with flanged connection driven by electric motor. Two nos.
condensate extraction pumps are used in this system. Supercritical Boilers
Different boiler technology is used which is the critical requirement in the
adoption of supercritical pressure and temperature. With supercritical pressure
boiler need to increase the wall thickness of the pressure components and also
use advanced materials for its effective working. Super critical steam turbine
Steam turbine is of 3000rpm and is designed for main steam parameters of
247kg/cm2 & 540C before emergency stop. High pressure steam turbines must
be designed to withstand the higher pressure and temperature. Typical
feedwater temperatures are around 275C to 290C compared to around 235C
to 250C for sub-critical plants. With supercritical pressures, because of the
greater steam pressure range in the turbine from inlet through to the condenser,
there is greater scope for including an extra stage or stages of feedwater
heating. This will further increase the cycle efficiency. 6.2.6 PRIMARY FUEL The
primary fuel for the Proposed Project would be domestic coal. The Company
proposes to use coal available from CIL mines. Coal India Limited has made a LoA
with the company for use of coal in the Proposed Project. The Company has
approved the agreement. The average calorific value of the coal is expected to
be about 3400 kcal/kg. Considering this Gross Calorific Value and PLF of 85% the
coal requirement of the Project works out to be about 3771700 TPA. The
Company has estimated the capital investment of Rs. 900 per tonne at an
escalation of 5% p.a and the same has been incorporated in the overall Project
Cost. 6.2.7 SECONDARY FUEL HFO, which is the secondary fuel for pulverized
coal, will be used for flame stabilisation at low loads and for supporting purposes.
Heavy fuel oil will be supplied from oil depot by means of truck. Two HFO storage
tanks each of capacity 1000m with necessary heating arrangement within the
tank will be provided. The estimated maximum annual requirement of HFO is
4914 KL. Capital investment of Rs 50 per kg at an escalation of 4% p.a has been
estimated. LDO system will be designed for 7.5 % of BMCR, which will be
considered sufficient to introduce heavier grade fuel. The light diesel oil will have
provision for supply to the steam generator for startup purpose. The estimated
maximum annual requirement of LDO is 1000 KL.
34 | Page Project Appraisal
& Financial Modeling 6.2.8 TRANSPORTATION Coal will be transported from the
Indian Coal fields to the Paradeep Port by Rail and from the port to the
Manappadu Port located near to the project site by ship. Coal unloaded from ship
will be stored in a separate coal yard to be set up by prospective Coal sellers at
Manappadu port and coal will be supplied at the plant boundary by conveyors.
Calorific value of Indian F grade coal will be in the range of 3400 kcal/kg. Rail
route already exists upto Tiruchendur. About 12 km of rail route from Tiruchendur
to project site is under approval. For transportation of coal, the Company would
enter into Coal Transportation Arrangement (CTA) with the Indian Railways. Due

to the availability of port facilities for transportation of coal from the mines, it is
convenient and economical to unload and transport the coal to the plant. Coal
will be also be transported from the port to the Manappadu Port located near to
the project site by ship. Alternatively trucks will also be used for coal transfer
from port to plant. Company has made a logistic agreement with Aspinwall Co
Ltd for transportation of coal from port and railway station to the plant. 6.2.9 EPC
CONTRACT Under an EPC contract, the contractor designs the installation,
procures the necessary materials and builds the project, either directly or by
subcontracting part of the work. EPC contract for this project is been given to
Consolidated Construction Consortium Ltd. It is proposed to entrust the entire
work of project execution covering all civil works, electrical and mechanical
systems to a single EPC (Engineering, Procurement and Construction) Contractor
who will take overall responsibility for timely project execution and plant
performance and provide guarantees for the same. SCOPE The EPC Contractors
scope of work includes design, engineering, manufacture, supply, erection,
testing and commissioning within the Power Plant site. The EPC Contractor
would be responsible for all basic and conceptual engineering, detailed system
engineering, design & drawings for all mechanical and electrical systems,
detailed designs and construction drawings for all civil works, manufacture of
equipment as applicable, procurement of sub-contracted equipment and
materials, review of sub-contractors design and engineering, inspection and
expediting of sub- contracted equipment, transport of equipment and materials
to site, stores management at site, overall site management covering
construction, erection and commissioning activities and performance testing for
the complete Power Plant. The contractor agrees to provide all civil and
structural works including supplies of cement, reinforcement steel and
structural steel etc. The lump sum amount of Rs 524 crore represents the lump
sum fixed price towards the services to be provided by the contractor, pursuant
to the scope of work under this Agreement. The contractor shall complete all the
works as per project schedule approved by owner, pursuant to various conditions
of this agreement, within 30 months from the start of project commencement
date.
35 | Page Project Appraisal & Financial Modeling 6.2.10 OPERATION AND
MAINTENANCE In order to ensure a high level of performance of the power
station, it is proposed to entrust the operation and maintenance of the power
station to an experienced O&M Contractor. In order to ensure that the design and
construction of the power station incorporates all necessary features required for
easy and efficient operation and maintenance of the proposed power plant, the
proposed O&M Contractor will also be consulted during the review of EPC
contract documents, plant design features, operational and maintenance
features of plant systems and equipment. O&M Contractors general manager
would have primary responsibility for the operation & maintenance of the power
station. O&M Contractors site organisation is expected to comprise four broad
functional areas viz. operations, maintenance, engineering and administration.
Operation of Power Plant, coal and ash handling systems, water systems
including water treatment system, switchyard and other auxiliary plant.
Operations manager would be overall in charge of operations, all other operation
personnel would work on three - shift basis. Shift personnel manpower planning

for key areas has been generally done on (3+1) concept to take into account
leave taken by shift personnel. Maintenance of all mechanical and electrical
plant, control systems, buildings, roads, drainage and sewage systems, etc.,
operation of the plant workshop, planning for scheduled maintenance works and
deciding requirement of spare parts. The O&M team of the power station would
be headed by a Senior Vice President, under whom separate groups viz.
Operation, Mechanical, Electrical, Civil and C&I maintenance would operate. In
addition to these groups, operation and efficiency improvement group and
maintenance planning group would monitor the efficiency in operations and
maintenance management respectively and suggest continual improvements.
6.2.11 INFRASTRUCTURAL REQUIREMENTS Construction Power The company has
received approval for drawl of construction power from nearby substation of
Tamil Nadu Power Distribution Company Ltd. (TNPDCL). Construction Water The
total water requirement for the project is 2000 m3 /day. This water will be
sourced from nearby desalination plant. The requirement of construction water
for potable and service purposes will be met by the nearby desalination plant
located within the allotted land for the Project. The Company has taken over the
desalination plant along with the auxiliary and paid about Rs. 50 Crore for the
same. 6.2.12 EVACUATION OF POWER The power generated from the plant will
be evacuated at 400 KV through PGCIL / TNEB grid lines. Three / Four 400 KV
transmission line circuits are proposed from
36 | Page Project Appraisal &
Financial Modeling 400KV switch yard to Udangudi STPP Substation for further
connectivity to southern grid. Companys generation project shall implement,
maintain and operate dedicated transmission system for immediate evacuation
of power from their generation projects. a) Companys Power generation
switchyard-tuticorin pooling station 400kV D/c quad/high capacity line. b) Two
nos of 400kV bays each at Companys switchyard & Tuticorin Pooling
POWERGRID station. The cost of the transmission line is estimated by the
Company is about Rs. 52 Crore. 6.2.13 ENVIRONMENTAL ASPECTS The project
site is located at a distance of about 14 kms from the National High way and 15
kms from Trichendur town. There is no cultivation in the project site and
rehabilitation of resident population from the project site does not arise. Around
the project site there is no reserve forest within 15 Km radius. Since all necessary
pollution control measures to maintain the emission levels of dust particles and
sulphur dioxide within the permissible limits would be taken and necessary
treatment of effluents would be carried out, there would be no adverse impact on
either air or water quality in and around the power station site on account of
installation of the proposed plant. Ash Handling System The fly ash generated in
thermal power stations has commercial value because of its usage in cement
and construction industries in various forms. Fly ash generated from the
proposed power plant would be commercially utilized in one or more of the
following industries, to the extent possible a. Manufacture of fly ash bricks b.
Manufacture of aerated wall blocks and panels c. Fly ash Aggregate d. Land
reclamation e. Ready Mixed Fly Ash Concrete f. Utilisation in Roads/Paving g. Use
in cement manufacturing using fly ash in combination h. Manufacture of fly ash
bricks i. Export of Fly ash to countries like Bangladesh and Middle East. Water
Handling System Hydrochloric acid and caustic soda would be used as reagents

in the proposed water treatment plant. The acid and alkali effluents generated
during the regeneration process of the ion exchangers would be drained into an
underground neutralising pit. The effluent would be neutralised by the addition of
either acid or alkali to achieve the required pH.
37 | Page Project Appraisal &
Financial Modeling Waste water from the Coal yard suppression system and
leaching water is collected in the settling tank. The clear water will be disposed
to the nallah through CEMS. The Sludge will be dried in a Drying Pond and then
Reused. Sewage water from power plant and canteen will be collected in the
Anaerobic treatment pond and from there it will be sent to the clarifier. The
treated water will be used for horticulture purpose. The oily waste water will be
treated in an Oily Water Separator. The clear water is disposed through CEMS
and the Oily Sludge is disposed offsite. Air Handling System The height of the
stack which disperses the pollutants have been fixed based on the above
guidelines of the Indian Emission Regulations. The electrostatic precipitators
which remove most of the fly ash from the flue gas, thereby limiting the quantity
of fly ash emitted to atmosphere. By selecting a suitable furnace and burner for
the steam Generator, NOx formation has been avoided and no additional
equipment for NOx control is required. Although there is no statutory stipulation
for regulation of NOx emission, the boiler will be designed for maximum of 750
mg/Nm3 with provision of low NO burners. Dust nuisance due to Coal handling
would be minimised by providing suitable dust suppression/extraction systems at
crusher house, junction towers etc. For the coal stockyard, dust suppression
system would be provided. Boiler bunkers would be provided with ventilation
system with bag filters to trap the dust in the bunkers. Noise Handling System As
per State Pollution Control Board, Ambient noise level for Industrial area will be
Sl. No Time dB (A) 1. Day Time 6 AM to 9 PM 75 2. Night Time 9 PM to 6 AM 70
The above noise level at plant boundary during normal operation is ensured by
proper selection of the system. Controlled noise level from originating equipment
and green belts around the plant area. Project clearances received from statutory
authorities, Tamil Nadu State Pollution Control Board (TNPCB) and the concerned
agencies of the Government of Tamil Nadu and India. Statutory Clearances All
statutory clearances requires at Central/State level for the implementation of the
project are to be ensured. Depending on the cost of project, techno economic
clearances of CEA/SEB may be asked. Clearances/Agreements required for
implementation of project: 1. Land Acquisition 2. Water Availability 3. Stack
Height: Airport Authority of India 4. Forest Clearance: Such that no sanctuary,
reserve, national park within the project 5. No defense establishment
38 |
Page Project Appraisal & Financial Modeling 6. Ministry of environment and Forest
7. Fuel Supply Arrangement/Agreement through various coal linkages 8. Fuel
Transportation Arrangement 9. PPA for selling Electricity 10. Transmission
agreement with Transmission agency 11. Pollution Control Board Table 9:
Approval and Agreement Status Major Clearances/ Agreements S No
Requirement Agency Status 1 Consent to establish / NoC Tuticorin Airport
Certified 2 Environment Clearance MoEF The Company has applied for the
clearance. 3 Forest clearance MoEF The Company has applied for the clearance 4
Water Drawl SG Agreement made 5 Stack height Clearance Airport Authority of
India (AAI) Approved 6 Pollution control board NOC for power plant Tamil Nadu

