Jabalpur Transmission Company Limited

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On 19th January 2011, Power Finance Corporation (PFC) awarded a concession of 35 years (including construction period of 3 years starting from the date of grant of Transmission License) to M/s Sterlite Transmission Projects Private Limited, for the development of the 368km 765kv double-circuit transmission and 242km single-circuit transmission project,in the states of Madhya Pradesh and Chattisgarh. The western region interconnection mega transmission project was aimed at system strengthening of western and northern region transmission grids through two sections - Dhramjaygarh-Jabalpur line and Jabalpur-Bina line. Given the huge potential of thermal power in Central coal-rich states, power transfer to meet the long term power transfer requirement i.e. next 10-15 years. Jabalpur Transmission Company Limited (JTCL) was incorporated on 8th September, 2009. PFC Consulting Limited (subsidiary of PFC) conducted the bid process for the SPV, Jabalpur Transmission Company Limited (JTCL). The SPV had been formed to undertake preliminary survey work, identification of route, preparation of Survey Report, initiation of the process of land acquisition (if required), initiation of process of seeking forest clearance(if required) and to conduct the bidding process. 5 idetified Long Term Transmission Customers (LTTCs) - Audhunik Power and Natural Resources Limited, Corporate Power Limited, Essar Power (Jharkhand) Limited, West Bengal State Electricity Distribution Company Limited, and MB Power (Madhya Pradesh) Limited, were to enter into Transmission Service Agreement (TSA) with the successful bidder. 33 biders had shown interest in the RFQ stage, out of which 22 got qualified for the RFP stage. Only 13 bidders offered their finanical bids out of which 2 bids were rejected to non-conformance to the RFP requirement. Sterlite Transmission Projects Private Limited (subsidiary of Serlite Group) won the bid by quoting the lowest levelized transmission charges of USD 31.1mn per annum (INR 1421.28mn @45.73 USD/INR). The L2 bidder - Ashoka ICOMM Consortium had quoted INR 1440.90 mn/year and L3 bidder - Jyoti Energy Limited had quoted INR 1499.48 mn/year respectively.The SPV Jabalpur Transmission Company Limited was subsequentlytransferred to Sterlite on 31st March 2011. The tranmission license was awarded by CERC on 12th October 2011 for a period of 25 years (to be extended on request before the expiry of the license period). Adoption of Transmission Charges and grant of Transmission License by CERC was done on 28th October, 2011.The tariff adopted for the transmission system was valid for a period of 35 years. The tariff of the transmission assets beyond the period of 35 years were to be governed in accordance with the provisions of CERC Regulations. The tariffs or the Transmission Service Charges (TSC) comprised of a non-escalable component and an escalable component linked to inflation index as notified by CERC (Central Regulator). The ratio of the minimum and maximum quoted annual transmission charges during the term of the TSA should not be less than 0.7 and, the quoted escalable transmission charges were not to exceed 15% of the corresponding quoted nonescalable transmission charges for each of the corresponding contract year. Full TSC as per the quoted tariff structure were payable to BDTCL by the counterparty utilities subject to availability of the transmission lines at normative level of 98%. As mentioned in PTA, a payment security mechanism was in place which comprised of a) revolving Letter of Credit (for 105% of monthly TSC), and b) right for request to RLDC (Regional Load Dispatch Centre) for diversion of low cost power available to defaulting state utility in the peak time (7 to 10 pm) so that dues could be adjusted from the revenues arising out of sale of those diverted units at Unscheduled Interchange (UI) rate. Counter party credit risks post CoD were thus expected to remain largely mitigated by way of adequate payment securi