Raichur Sholapur Transmission Company Limited

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On 16th December 2010, Rural Electrification Corporation Limited (RECL) awarded a concession of 35 years (including construction period of 3 years starting from 7th January 2011) to a consortium of Patel Engineering Limited (33.3%),Simplex Infrastructures Limited (33.3%), and BS TransComm Limited (33.3%), for the development of the 208km 765kv single-circuit transmission,in the states of Karnataka and Maharashtra.The transmission project was associated with the upcoming Krishnapattnam Ultra Mega Power Project (4000MW)- and export of power from various IPPs coming up in Southern Region to their target beneficiaries in Western and Northern region. With this interconnection a synchronously connected all India Grid would come into existence. REC Transmission Projects Company Limited (RECTPCL),a wholly owned subsidiary of Rural Electrification Corporation Limited incorporated on 19th November 2009, conducted the bid process for the SPV, Raichur Sholapur Transmission Company Limited (RSTCL). 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. 23 identified Long Term Transmission Customers (LTTCs), primiarily across westerna dn southern region, were to enter into Transmission Service Agreement (TSA) with the successful bidder. Responses to the RFQ were received from 35 bidders on 26.4.2010, out of which 25 bidders were qualified for the RFP stage. The RFP bids comprising of Non-Financial Bids and Financial Bids were submitted by 20 bidders, out of which 1 bidder was rejected.19 bidders offered their finanical bids including Lanco Infratech, Asoka Buildcon, Navayuga, Sterlite. The (Patel,Simplex,BST) consortium won the bid by quoting the lowest levelized transmission charges of USD 6.4mn per annum (INR 293.9569mn @45.73 USD/INR). The L2 bidder (Lanco) had quoted INR 315.894mn/year and L3 bidder (Ashoka) had quoted INR 316.7983mn/year respectively.The SPV Raichur Sholapur Transmission Company Limited was subsequently transferred to the winning consortium on 7th January 2011. The tranmission license was awarded by CERC on 24th August 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 12th August,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 security mechanism as put in place in PTA. Details of financial closur