Pollution control board (TNPCB) All the required standards of Pollution control
board are met 7 Land Availability State Government 600 acres has been acquired
8 Primary Fuel Coal India Limited Long term agreement made on 15 April 2010 9
Transportation of Fuel Aspinwall Co Ltd Fuel Transport Agreement made 10
Transmission Line PGCIL Open Access and Transmission Agreement made 11
EPC / package contract Consolidated Construction Consortium Ltd. Agreement
made on 18 June 2010 6.3 PROJECT COST 6.3.1 COMPONENTS OF PROJECT COST
The Project is estimated to be set up at an aggregate cost of Rs. 4251 Crore
comprising of expenditure towards Land, EPC Cost, Transmission Line, Coal
Transportation Arrangement, Water Arrangement, Preliminary & Preoperative
Expenditure, Contingencies, Interest During Construction Period and Margin
Money for Working Capital. A summary of the components of Project cost is
presented below:
39 | Page Project Appraisal & Financial Modeling Table 10:
Project Cost Details Sl No. Particulars Total Cost 1 Land & Site Development 50 2
Total Plant & Equipment 2038.48 3 Civil Works 545 4 Electric Works 135 5
Miscellaneous 146.5 Total Hard Cost 2914.98 6 Overhead & Pre-Op. Expenses
114.59 7 Interest During Construction 656.20 8 Working Capital Margin 565.43
Total Soft Cost 1336.22 (in crore) Total Project Cost 4251 6.3.2 FINANCING PLAN
The tentative financial plan for the proposed project is as follows: Particulars
Percentage Cost (Rs Crore) Debt Equity Ratio 3.00 Equity 25% 1062.80 Debt 75%
3188.40 Upfront Equity 51.5% 547.342 Total 100% 4251 6.3.3 DEMAND AND
SUPPLY Inspite of 18,382 MW of installed capacity the state of Tamil Nadu is
struggling to fulfil its electricity demand. The electricity demand in the State had
increased but the capacity of the generating facilities had dropped due to
inefficiencies resulting in shortfall. Most of the districts in Tamil Nadu face power
cuts lasting over six hours. Between April 2012 and February 2013, the energy
and peak shortage of power in Tamil Nadu were 17.4 % and 12.3 % respectively
of the demand.
40 | Page Project Appraisal & Financial Modeling Electricity
deficit in the state has increased from 1% in 2005-06 to 11% in 2011- 12.
Between 2005-06 and 2011-12, electricity requirement grew at CAGR of 9%,
while availability only grew at around 7% leading to increasing electricity deficits.
Source: CEA website Table 11: Power requirement and availability for year 20122013 for Tamil Nadu Period Peak Demand (MW) Peak Availabilit y (MW) Peak
Deficit/Surp lus (MW) Energy Requiremen t (MU) Energy Availabilit y (MU) Energy
Deficit/S urplus (MW Apr 12 12499 9841 -2658 7583 5817 -1766 May 12 11967
10182 -1785 6796 5840 -956 June 12 12296 11053 -1243 7868 6834 -1034 July
12 12269 10877 -1392 8043 7333 -710 Aug 12 12004 10566 -1438 7840 6763
-1077 Sep 12 12606 10348 -2258 7990 6606 -1384 Oct 12 12538 10269 -2269
8233 6574 -1659 Nov 12 11755 8306 -3449 7110 5254 -1856 Dec 12 12323
9409 -2914 7450 5831 -1619 Jan 13 12038 9698 -2340 7859 6668 -1191 47872
54194 61499 65780 69668 76293 80314 85685 47570 53853 60445 63954
64208 71568 75101 76705 1% 1% 2% 3% 8% 6% 7% 11% 0% 2% 4% 6% 8%
10% 12% 0 10000 20000 30000 40000 50000 60000 70000 80000 90000 FY
2005 FY 2006 FY 2007 FY 2008 FY 2009 FY 2010 FY 2011 FY 2012 MU Figure 6:
Actual power supply position in Tamil Nadu Requirement Availability % deficit
41 | Page Project Appraisal & Financial Modeling Feb 13 11803 10021 -1782 7288
5998 -1290 Mar 13 12736 10556 -2180 8242 6643 -1599 TOTAL 134565 121126

-13439 92302 76161 -16141 Source: CEA, Load Generation Balance Report
(2012-2013) 6.3.4 COST BENEFIT ANALYSIS Table 12: Project details sheet No. of
units 1 Capacity per unit 660 MW Total project capacity 660 MW Without IDC
3595 Rs Crore IDC 656 Rs Crore With IDC 4251 Rs Crore Equity (25%) 1062.80 Rs
Crore Debt (75%) 3188.40 Rs Crore Upfront Equity (51.5%) 547.34 Rs Crore
Interest Rate pre COD 13.25% p.a. Interest rate post COD 13.25% p.a. Working
Capital 13% p.a. Repayment Period 12 Years Moratorium Period 6 Months
Principle Repayment Start Date 01-Jul-14 Date Principle Repayment End Date 01Jan-26 Date Interest Repayment Start Date 01-Jan-14 Date Interest Repayment
End Date 01-Jan-26 Date MOU with PTC (including all units) % of total capacity
70% PPA Tariff As per CERC based tariff Rs/unit No. of years 25 years Selling
through Merchant Basis (including all units) % of total capacity 30% PPA Tariff 3.5
Rs/unit No. of years 25 years Escalation per year 5% Corporate Tax 33.99% MAT
20.96%
42 | Page Project Appraisal & Financial Modeling GSHR 2392 kCal/kwh
Auxiliary Consumption 7% % Plant Load Factor 85% % O&M Escalation 5.72% %
O&M Expense 0.155 crore/MW Fuel Price 900 Rs/tonne Price Escalation 5% p.a.
Gross Calorific Value 3400 kCal/kg Secondary Fuel Price 50 Rs/kg Gross Calorific
Value 10280 kCal/kg Secondary Fuel Consumption 1 ml/kwh Specific Gravity
value of Secondary Fuel 0.95 Price Escalation 4% p.a. Transportation & Handling
Charges Escalation Coal Stock 2 Months Secondary Fuel 2 Months O&M Expenses
1 Month Maintenance Spares (20% of O&M Expense) 1 Year Receivables from
Energy Sales 2 Months Rate For Tariff Calculation 5.28% Land 0% Civil Works &
Building 3.34% Plant & Machinery 5.28% Max Depreciable Value 90% Machinery
15% Building 10% Discount Rate 13.10% % Return on Equity 15.50% % Return
on Equity pre tax (first 12 years) 19.38% % Return on Equity pre tax (last 13
years) 22.95% % Project Life 25 years Total units generated 4914.36 MU
43 |
Page Project Appraisal & Financial Modeling 6.3.5 FINANCIAL MODELLING AND
PROJECTIONS After doing through study of the information Memorandum and all
the contracts and the agreements signed by ABC Ltd. the Financial Analysis is
performed. Various parameters that need to be calculated as a part of the
financials of the project are: INTEREST DURING CONSTRUCTION In the Interest
during construction phase is the period were the power plant is in the process of
making and during this time it generates no revenues. The complete infusion of
term loan and the equity by the financers and promoters respectively is done in
this phase. This period starts from the date when the sub debt and then the
upfront equity starts flowing into the project (upto 51.5 % of the total equity) by
the promoters, when the Upfront Equity part finishes Upfront Debt starts flowing
till the time Debt Equity ratio becomes 75:25. Once, the ratio is achieved the
Matching Debt and Matching Equity flows simultaneously in the ratio of 75:25.
During the construction period the project has to pay the interest on the debt
fused till that month. The interest rates depends on the Pre COD Rates and sub
debt rates are specified by the leading Financial Institution (FI), which is also the
syndicator of the project. (IDC Sheet Attached in Annexure III) DEBT PAYMENT
When the project is commissioned then the borrower company has to pay the
interest on the Term Loan. The interest rate used is the weighted average of Post
COD Rates and sub debt rates are specified by the leading Financial Institution
(FI), which is also the syndicator of the project. The First Six months after the

project commissioning is the Moratorium Period that is during this period no

principle repayment will be done but the interest will be charged according to the
Post COD Rates. After the Moratorium period the project has to pay both the
principle repayment and interest on the term loan. (Sheet is attached in the
Annexure V) FUEL REQUIREMENT The main objective of this part is to calculate
the requirement of fuel for the project and thus calculate overall cost of fuel
required per annum for each of the next 25 years of operation of the plant from
the date of start of operations, which is assumed as the life of the Thermal Power
plant. Here we first calculate the primary fuel cost and secondary fuel cost on
yearly basis for 25 years depending upon the energy exported and GCV of the
fuel that will be charged to the project. While calculating the fuel cost we
consider the Fuel Charges Escalation (as mentioned in Power Purchase
Agreement).For this we calculate the amount of units that the project will be
producing every year for 25 years. This is done on the basis of installed capacity
(MW) from the point the very first unit becomes operational to the point 25 years
ahead of the last commissioning of last unit. Plant Load factor (PLF) is also taken
into consideration. This collectively gives the amount of fuel required to generate
the stipulated amount of power. After knowing the amount of fuel required and
the cost for 25 years we calculate the fuel cost on yearly basis. (Fuel requirement
sheet is attached in Annexure VI)
44 | Page Project Appraisal & Financial
Modeling TARIFF This is among the most important parameters of the project. In
this the main objective is to calculate the Variable Cost and Fixed Cost of
generation of one unit of electricity. This cost is the cost to the company. This
cost is compared with the Quoted Tariff, as specified in the PPA so as to figure it
that whether the company is selling the electricity on profit and loss. VARIABLE
TARIFF: Variable tariff only takes into account the primary fuel cost. This is
obtained by using formula: Variable Cost Electricity Units sold FIXED TARIFF: As
per CERC norms, the fixed cost takes the following parameters into
consideration: Secondary Fuel Cost Interest on Loan Capital Return on Equity
Depreciation O&M Expenses Interest on Working Capital Fixed tariff is
calculated as: Fixed Cost Electricity Units sold The sum of variable cost and the
fixed cost gives the total Tariff that should be charged to get the desire return on
Equity. (Tariff sheets attached in Annexure VIII) DEPRECIATION Depreciation is
calculated on the Machinery and Building strictly according to the CERC
Guidelines. Depreciation shall be calculated on straight line method and at rates
specified in the CERC guidelines for the assets of the generating station but the
company files the tax according to IT ACT section 80. (Tariff sheets attached in
Annexure IV) WORKING CAPITAL REQUIREMENT The working capital requirements
as specified in the CERC guidelines are as follows: Working Capital Limits Primary
Fuel Stock 2 Months Secondary Fuel Stock 2 Months
45 | Page Project
Appraisal & Financial Modeling O&M Expense 1 Month Maintenance Spares 20%
O&M Receivables from energy sales 2 Months (Detailed Working Capital
requirement sheets is attached in Annexure VII) CASH FLOW The Objective of this
part is to calculate the total cash flow Inflow and Outflows, and then to calculate
the excess/shortfall. (Detailed Cash flow sheets is attached in Annexure X)
PROFIT AND LOSS ACCOUNT The main aim of this part is to calculate the Profit &
Loss of the project for the 25 years after the commissioning of first unit. In case

of PTC (long term) the levelised cost of electricity is Rs 2.475/kWh and that for
short term is Rs 3.5/kWh. The sale of electricity to PTC is done at the rate of Rs
2.475/kWh for aggregate cap of 70% and rest at variable cost of Rs 0.63/kWh.
(Detailed P&L is attached in Annexure IX) BALANCE SHEET This part accounts for
the assets and liabilities per year for the project for 25 years from COD. (Detailed
Balance sheet is attached in Annexure XI) RATIOS This part is used to calculate
the relevant ratios in order to determine the financial viability of the project. The
Minimum, average and maximum Debt Service Coverage Ratio is calculated
along with Internal Rate of Return and Net present Value are calculated. (Detailed
Ratios sheet is attached in Annexure XII) 6.3.6 SNAPSHOT OF FINANCIAL
PROJECTIONS The financial projections, based on the capital/project cost as
specified by the borrower, would be as below: Table 13: Snapshot of project
financial projections Particular Value Value Parameters DSCR Minimum 1.403
Average 2.106
46 | Page Project Appraisal & Financial Modeling Maximum
4.212 Project IRR, 25 years 18.54% Equity IRR, 25 years 21.41% Levelised cost of
generation 2.475 Rs/kwh 6.3.7 SENSITIVITY ANALYSIS A sensitivity analysis of the
Companys financial position has been carried to ascertain the robustness of its
financials. Various scenarios for which the sensitivities was carried out and the
results are as follows: Table 14: Sensitivity analysis sheet Scenario Min DSCR Avg
DSCR Project IRR (%) Equity IRR (%) Base Case 1.403 2.106 18.54 21.41 Case 1:
PLF at 65% 1.238 1.784 16.44 18.12 Case 2: Increase Fuel cost by 20% 1.371
2.043 18.20 20.81 Case 3: Increase project cost by 10% 1.332 1.974 17.70 20.35
Case 4: Decrease in calorific value of coal by 1000 kcal/kg 1.336 1.975 17.83
20.13 Case 5: Increase interest rate by 100 bps 1.373 2.068 18.73 21.25 It may
be observed from above mentioned results that project financials are quite
robust in various scenarios and the DSCR levels are above satisfactory.
47 |
Page Project Appraisal & Financial Modeling CHAPTER 7: RISK ANALYSIS AND
SWOT ANALYSIS 7.1 RISK ANALYSIS i) PRE CONSTRUCTION Sno Risk Mitigation /
Allocation 1 Grant of approvals / Clearances Obtain all statutory and non
statutory clearances including the MOEF clearance, Pollution Control Board NOC
and agree to comply with all the conditionality of these clearances. 2 Finalization
of Contracts The Company has already awarded the EPC Contract Project. The
service contract has also been awarded by the Company. The EPC contract has
provided for liquidated damages in case of delay in implementation and for
plants various performance parameters below stipulated level. 3 Procurement of
land Land has been already acquired which is sufficient for the main power block,
Ash Dyke and Raw Water Reservoir. ii) CONSTRUCTION Sno Risk
Mitigation/Allocation 1 Cost estimate Since the technology is based on super
critical parameters, it is difficult to fairly compare costs and to estimate the cost
precisely. 2 Cost increase and price Escalation Package contracts are expected to
have suitable safeguards and will be subject to LIE review. Also, any increment in
project cost would be met by the promoters without recourse to either the
project or its lenders. 3 Completion delay and Equipment Supply delay The
package contract is expected to have suitable provision for timely project
completion. Also, LDs have been stipulated for delay in equipment supply.
48
| Page Project Appraisal & Financial Modeling 4 Equity infusion The equity in
company will be infused by promoters Group as also by raising funds from

financial/strategic investors. iii) POST CONSTRUCTION Sno Risk

Mitigation/Allocation 1 Fuel supply risk The Company has made a long term fuel
agreement with CIL. Hence, fuel supply risk is perceived to be moderate. 2 Fuel
price risk The fuel supply agreement is yet to be signed. The fuel supply
agreement shall be subject to review by Lenders / Lenders agencies. 3
Performance shortfall The EPC Contract is expected to provide suitable defect
liabilities / warranties. LD clauses would also be stipulated for ensuring
performance. As a preventive measure, the design shall be subject to review by
both the Owners Engineer and LIE. 4 Technology risk EPC contract have been
awarded to a contractor having super critical technology and sufficient
experience. Company is also implementing other project on the same
technology, which again reduces the risk. 5 Force Majeure The risk will have to
be borne by the project Company, and may prove to be damaging for the project
and by extension the lenders. This may be mitigated to some extent by ensuring
adequate security for the lenders. 6 Off take risk The Company would sell 70% of
net power to State Discom through a long term PPA at a levelized tariff and rest
at Rs 3.5 per unit on merchant basis with escalation of 3% p.a. 7 Price risk The
cost of generation, is lower than the assumed average purchase price of power.
The risk may be perceived to be low. 8 Payment risk Payment risk is perceived to
be low as the major portion of power is being sold to State Discom under a long
term take or pay PPA.
49 | Page Project Appraisal & Financial Modeling Also,
LDs have been specified in the PPA for payment security. 9 Environmental
Hazards Obtained MOEF Clearance and Pollution Control Board NOC. 10 Lower
cost power producers With newer technology, the cost of energy generated
might be significantly lower than cost of energy. Older plants, with depreciated
assets would also be able to compete with company. 7.2 SWOT ANALYSIS
STRENGTH The Project has long term fuel supply agreement with Coal India
Limited of Coal for use in the Project. The Project is located in severe power
shortage region. State itself has been facing severe power shortage and the
power deficit is likely to continue in short and medium term. The Company has
already acquired 600 Ha land which is adequate for the main power plant block.
The work on site may start immediately without any delay. Promoting Group has
demonstrated its infrastructure project development and execution skills in the
port sector and is on the verge of completion of the power project. The Project is
based on Super Critical Technology which is expected to provide efficiency gains
to the Company resulting in lower cost of generation. Use of Super Critical
Technology will reduce the pollution and the Project may be qualified to get CER
under CDM. This would act as additional revenue stream for the Project and
improve the financials of the Company. WEAKNESS Company shall be selling
30% of power on Merchant Basis and may get lower return than the levelised
cost of generation. Environment and Forest Clearances still to be obtained.
50 | Page Project Appraisal & Financial Modeling OPPORTUNITY The Electricity
Act 2003 and subsequent National Electricity Policy and Tariff Policy have
opened up several opportunities for the power sector. The Act allows the IPPs and
captive power producers open access to transmission system, thus allowing
them to bypass the SEBs and sell power directly to bulk consumers. These

provisions will give credence to the concept of merchant power. With the advent
of the era of competitive bidding for tariff for procurement of power, the new
capacities would not be subject to regulated tariff and regulated return of equity
and thus provide investment opportunities to Developers in the power sector
where returns would be market determined. There is huge power deficit in the
country and the demand supply situation in the country is expected to remain
favourable to power generators for the next 8/10 years at least. This presents
huge opportunities in the power sector for power generators. THREATS A part of
power generated will be sold on Merchant basis and may get lower return than
the levelised cost of generation. Fuel supply agreement with Coal India Limited
may result in delay 7.3 LIMITATIONS This analysis is limited to an examination of
annualized expenses and revenue and represents a prototypical year of
operations. This analysis should examine alternative pay as- you-go and debt
financed scenarios, be conducted in year-of-expenditure, and address the
underlying uncertainties associated with inflation, interest rates, project cost
(exclusive of inflation), foreign exchange rate, grant funding levels and rates of
payment, and other factors over which the project sponsor will have no direct
control. The assumptions and sources of information underlying the development
of the capital and operating cost estimates are an integral part of the financial
analyses documented in this report. Uncertainties associated with fluctuating
economic conditions and other factors may result in the actual results of the
financial program varying from the projections in the financial analyses, and the
variations could be material. Some of the major limitations and issues regarding
the project appraisal are as follow: The rate of escalation is taken as constant
over the life of the project (about 25 years); being the life of project large it is
not easy to predict the actual cost and inflationary effect on the price of fuels
and other inputs with the change in market conditions. Cash flows not really
known until the project is in service no history of cash flows.
51 | Page
Project Appraisal & Financial Modeling Value of debt and equity driven by cash
flow. Measure the value of different securities supported by project cash flow.
Risk analysis depends on contracts used to allocate risk to different parties.
52 | Page Project Appraisal & Financial Modeling CHAPTER 8: CONCLUSION,
RECOMMENDATIONS AND LEARNING 8.1 CONCLUSION Company has proposed to
set-up 660 MW Coal fired Thermal Power Project based on Super Critical
Technology. State Government has supported this Project and has issued letter of
support to provide all kind of administrative support required. The Company has
already acquired the land required for the Main plant from Industrial
Development Corporation and has made the requisite payments. The remaining
required land has been identified and the process of acquisition is underway. The
Proposed Project will be implemented by way of a turnkey Engineering,
Procurement and Construction (EPC) contract to be awarded on Competitive
Bidding Process. The Project requires about 3771700 TPA coal based on average
GCV of 3400 kcal/kg and PLF of 85%. The company made an FSA with CIL for the
Proposed Project. Appropriate arrangements are proposed to be done. The
Project will require about 150 cubic meter per hour make-up water during
operation. A raw water reservoir of 25200m3 capacity to hold 7 days

requirement for plant requirement of water will be constructed at the plant site.
Of the total 462 MW of power is proposed to be sold as PPA as per CERC tariff.
Balance 198 MW will be sold on Merchant basis at Rs 3.5 per unit with an
escalation of 3% p.a. Considering the cost of generation of Rs. 2.475 per unit,
company does not envisage any difficulties in selling the power through
merchant route. Power Evacuation will be through two double circuit 400 KV
transmission lines connecting the Project to the PGCIL substation and State
TRANSCO substation. The Electricity Act 2003 and subsequent National
Electricity Policy and Tariff Policy have opened up several opportunities for the
power sector. The Act allows the IPPs and captive power producers open access
to transmission system, thus allowing them to bypass the SEBs and sell power
directly to bulk consumers. Slowly open access in distribution system is also
being allowed. Assessment of the financial feasibility of the Proposed Project,
delivers satisfactory financial parameters as per base financial model. It has also
assessed the viability of the Project under the impact of various scenarios, which
could be at variance with the base case scenario assumed. Subject to the
weaknesses and threats enumerated in the SWOT analysis and the impact of the
various scenarios as envisaged under the sensitivity analysis, the Proposed
Project is viewed as economically viable. Thus, loan amount should be granted
by PFC equal to the request of the borrower.
53 | Page Project Appraisal &
Financial Modeling 8.2 RECOMMENDATIONS To minimize the risk, the extent of
financing to a single project should be proportionate; it will also affect the
exposure limit for borrower or utilities and chance to fund in more projects rather
in some. With the deficit of electricity in our country, there is need of many
projects and the exposure limit should be increased to effectively assist the new
projects. The exposure limit of some utility is going to reached, which resist PFC
to fund. With the increasing IPPs in power generation the exposure to them
should be more and the portfolio size for IPPs should be increased. It will
increase the revenue because of higher interest rate and some extra charges.
Currently PFC has less % funding in renewable energy, PFC should also
concentrate to increase its share in renewable energy. With the changes in
project parameters, the re-rating of project should be done at an appropriate
time and linkages of interest rate, exposure limit and security to the new project
rating should be done. There should be more bifurcation in the linkages to
integrated project rating. A detailed and comprehensive model study should be
made for accordingly. 8.3 LEARNING The experience and know-how gained from
this internship, has left me in more compliant form and stature in order to fare
better in areas of similar interest. Now I here make it sort with few but most
important points what I have learned: A practical exposure of financial world.
Learnt about investment scenario in power generation. Know about various
complicacies in power generation and their mitigation. Know about project
implication and investment. Learnt financing aspect of various investment
related parameters. Learnt the formulation and analysis of various financials
sheets through model. Learnt corporate culture.
54 | Page Project Appraisal
& Financial Modeling BIBILIOGRAPHY 1. Chandra Prasanna, Project Management,
4th Edition, 2005 2. I.M.Pandey, Financial Management, 9th Edition, 2010 3. PFC

website: www.pfcindia.com 4. www.cerc.gov.in 5. www.powermin.nic.in 6.

Operational policy statement of PFC 7. Project Appraisal Manual 8. Load
Generation Balance Report for 2013-14, CEA 9. Integrated Project Rating Model
Manual 10. Detailed Project Report of the Company 11. www.powergrid.com 12.
Power Finance Corporation, Project Term Loan and Short Term Loans
55 |
Page Project Appraisal & Financial Modeling ANNEXURE Project Capacity No. of
units 1 Capacity per unit 660 MW Total project capacity 660 MW Project Cost
Without IDC 3595 Rs Crore IDC 656 Rs Crore With IDC 4251 Rs Crore Financing
Plan Equity (25%) 1062.80 Rs Crore Debt (75%) 3188.40 Rs Crore Upfront Equity
(51.5%) 547.34 Rs Crore Interest Rate pre COD 13.25% p.a. Interest rate post
COD 13.25% p.a. Working Capital 13% p.a. Repayment Details Repayment Period
12 Years Moratorium Period 6 Months Principle Repayment Start Date 01-Jul-14
Date Principle Repayment End Date 01-Jan-26 Date Interest Repayment Start
Date 01-Jan-14 Date Interest Repayment End Date 01-Jan-26 Date PPA Details
PPA with PTC (including all units) % of total capacity 70% PPA Tariff As per CERC
based tariff Rs/unit No. of years 25 years Selling through Merchant Basis
(including all units) % of total capacity 30% PPA Tariff 3.5 Rs/unit No. of years 25
years Escalation per year 5% Tax Rates Corporate Tax 33.99% MAT 20.96%
Technical Parameters GSHR 2392 kCal/kwh Auxiliary Consumption 7% % Plant
Load Factor 85% % O&M Escalation 5.72% % O&M Expense 0.155 crore/MW
Fuel : Primary Fuel Fuel Price 900 Rs/tonne Price Escalation 5% p.a. Gross
Calorific Value 3400 kCal/kg ANNEXURE I: ASSUMPTION SHEET Secondary Fuel
Price 50 Rs/kg Gross Calorific Value 10280 kCal/kg Secondary Fuel Consumption
1 ml/kwh Specific Gravity value of Secondary Fuel 0.95 Price Escalation 4% p.a.
Transportation & Handling Charges Escalation Working Capital Limits Coal Stock
2 Months Secondary Fuel 2 Months O&M Expenses 1 Month Maintenance Spares
(20% of O&M Expense) 1 Year Receivables from Energy Sales 2 Months
Depreciation Rate For Tariff Calculation 5.28% Land 0% Civil Works & Building
3.34% Plant & Machinery 5.28% Max Depreciable Value 90% Depreciation Rate
for IT Machinery 15% Building 10% Miscellaneous Discount Rate 13.10% %
Return on Equity 15.50% % Return on Equity pre tax (first 12 years) 19.61% %
Return on Equity pre tax (last 13 years) 23.48% % Project Life 25 years Total
units generated 4914.36 MU Sl No. Particulars Base Amount Escalation Total Cost
1 Land & Site Development 50 0% 50 2 Total Plant & Equipment 2038.48 0%
2038.48 3 Civil Works 545 0% 545 4 Electric Works 135 5 Miscellaneous 146.5
Total Hard Cost 2914.98 6 Overhead & Pre-Op. Expenses 114.59 7 Interest
During Construction 656.20 8 Working Capital Margin 565.43 Total Soft Cost
1336.22 Total Project Cost 4251 Particulars Percentage Cost (Rs Crore) Debt
Equirt Ratio 3.00 Equity 25% 1062.80 Debt 75% 3188.40 Upfront Equity 51.5%
547.34 Total 100% 4251 ANNEXURE II: PROJECT COST MEANS OF FINANCE i) Land
& Site Development Particulars Amount (In Crore) Land 30 Site Development 20
TOTAL 50 ii) Civil Construction Particulars Amount (In Crore) Civil & Construction
Works 545 TOTAL 545 iii) Plant & Equipment Particulars Amount (In Crore) Steam
generators (boilers) & Steam turbine generators with all auxiliaries 1431.5 Coal
handling system 50 Ash handling plant 50 CW System 10.5 DM plant including all
accessories 5.05 Air conditioning plants 2.15 Fire protection system 4.25
Miscellaneous pumps 2.5 CW treatment plant 3.3 IDCT Electro-Mechanical 6

Effluent treatment system 2.38 Chemical laboratory equipment 1.5 Cranes and
hoists 2.23 Air compressors and accessories 2.05 Instrumentation and Control
system 5 Computers and software 1.05 Emergency D.G. Sets 3.05 Fuel
unloading, storage and forwarding system 6.2 Workshop Equipment 2.75 Cost of
Mechanical Spares 4 Freight and Insurance 15.95 Excise and Central Sales tax
199.53 Erection testing and commissioning 159.15 Transmission Line 52 Service
tax 16.39 TOTAL 2038.48 PROJECT COST BREAKUP iv) Particulars Amount (In
Crore) Start-up fuel 14.57 Design, engineering, construction supervision,
inspection and expediting and project management 56.3 Pre-operative Expenses
29.15 Insurance during construction 14.57 TOTAL 114.59 v) Electric Works
Expenses Particulars Amount (In Crore) Power transformers 21 GCB 8 Other
electric equipments 76.98 Cost of Electrical Spares 2.65 Miscellaneous 26.37
TOTAL 135 vi) Miscellaneous Particulars Amount (In Crore) Coal conveyor from
Port 12 Railway siding 55 Water intake 29.5 Desalination plant and auxiliaries 50
TOTAL 146.5 Date of Commencement 01-Apr-10 No. of quarters of construction
15 Period of Construction 45 months End of Construction 31-Dec-13 Commercial
operation period 01-Jan-14 Overheads & Preoperative Expenses Particulars
Amount Total Upfront Balance Project Cost without IDC 3595 Equity 25%
1062.801 547.34 515.46 IDC 656 Debt 75% 3188.402 1642.03 1546.38 Project
Cost with IDC 4251 Upfront 51.50% Interest Rate pre COD 13.25% Interest Rate
post COD 13.25% Month Apr-10 May-10 Jun-10 Jul-10 Aug-10 Sep-10 Oct-10 Nov10 Dec-10 Jan-11 Feb-11 Mar-11 Apr-11 May-11 Jun-11 Jul-11 Financial Year 2010
2010 2010 2010 2010 2010 2010 2010 2010 2011 2011 2011 2011 2011 2011
2011 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 Total Percentage 100% 1.50%
1.50% 1.50% 2.00% 2.00% 2.00% 2.00% 2.00% 1.00% 1.00% 2.00% 2.00%
2.00% 2.00% 2.00% 2.00% Amount 4251 63.76804 63.76804 63.76804
85.02406 85.02406 85.02406 85.02406 85.02406 42.51203 42.51203 85.02406
85.02406 85.02406 85.02406 85.02406 85.02406 Upfront Equity 547.34
63.76804 63.76804 63.76804 85.02406 85.02406 85.02406 85.02406 15.94
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Upfront Debt 1642.03 0.000
0.000 0.000 0.000 0.000 0.000 0.000 69.08205 42.51203 42.51203 85.02406
85.02406 85.02406 85.02406 85.02406 85.02406 Matching Equity 515.46 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 Matching Debt 1546.38 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 Total Equity
1062.80 63.768 63.768 63.768 85.024 85.024 85.024 85.024 15.942 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 Total Debt 3188.40 0.000 0.000
0.000 0.000 0.000 0.000 0.000 69.08205 42.51203 42.51203 85.02406
85.02406 85.02406 85.02406 85.02406 85.02406 Total Senior Debt 3188.402
0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 42.512 42.512 85.024
85.024 85.024 85.024 85.024 85.024 Total Sub Debt 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 Opening Balance 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082
111.594 154.106 239.130 324.154 409.178 494.202 579.226 Monthly
Disbursement 0.000 0.000 0.000 0.000 0.000 0.000 0.000 69.082 42.512 42.512
85.024 85.024 85.024 85.024 85.024 85.024 Closing Balance 0.000 0.000 0.000
0.000 0.000 0.000 0.000 69.082 111.594 154.106 239.130 324.154 409.178

494.202 579.226 664.250 Interest During Construction 656.203 0.000 0.000

0.000 0.000 0.000 0.000 0.000 0.381 0.997 1.467 2.171 3.110 4.049 4.987
5.926 6.865 Year Ending on 31 March 2010 2011 2012 2013 Total Expenditure
4251.2 658.9364 977.7766 1254.105 1360.385 IDC 656.203 1.379 76.982
219.945 357.897 Expenditure less IDC 3595.000 657.558 900.794 1034.160
1002.488 Total Equity 1062.801 547.342 0.000 175.362 340.096 Debt 3188.402
111.594 977.777 1078.743 1020.289 PROJECT PHASING YEARLY PHASING
ANNEXURE III: INTEREST DURING CONSTRUCTION Aug-11 Sep-11 Oct-11 Nov-11
Dec-11 Jan-12 Feb-12 Mar-12 Apr-12 May-12 Jun-12 Jul-12 Aug-12 Sep-12 Oct-12
Nov-12 Dec-12 Jan-13 Feb-13 Mar-13 2011 2011 2011 2011 2011 2012 2012
2012 2012 2012 2012 2012 2012 2012 2012 2012 2012 2013 2013 2013 17 18
19 20 21 22 23 24 25 26 27 28 29 30 31 32 33 34 35 36 2.00% 2.00% 2.00%
2.00% 2.00% 2.50% 2.00% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50% 2.50%
2.50% 2.50% 2.50% 3.00% 2.50% 2.50% 85.02406 85.02406 85.02406 85.02406
85.02406 106.2801 85.02406 106.2801 106.2801 106.2801 106.2801 106.2801
106.2801 106.2801 106.2801 106.2801 106.2801 127.5361 106.2801 106.2801
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 85.02406 85.02406 85.02406
85.02406 85.02406 106.2801 85.02406 106.2801 106.2801 106.2801 42.5120
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 15.942 26.570 26.570 26.570
26.570 26.570 26.570 31.884 26.570 26.570 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 47.826 79.710 79.710 79.710 79.710 79.710
79.710 95.652 79.710 79.710 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 15.942 26.570 26.570 26.570 26.570 26.570 26.570 31.884 26.570
26.570 85.02406 85.02406 85.02406 85.02406 85.02406 106.2801 85.02406
106.2801 106.2801 106.2801 90.338 79.710 79.710 79.710 79.710 79.710
79.710 95.652 79.710 79.710 85.024 85.024 85.024 85.024 85.024 106.280
85.024 106.280 106.280 106.280 90.338 79.710 79.710 79.710 79.710 79.710
79.710 95.652 79.710 79.710 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
664.250 749.274 834.299 919.323 1004.347 1089.371 1195.651 1280.675
1386.955 1493.235 1599.515 1689.853 1769.563 1849.273 1928.983 2008.693
2088.403 2168.113 2263.766 2343.476 85.024 85.024 85.024 85.024 85.024
106.280 85.024 106.280 106.280 106.280 90.338 79.710 79.710 79.710 79.710
79.710 79.710 95.652 79.710 79.710 749.274 834.299 919.323 1004.347
1089.371 1195.651 1280.675 1386.955 1493.235 1599.515 1689.853 1769.563
1849.273 1928.983 2008.693 2088.403 2168.113 2263.766 2343.476 2423.186
7.804 8.743 9.681 10.620 11.559 12.615 13.671 14.728 15.901 17.075 18.160
19.099 19.979 20.859 21.739 22.619 23.500 24.468 25.436 26.316 Civil Works 0
1 2 3 4 5 6 7 8 9 10 11 Opening Balance 545.00 531.38 478.24 430.41 387.37
348.64 313.77 282.39 254.16 228.74 205.87 185.28 Depreciation 13.625
53.1375 47.82375 43.04138 38.73724 34.86351 31.37716 28.23945 25.4155
22.87395 20.58656 18.5279 Closing Balance 531.38 478.24 430.41 387.37
348.64 313.77 282.39 254.16 228.74 205.87 185.28 166.75 Opening Balance
2038.48 1962.037 1667.731 1417.572 1204.936 1024.196 870.5662 739.9813
628.9841 534.6365 454.441 386.2749 Depreciation 76.443 294.3056 250.1597

212.6358 180.7404 153.6293 130.5849 110.9972 94.34762 80.19547 68.16615

57.94123 Closing Balance 1962.037 1667.731 1417.572 1204.936 1024.196
870.5662 739.9813 628.9841 534.6365 454.441 386.2749 328.3336 Total Dep
as per IT 90.068 347.4431 297.9835 255.6771 219.4776 188.4929 161.9621
139.2366 119.7631 103.0694 88.75271 76.46913 Depreciation rate after taking
the weighted avg. 0 1 2 3 4 5 6 7 8 9 10 11 Depreciation 31.53483 126.1393
126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393
126
93 126.1393 Cumulative Depreciation 31.53483 157.6742 283.8135 409.9529
536.0922 662.2315 788.3709 914.5102 1040.65 1166.789 1292.928 1419.068
Plant & Machinery Depreciation as per IT act ANNEXURE IV: DEPRECIATION 4.89%
12 13 14 15 16 17 18 19 20 21 22 23 24 25 166.75 150.08 135.07 121.56
109.41 98.46 88.62 79.76 71.78 64.60 58.14 52.33 47.10 42.39 16.67511
15.0076 13.50684 12.15616 10.94054 9.846486 8.861837 7.975654 7.178088
6.460279 5.814252 5.232826 4.709544 3.178942 150.08 135.07 121.56 109.41
98.46 88.62 79.76 71.78 64.60 58.14 52.33 47.10 42.39 39.21 328.3336
279.0836 237.2211 201.6379 171.3922 145.6834 123.8309 105.2562 89.4678
76.04763 64.64049 54.94442 46.70275 39.69734 49.25005 41.86254 35.58316
30.24568 25.70883 21.85251 18.57463 15.78844 13.42017 11.40715 9.696073
8.241662 7.005413 4.465951 279.0836 237.2211 201.6379 171.3922 145.6834
123.8309 105.2562 89.4678 76.04763 64.64049 54.94442 46.70275 39.69734
35.23139 65.92516 56.87014 49.09 42.40184 36.64937 31.69899 27.43647
23.76409 20.59826 17.86742 15.51032 13.47449 11.71496 7.644893 12 13 14
15 16 17 18 19 20 21 22 23 24 25 89.18573 89.18573 89.18573 89.18573
89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573
89.18573 66.88929 1508.253 1597.439 1686.625 1775.81 1864.996 1954.182
2043.368 2132.553 2221.739 2310.925 2400.111 2489.296 2578.482 2645.371
Plant & Machinery Depreciation as per IT act 4.89% 2014 0 Jan-Mar Apr-Jun JulSept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec
3188.40 3188.40 3188.40 3119.09 3049.78 2980.46 2911.15 2841.84 2772.52
2703.21 2633.90 2564.58 105.62 105.62 105.62 103.32 101.02 98.73 96.43
94.14 91.84 89.54 87.25 84.95 0.00 0.00 69.31 69.31 69.31 69.31 69.31 69.31
69.31 69.31 69.31 69.31 105.62 105.62 174.93 172.63 170.34 168.04 165.74
163.45 161.15 158.86 156.56 154.26 3188.40 3188.40 3119.09 3049.78
2980.46 2911.15 2841.84 2772.52 2703.21 2633.90 2564.58 2495.27 2017 3
Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun
Jul-Sept Oct-Dec 2495.27 2425.96 2356.65 2287.33 2218.02 2148.71 2079.39
2010.08 1940.77 1871.45 1802.14 1732.83 82.66 80.36 78.06 75.77 73.47
71.18 68.88 66.58 64.29 61.99 59.70 57.40 69.31 69.31 69.31 69.31 69.31
69.31 69.31 69.31 69.31 69.31 69.31 69.31 151.97 149.67 147.38 145.08
142.78 140.49 138.19 135.90 133.60 131.30 129.01 126.71 2425.96 2356.65
2287.33 2218.02 2148.71 2079.39 2010.08 1940.77 1871.45 1802.14 1732.83
1663.51 2020 6 Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept OctDec Jan-Mar Apr-Jun Jul-Sept Oct-Dec 1663.51 1594.20 1524.89 1455.57 1386.26
1316.95 1247.64 1178.32 1109.01 1039.70 970.38 901.07 55.10 52.81 50.51
48.22 45.92 43.62 41.33 39.03 36.74 34.44 32.14 29.85 69.31 69.31 69.31

69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 124.42 122.12 119.83
117.53 115.23 112.94 110.64 108.35 106.05 103.75 101.46 99.16 Outstanding
Balance 1594.20 1524.89 1455.57 1386.26 1316.95 1247.64 1178.32 1109.01
1039.70 970.38 901.07 831.76 Year Quarters Loan Opening Balance Quarterly
Interest Principle Amount Loan Repayments ANNEXURE V: DEBT SERVICING
Outstanding Balance Year Quarters Loan Opening Balance Quarterly Interest
Principle Amount Loan Repayments Quarterly Interest Principle Amount Loan
Repayments Outstanding Balance Year Quarters Loan Opening Balance 4 5 6 7 8
9 2021 2022 2020 2017 1 2 3 2018 2019 2015 2016 2023 2023 9 Jan-Mar AprJun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept Oct-Dec Jan-Mar Apr-Jun Jul-Sept
Oct-Dec 831.76 762.44 693.13 623.82 554.50 485.19 415.88 346.57 277.25
207.94 138.63 69.31 27.55 25.26 22.96 20.66 18.37 16.07 13.78 11.48 9.18
6.89 4.59 2.30 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31 69.31
69.31 69.31 96.87 94.57 92.27 89.98 87.68 85.39 83.09 80.79 78.50 76.20
73.91 71.61 Outstanding Balance 762.44 693.13 623.82 554.50 485.19 415.88
346.57 277.25 207.94 138.63 69.31 0.0 Year Quarters Loan Opening Balance
Quarterly Interest Principle Amount Loan Repayments 10 11 12 2024 2025 2026
2392 10280 10.28 2381.72 3400 0.7005 0.9 0.63 0.001 0.95 0.00095 50 0.0475
23.34 0.63 7% 0.59 Year 0 1 2 3 4 5 6 7 8 9 10 11 12 Total Coal cost per annum
(in crs) 77.457 325.320 341.586 358.665 376.598 395.428 415.200 435.960
457.758 480.646 504.678 529.912 556.407 Total secondary fuel oil cost per
annum (in crs) 5.84 24.277 25.248 26.258 27.308 28.401 29.537 30.718 31.947
33.225 34.554 35.936 37.373 13 14 15 16 17 18 19 20 21 22 23 24 25 584.2277
613.4391 644.111 676.3166 710.1324 745.639054 782.9210065 822.0671
863.1704 906.3289 951.6454 999.2276 786.8918 38.86816 40.42289 42.0398
43.72139 45.47025 47.2890603 49.18062275 51.14785 53.19376 55.32151
57.53437 59.83575 46.67188 Variable charges for single unit (Rs/kwh) Auxiliary
Consumption Rate of Energy delivered to Ex Bus Secondary Fuel Oil Consumption
(L/kwh) Specific gravity of Secondary Fuel Oil Secondary Fuel Oil Consumption
(kg/kwh) Secondary Fuel Oil cost (Rs/kg) Secondary Fuel Oil cost per unit of
electricity (Rs/kwh) Total Fuel Oil consumption per annum (Rs Crs) PRIMARY FUEL
(COAL) ANNEXURE VI: ENERGY CHARGE Gross Calorific value of Secondary Fuel
oil (kCal/L) Gross station heat rate (kCal/kwh) ENERGY CHARGE Coal price to
produce 1 unit of electricity (Rs/kwh) SECONDARY FUEL Heat contribution from
secondary fuel oil (kCal/kwh) Heat contribution from primary fuel oil (kCal/kwh)
Gross calorific value for coal (kCal/kg) Cost of Coal (Rs/kg) Coal required to
produce 1 unit of electricity (kg/kwh) 2014 2015 2016 2017 2018 2019 2020
2021 2022 2023 2024 0 1 2 3 4 5 6 7 8 9 10 Primary Fuel 2 Months 12.910
54.220 56.931 59.778 62.766 65.905 69.200 72.660 76.293 80.108 84.113
Secondary Fuel 2 Months 0.973 4.046 4.208 4.376 4.551 4.733 4.923 5.120
5.324 5.537 5.759 O&M Expense 1 Month 8.498 8.984 9.498 10.042 10.616
11.223 11.865 12.544 13.261 14.020 14.822 Maintenance Spares 20% O&M
20.396 21.563 22.796 24.100 25.479 26.936 28.477 30.105 31.828 33.648
35.573 Receivables 2 Months 56.723 231.998 235.202 238.503 242.191 246.287
250.810 255.784 261.229 267.172 273.636 99.500 320.812 328.635 336.798
345.603 355.084 365.275 376.213 387.936 400.485 413.902 99.500 221.312
7.823 8.163 8.805 9.481 10.191 10.938 11.723 12.549 13.418 74.625 240.609

246.476 252.599 259.203 266.313 273.956 282.160 290.952 300.364 310.427

9.701 31.279 32.042 32.838 33.696 34.621 35.614 36.681 37.824 39.047
40.355 91.001 311.827 319.137 326.756 334.987 343.861 353.410 363.669
374.674 386.465 399.080 91.001 220.826 7.309 7.620 8.231 8.873 9.549
10.259 11.006 11.790 12.616 Total Working Capital Increase in Working Capital
Total Current Assets Increase in Current Assets Interest on Working Capital
Working Capital Debt CURRENT ASSETS ANNEXURE VII: WORKING CAPITAL Year
WORKING CAPITAL ITEMS 2025 2026 2027 2028 2029 2030 2031 2032 2033
2034 2035 2036 2037 2038 2039 11 12 13 14 15 16 17 18 19 20 21 22 23 24 25
88.319 92.735 97.371 102.240 107.352 112.719 118.355 124.273 130.487
137.011 143.862 151.055 158.608 166.538 131.149 5.989 6.229 6.478 6.737
7.007 7.287 7.578 7.882 8.197 8.525 8.866 9.220 9.589 9.973 7.779 15.670
16.566 17.514 18.515 19.575 20.694 21.878 23.129 24.452 25.851 27.330
28.893 30.546 32.293 34.140 37.607 39.759 42.033 44.437 46.979 49.666
52.507 55.510 58.686 62.042 65.591 69.343 73.309 77.503 81.936 280.648
288.731 299.635 312.800 326.635 341.172 356.448 372.500 389.368 407.092
425.718 445.291 465.858 487.471 349.734 428.233 444.019 463.030 484.730
507.547 531.539 556.767 583.294 611.189 640.522 671.367 703.802 737.910
773.777 604.737 14.331 15.786 19.011 21.699 22.817 23.992 25.228 26.528
27.895 29.333 30.845 32.435 34.108 35.868 -169.041 321.175 333.014 347.273
363.547 380.660 398.654 417.575 437.471 458.392 480.391 503.525 527.851
553.432 580.333 453.553 41.753 43.292 45.145 47.261 49.486 51.825 54.285
56.871 59.591 62.451 65.458 68.621 71.946 75.443 58.962 412.564 427.453
445.517 466.214 487.972 510.844 534.889 560.165 586.737 614.671 644.037
674.909 707.364 741.485 570.597 13.483 14.889 18.064 20.698 21.758 22.872
24.044 25.276 26.572 27.934 29.366 30.872 32.455 34.120 -170.888 CURRENT
ASSETS WORKING CAPITAL ITEMS 2014 2015 2016 2017 2018 2019 2020 2021
2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035
2036 2037 2038 2039 0 1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17 18 19 20 21
22 23 24 25 Energy Available for Sale Million Units 1228.59 4914.36 4914.36
4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36
4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36 4914.36
4914.36 4914.36 4914.36 4914.36 3685.77 Variable Fuel Cost Rs Crore 77.46
325.32 341.59 358.67 376.60 395.43 415.20 435.96 457.76 480.65 504.68
529.91 556.41 584.23 613.44 644.11 676.32 710.13 745.64 782.92 822.07
863.17 906.33 951.65 999.23 786.89 Variable Fuel Cost per Unit Rs/kwh 0.63
0.66 0.70 0.73 0.77 0.80 0.84 0.89 0.93 0.98 1.03 1.08 1.13 1.19 1.25 1.31 1.38
1.45 1.52 1.59 1.67 1.76 1.84 1.94 2.03 2.13 Interest Rs Crore 105.62 415.58
381.14 344.40 307.66 270.93 234.19 197.46 160.72 123.98 87.25 50.51 13.78
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 Return on
Equity Rs Crore 52.10 208.42 208.42 208.42 208.42 208.42 208.42 208.42
208.42 208.42 208.42 208.42 249.56 249.56 249.56 249.56 249.56 249.56
249.56 249.56 249.56 249.56 249.56 249.56 249.56 187.17 Depreciation Rs
Crore 31.53 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14 126.14
126.14 126.14 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19 89.19
89.19 89.19 89.19 66.89 Cumulative Depreciation Rs Crore 31.53 157.67 283.81
409.95 536.09 662.23 788.37 914.51 1040.65 1166.79 1292.93 1419.07

1508.25 1597.44 1686.62 1775.81 1865.00 1954.18 2043.37 2132.55 2221.74

2310.92 2400.11 2489.30 2578.48 2645.37 O&M Expense Rs Crore 25.50 107.81
113.98 120.50 127.39 134.68 142.38 150.53 159.14 168.24 177.86 188.04
198.79 210.16 222.19 234.89 248.33 262.53 277.55 293.43 310.21 327.96
346.72 366.55 387.51 25.60 Interest on Working Capital Rs Crore 9.70 31.28
32.04 32.84 33.70 34.62 35.61 36.68 37.82 39.05 40.36 41.75 43.29 45.15
47.26 49.49 51.83 54.28 56.87 59.59 62.45 65.46 68.62 71.95 75.44 58.96 Fixed
Cost Rs Crore 224.45 889.23 861.72 832.30 803.31 774.79 746.75 719.22
692.24 665.83 640.02 614.86 594.61 594.05 608.19 623.13 638.90 655.56
673.17 691.76 711.41 732.16 754.08 777.24 801.70 338.63 Fixed Cost per unit
Rs/kwh 1.83 1.81 1.75 1.69 1.63 1.58 1.52 1.46 1.41 1.35 1.30 1.25 1.21 1.21
1.24 1.27 1.30 1.33 1.37 1.41 1.45 1.49 1.53 1.58 1.63 0.92 Total Cost per unit
Rs/kwh 2.46 2.47 2.45 2.42 2.40 2.38 2.36 2.35 2.34 2.33 2.33 2.33 2.34 2.40
2.49 2.58 2.68 2.78 2.89 3.00 3.12 3.25 3.38 3.52 3.66 3.05 PV Factor 1.00
0.8842 0.7818 0.69121 0.6112 0.5404 0.4778 0.4224 0.3735 0.3302 0.292
0.2582 0.2283 0.2018 0.1785 0.1578 0.1395 0.1233 0.1091 0.0964 0.0853
0.0754 0.0667 0.0589 0.0521 0.046072 Variable Tariff Rs/kwh 0.6305 0.5853
0.5434 0.50447 0.4683 0.4348 0.4037 0.3747 0.3479 0.323 0.2999 0.2784
0.2584 0.2399 0.2228 0.2068 0.192 0.1782 0.1655 0.1536 0.1426 0.1324
0.1229 0.1141 0.1059 0.098361 Fixed Tariff Rs/kwh 1.8269 1.5999 1.3708
1.17064 0.999 0.8519 0.726 0.6182 0.5261 0.4474 0.3803 0.323 0.2762 0.244
0.2208 0.2001 0.1814 0.1645 0.1494 0.1357 0.1234 0.1123 0.1023 0.0932
0.085 0.042328 Total tariff Rs/kwh 2.4574 2.1852 1.914 1.67511 1.4673 1.2867
1.1296 0.993 0.874 0.7704 0.6801 0.6014 0.5346 0.4839 0.4436 0.4069 0.3734
0.3428 0.3149 0.2894 0.266 0.2447 0.2252 0.2073 0.191 0.140689 Levelised
Tariff Rs/kwh ANNEXURE VIII: TARIFF PV Calculation Discounted Tariff 2.475 Year
Fixed Tariff Variable Tariff 0 1 2 3 4 5 6 7 8 9 10 Year 2014 2015 2016 2017 2018
2019 2020 2021 2022 2023 2024 Revenue from Energy Sale to PTC 211.336
850.182 842.311 833.672 825.936 819.150 813.363 808.627 804.998 802.532
801.292 Revenue from energy sale on Merchant basis 129.002 541.8082
568.8986 597.3435 627.2107 658.5712 691.4998 726.0748 762.3785 800.4975
840.5223 Total Revenue 340.338 1391.990 1411.210 1431.016 1453.147
1477.721 1504.863 1534.702 1567.376 1603.030 1641.814 Expenses Fuel
77.457 325.320 341.586 358.665 376.598 395.428 415.200 435.960 457.758
480.646 504.678 O&M Expenses 25.495 107.813 113.980 120.500 127.393
134.679 142.383 150.527 159.138 168.240 177.864 Depreciation 31.53483
126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393 126.1393
126.1393 126.1393 Interest payments 115.32 446.85 413.18 377.24 341.36
305.55 269.81 234.14 198.54 163.03 127.60 Total Expenditure 249.804
1006.127 994.883 982.542 971.490 961.795 953.528 946.763 941.578 938.056
936.284 Profit before tax, PBT 90.534 385.863 416.327 448.474 481.657
515.926 551.334 587.939 625.798 664.974 705.530 PBT+Dep on books 122.069
512.002 542.466 574.613 607.796 642.065 677.474 714.078 751.938 791.113
831.669 PBT for IT purposes 32.001 164.559 244.483 318.936 388.318 453.572
515.512 574.842 632.174 688.044 742.917 MAT 18.97593 80.87692 87.2621
94.00017 100.9552 108.138 115.5597 123.232 131.1673 139.3785 147.8791
Corporate Tax 10.87709 55.93375 83.09967 108.4064 131.9894 154.1692

175.2224 195.3887 214.8761 233.866 252.5174 Payable Tax 18.97593 80.87692

87.2621 108.4064 131.9894 154.1692 175.2224 195.3887 214.8761 233.866
252.5174 Profit after tax, PAT 71.558 304.986 329.065 340.068 349.667 361.757
376.112 392.550 410.922 431.108 453.013 ANNEXURE IX: PROFIT & LOSS 11 12
13 14 15 16 17 18 19 20 21 22 23 24 25 2025 2026 2027 2028 2029 2030 2031
2032 2033 2034 2035 2036 2037 2038 2039 801.340 805.709 824.798 855.142
887.065 920.652 955.988 993.165 1032.279 1073.433 1116.731 1162.287
1210.219 1260.651 787.862 882.5484 926.6759 973.0097 1021.66 1072.743
1126.38 1182.699 1241.834 1303.926 1369.122 1437.578 1509.457 1584.93
1664.177 1310.539 1683.889 1732.385 1797.807 1876.802 1959.809 2047.032
2138.687 2234.999 2336.205 2442.555 2554.309 2671.744 2795.149 2924.828
2098.401 529.912 556.407 584.228 613.439 644.111 676.317 710.132 745.639
782.921 822.067 863.170 906.329 951.645 999.228 786.892 188.037 198.793
210.164 222.186 234.895 248.330 262.535 277.552 293.428 310.212 327.956
346.715 366.547 387.514 25.605 126.1393 89.18573 89.18573 89.18573
89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573 89.18573
89.18573 89.18573 66.88929 92.26 57.07 45.15 47.26 49.49 51.83 54.28 56.87
59.59 62.45 65.46 68.62 71.95 75.44 58.96 936.353 901.454 928.723 972.071
1017.677 1065.658 1116.138 1169.248 1225.126 1283.916 1345.771 1410.851
1479.325 1551.371 938.348 747.536 830.931 869.084 904.730 942.132
981.374 1022.549 1065.751 1111.080 1158.639 1208.539 1260.894 1315.824
1373.457 1160.053 873.675 920.117 958.270 993.916 1031.317 1070.560
1111.735 1154.937 1200.266 1247.825 1297.725 1350.079 1405.010 1462.643
1226.943 797.206 854.192 901.400 944.826 988.915 1033.911 1080.036
1127.501 1176.501 1227.227 1279.857 1334.569 1391.536 1450.928 1219.298
156.6835 174.1632 182.1601 189.6315 197.4708 205.6961 214.3264 223.3815
232.8823 242.8508 253.3097 264.2833 275.7968 287.8766 243.1472 270.9702
290.3398 306.3858 321.1463 336.1324 351.4263 367.1043 383.2375 399.8929
417.1343 435.0234 453.62 472.9829 493.1704 414.4393 270.9702 290.3398
306.3858 321.1463 336.1324 351.4263 367.1043 383.2375 399.8929 417.1343
435.0234 453.62 472.9829 493.1704 414.4393 476.565 540.591 562.698
583.584 605.999 629.948 655.445 682.514 711.187 741.505 773.515 807.274
842.841 880.287 745.614 0 1 2 3 4 5 6 7 8 9 10 11 12 Year 2014 2015 2016
2017 2018 2019 2020 2021 2022 2023 2024 2025 2026 Inflow Equity 1062.80 0
0 0 0 0 0 0 0 0 0 0 0 Debt 3271.53 166.46 6.39 6.66 7.18 7.71 8.29 8.87 9.51
10.17 10.86 11.60 12.74 Term Loan 3188.40 0 0 0 0 0 0 0 0 0 0 0 0 WC Debt
83.12 166.46 6.39 6.66 7.18 7.71 8.29 8.87 9.51 10.17 10.86 11.60 12.74 PBT
90.534 385.863 416.327 448.474 481.657 515.926 551.334 587.939 625.798
664.974 705.530 747.536 830.931 Depreciation 31.535 126.139 126.139
126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139
89.186 Total cash inflow 4456.40 678.47 548.85 581.28 614.98 649.78 685.77
722.95 761.45 801.28 842.53 885.27 932.86 Outflow Project expenditure
4251.20 0 0 0 0 0 0 0 0 0 0 0 0 Increase in WC 99.500 221.312 7.823 8.163
8.805 9.481 10.191 10.938 11.723 12.549 13.418 14.331 15.786 Tax 18.976
80.877 87.262 108.406 131.989 154.169 175.222 195.389 214.876 233.866
252.517 270.970 290.340 Loan repayments 0.000 207.939 277.252 277.252
277.252 277.252 277.252 277.252 277.252 277.252 277.252 277.252 207.939

Total cash outflow 4369.68 510.13 372.34 393.82 418.05 440.90 462.67 483.58
503.85 523.67 543.19 562.55 514.06 Excess/Shortfall 86.718 168.338 176.516
187.454 196.933 208.873 223.101 239.373 257.598 277.617 299.345 322.720
418.791 Opening Balance 0.000 86.718 255.056 431.572 619.026 815.959
1024.832 1247.934 1487.306 1744.905 2022.522 2321.867 2644.587 Closing
Balance 86.718 255.056 431.572 619.026 815.959 1024.832 1247.934 1487.306
1744.905 2022.522 2321.867 2644.587 3063.378 ANNEXURE X: CASH FLOW 13
14 15 16 17 18 19 20 21 22 23 24 25 2027 2028 2029 2030 2031 2032 2033
2034 2035 2036 2037 2038 2039 0 0 0 0 0 0 0 0 0 0 0 0 0 15.20 17.28 18.16
19.11 20.11 21.15 22.24 23.40 24.61 25.89 27.24 28.64 -124.93 0 0 0 0 0 0 0 0
0 0 0 0 0 15.20 17.28 18.16 19.11 20.11 21.15 22.24 23.40 24.61 25.89 27.24
28.64 -124.93 869.084 904.730 942.132 981.374 1022.549 1065.751 1111.080
1158.639 1208.539 1260.894 1315.824 1373.457 1160.053 89.186 89.186
89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186 89.186
66.889 973.47 1011.20 1049.48 1089.67 1131.85 1176.08 1222.51 1271.22
1322.34 1375.97 1432.25 1491.28 1102.01 0 0 0 0 0 0 0 0 0 0 0 0 1 19.011
21.699 22.817 23.992 25.228 26.528 27.895 29.333 30.845 32.435 34.108
35.868 -169.041 306.386 321.146 336.132 351.426 367.104 383.237 399.893
417.134 435.023 453.620 472.983 493.170 414.439 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 325.40 342.85 358.95
375.42 392.33 409.77 427.79 446.47 465.87 486.06 507.09 529.04 246.40
648.071 668.355 690.531 714.256 739.514 766.318 794.719 824.757 856.470
889.911 925.160 962.246 855.614 3063.378 3711.450 4379.805 5070.335
5784.591 6524.105 7290.423 8085.142 8909.899 9766.37 10656.28 11581.44
12543.69 3711.450 4379.805 5070.335 5784.591 6524.105 7290.423 8085.142
8909.899 9766.37 10656.28 11581.44 12543.69 13399.30 0 1 2 3 4 5 6 7 8 9 10
11 Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 2024 2025
Liabilities Equity Capital 1062.801 1062.801 1062.801 1062.801 1062.801
1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 Reserve
and Surplus 71.558 376.544 705.609 1045.677 1395.344 1757.100 2133.213
2525.763 2936.685 3367.793 3820.805 4297.371 Loan Funds 3263.027
3221.072 2949.687 2678.557 2407.908 2137.767 1868.157 1599.108 1330.648
1062.808 795.618 529.114 Term Loan 3188.402 2980.463 2703.210 2425.958
2148.706 1871.453 1594.201 1316.949 1039.696 762.444 485.192 207.939
Working Capital loan 74.625 240.609 246.476 252.599 259.203 266.313 273.956
282.160 290.952 300.364 310.427 321.175 Total Liabilities 4397.39 4660.42
4718.10 4787.03 4866.05 4957.67 5064.17 5187.67 5330.13 5493.40 5679.22
5889.29 Assets Project Asset 4219.67 4093.53 3967.39 3841.25 3715.11
3588.97 3462.83 3336.69 3210.55 3084.41 2958.27 2832.14 Depreciation
31.535 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139
126.139 126.139 126.139 Current Asset 91.001 311.827 319.137 326.756
334.987 343.861 353.410 363.669 374.674 386.465 399.080 412.564 Coal Stock
12.910 54.220 56.931 59.778 62.766 65.905 69.200 72.660 76.293 80.108
84.113 88.319 Secondary Fuel 0.973 4.046 4.208 4.376 4.551 4.733 4.923 5.120
5.324 5.537 5.759 5.989 Maintenance Spares 20.396 21.563 22.796 24.100
25.479 26.936 28.477 30.105 31.828 33.648 35.573 37.607 Receivables 56.723
231.998 235.202 238.503 242.191 246.287 250.810 255.784 261.229 267.172

273.636 280.648 Cash 86.718 255.056 431.572 619.026 815.959 1024.832

1247.934 1487.306 1744.905 2022.522 2321.867 2644.587 Total Assets 4397.39
4660.41 4718.10 4787.03 4866.06 4957.66 5064.18 5187.67 5330.13 5493.40
5679.22 5889.29 Difference 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00
0.00 0.00 ANNEXURE XI: BALANCE SHEET 12 13 14 15 16 17 18 19 20 21 22 23
24 25 2026 2027 2028 2029 2030 2031 2032 2033 2034 2035 2036 2037 2038
2039 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801
1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 1062.801 4837.962
5400.660 5984.244 6590.244 7220.192 7875.637 8558.151 9269.338
10010.843 10784.358 11591.632 12434.473 13314.760 14060.37 333.014
347.273 363.547 380.660 398.654 417.575 437.471 458.392 480.391 503.525
527.851 553.432 580.333 453.553 0.000 0.000 0.000 0.000 0.000 0.000 0.000
0.000 0.000 0.000 0.000 0.000 0.000 0.000 333.014 347.273 363.547 380.660
398.654 417.575 437.471 458.392 480.391 503.525 527.851 553.432 580.333
453.553 6233.78 6810.73 7410.59 8033.70 8681.65 9356.01 10058.42
10790.53 11554.03 12350.68 13182.28 14050.71 14957.89 15576.73 2742.95
2653.76 2564.58 2475.39 2386.21 2297.02 2207.84 2118.65 2029.46 1940.28
1851.09 1761.91 1672.72 1606.83 89.186 89.186 89.186 89.186 89.186 89.186
89.186 89.186 89.186 89.186 89.186 89.186 89.186 66.889 427.453 445.517
466.214 487.972 510.844 534.889 560.165 586.737 614.671 644.037 674.909
707.364 741.485 570.597 92.735 97.371 102.240 107.352 112.719 118.355
124.273 130.487 137.011 143.862 151.055 158.608 166.538 131.149 6.229
6.478 6.737 7.007 7.287 7.578 7.882 8.197 8.525 8.866 9.220 9.589 9.973
7.779 39.759 42.033 44.437 46.979 49.666 52.507 55.510 58.686 62.042
65.591 69.343 73.309 77.503 81.936 288.731 299.635 312.800 326.635
341.172 356.448 372.500 389.368 407.092 425.718 445.291 465.858 487.471
349.734 3063.378 3711.450 4379.805 5070.335 5784.591 6524.105 7290.423
8085.142 8909.899 9766.369 10656.280 11581.440 12543.685 13399.30
6233.78 6810.73 7410.60 8033.70 8681.64 9356.01 10058.42 10790.53
11554.03 12350.68 13182.28 14050.71 14957.89 15576.73 0.00 0.00 0.00 0.00
0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 0.00 2010 2011 2012 2013 2014
2015 2016 2017 2018 2019 2020 2021 2022 2023 -657.558 -900.794 -1034.16
-1002.49 0 0 0 0 71.558 304.986 329.065 340.068 349.667 361.757 376.112
392.550 410.922 431.108 0 0 0 0 31.535 126.139 126.139 126.139 126.139
126.139 126.139 126.139 126.139 126.139 0 0 0 0 105.616 415.575 381.135
344.399 307.663 270.928 234.192 197.456 160.720 123.984 0 0 0 0 9.701
31.279 32.042 32.838 33.696 34.621 35.614 36.681 37.824 39.047 0 0 0 0
18.976 80.877 87.262 108.406 131.989 154.169 175.222 195.389 214.876
233.866 0 0 0 0 237.386 958.857 955.643 951.851 949.156 947.613 947.280
948.215 950.481 954.144 -657.558 -900.794 -1034.16 -1002.49 237.386
958.857 955.643 951.851 949.156 947.613 947.280 948.215 950.481 954.144
18.49% -547.342 0 -175.362 -340.10 0 0 0 0 71.558 304.986 329.065 340.068
349.667 361.757 376.112 392.550 410.922 431.108 -547.342 0 -175.362
-340.10 71.558086 304.98623 329.06473 340.06764 349.66729 361.75651
376.11202 392.5503 410.92209 431.10764 21.37% ANNEXURE XII: RATIOS Cash
Outflow Cash Inflow Cash to the project PAT Add: Depreciation Add: Interest on
loan Add: Interest on WC Add: Tax Total cash inflow Project IRR Cash Inflow Cash

to equity holder Equity IRR Cash Outflow 2024 2025 2026 2027 2028 2029 2030
2031 2032 2033 2034 2035 2036 2037 2038 453.013 476.565 540.591 562.698
583.584 605.999 629.948 655.445 682.514 711.187 741.505 773.515 807.274
842.841 880.287 126.139 126.139 89.186 89.186 89.186 89.186 89.186 89.186
89.186 89.186 89.186 89.186 89.186 89.186 89.186 87.248 50.512 13.776
0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000 0.000
40.355 41.753 43.292 45.145 47.261 49.486 51.825 54.285 56.871 59.591
62.451 65.458 68.621 71.946 75.443 252.517 270.970 290.340 306.386
321.146 336.132 351.426 367.104 383.237 399.893 417.134 435.023 453.620
472.983 493.170 959.273 965.940 977.185 1003.415 1041.177 1080.803
1122.385 1166.020 1211.808 1259.857 1310.276 1363.183 1418.700 1476.956
1538.086 959.273 965.940 977.185 1003.415 1041.177 1080.803 1122.385
1166.020 1211.808 1259.857 1310.276 1363.183 1418.700 1476.956 1538.086
453.013 476.565 540.591 562.698 583.584 605.999 629.948 655.445 682.514
711.187 741.505 773.515 807.274 842.841 880.287 453.01274 476.56532
540.59141 562.69847 583.58389 605.9992 629.94819 655.44518 682.51395
711.18699 741.50481 773.51537 807.27366 842.841393 880.286707 0 1 2 3 4
5 6 7 8 9 10 11 12 Year 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023
2024 2025 2026 PAT 71.558 304.986 329.065 340.068 349.667 361.757 376.112
392.550 410.922 431.108 453.013 476.565 540.591 Add: Depreciation 31.535
126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139 126.139
126.139 126.139 89.186 Add: Interest on Term Loan 105.616 415.575 381.135
344.399 307.663 270.928 234.192 197.456 160.720 123.984 87.248 50.512
13.776 Add: Tax 18.976 80.877 87.262 108.406 131.989 154.169 175.222
195.389 214.876 233.866 252.517 270.970 290.340 Total 227.685 927.578
923.602 919.013 915.460 912.993 911.665 911.534 912.657 915.097 918.917
924.187 933.893 Principal Repayment 0.000 207.939 277.252 277.252 277.252
277.252 277.252 277.252 277.252 277.252 277.252 277.252 207.939 Interest
Payment 105.616 415.575 381.135 344.399 307.663 270.928 234.192 197.456
160.720 123.984 87.248 50.512 13.776 Total Debt Services 105.616 623.515
658.388 621.652 584.916 548.180 511.444 474.708 437.972 401.236 364.500
327.764 221.715 DSCR 2.156 1.488 1.403 1.478 1.565 1.665 1.783 1.920 2.084
2.281 2.521 2.820 4.212 Minimum DSCR 1.403 Average DSCR 2.106 Maximum
DSCR 4.212 ANNEXURE XIII: DSCR