Business Plan for Bihar Grid Company Limited

Bihar Grid Company Limited

Business Plan for Bihar Grid Company

Limited for control period from FY 2017-18
to FY 2020-21

BUSINESS PLAN PREPARED AS A PART OF REGULATORY FILING UNDER MYT FRAMEWORK OF BERC
March 2017

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 Business Plan for Bihar Grid Company Limited

CONTENTS

DEFINITION ................................................................................................................................................... 3

1. INTRODUCTION ................................................................................................................................... 4

2 PROFILE OF BIHAR GRID COMPANY LIMITED ............................................................................. 5

3 ENERGY SCENARIO ........................................................................................................................... 7

4 TWELFTH PLAN OBJECTIVES FOR GROWTH TRENDS ............................................................. 9

5 TRANSMISSION BUSINESS-ISSUES AND CHALLENGES ........................................................... 9

6 BUSINESS PLAN FOR BIHAR GRID COMPANY LIMITED .......................................................... 11

7 CONSTRUCTION ACTIVITIES OF BIHAR GRID COMPANY LIMITED ...................................... 12

8 STATUTORY & REGULATION FRAMEWORK .............................................................................. 13

9 RETURN ON EQUITY(ROE).............................................................................................................. 15

10 TRANSMISSION CHARGES FOR FY 2013-14 AND MYT CONTROL PERIOD ......................... 15

11 PHASED FUND REQUIRMENT FOR CAPEX FROM EQUITY AND LOAN ................................ 15

12 MODE OF FINANCING ...................................................................................................................... 16

13 INTEREST DURING CONSTRUCTION ( IDC ) @ 12 % ................................................................. 16

14 PROPOSED CAPEX( Capital Expenditure )PLAN ........................................................................ 16

16 CAPITALISATION SCHEDULE ........................................................................................................ 19

17 MANPOWER FOR O&M .................................................................................................................... 19

18 DIVIDEND PAYMENT ........................................................................................................................ 19

19 REVENUE PROJECTION ................................................................................................................. 19

20 REVENUE COLLECTIONS FROM TRANSMISSION COMPANY ................................................. 20

21 BENEFICIARY .................................................................................................................................... 20

22 CONCLUSION .................................................................................................................................... 20

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DEFINITION

i) BERC means Bihar Electricity Regulatory Commission.

ii) BIHARGRID means Bihar Grid Company Limited.
iii) BSPHCL means Bihar State Power Holding Company Limited.
iv) BSPTCL means Bihar State Power Transmission Company
Limited
v) CAPEX means Capital Expenditure.
vi) CPSU means Central Public Sector Undertaking.
vii) DPR means Detailed Project Report.
viii) GIS means Gas Insulated Switchgear.
ix) IDC means Interest During Construction.
x) IEDC means Incidental Expenditure During Construction.
xi) ITSA means Implementation and Transmission Service
Agreement.
xii) MYT means Multi Year Tariff.
xiii) O&M means Operations and Maintenance.
xiv) POWERGRID means Power Grid Corporation Limited.
xv) R&M means Repairs and Maintenance.
xvi) RoE means Return on Equity.
xvii) SHA means Shareholder`s Agreement.
xviii) STU means State Transmission Utility.

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1. INTRODUCTION

IN ORDER TO DEVELOP THE INTRA-STATE TRANSMISSION SYSTEM IN THE

STATE OF BIHAR, IT WAS AGREED BETWEEN BIHAR STATEPOWER HOLDING
COMPANY LIMITED (BSPHCL) AND POWER GRID CORPORATION OF INDIA
LIMITED (POWERGRID) TO FORM A 50:50 JOINT VENTURE COMPANY IN THE
NAME OF BIHAR GRID COMPANY LIMITED UNDER THE PROVISION OF
COMPANIES ACT 1956. THE PROPOSED COMPANY WILL BUILD, OWN AND
OPERATE (BOO) THE TRANSMISSION SYSTEM AND IT WILL BE A
TRANSMISSION LICENSEE DULY APPROVED BY BERC.

1.1 Bihar Grid Company Limited was registered on 04.01.2013 under the Companies Act
1956 with the objective of providing transmission facilities to the state distribution
companies and any other transmission system users. BGCL also fulfils the
responsibility of planning, developing and coordinating with state transmission utility
(STU) of the State of Bihar.

1.2 BGCL has prepared a strategic & operational business plan taking cognisance of
existing internal factors and external business environment affecting the business.

1.3 The Business of Bihar Grid Company Ltd shall, at all times, be conducted on
commercial line and it shall be done independently and distinct from the share
holders.

1.4 The Bihar Grid Company Ltd (BGCL) shall have an authorised equity share capital
and unless otherwise mutually agreed, there shall be only one class of share. The
paid up capital of BGCL shall be as follows;

i) 50% of the issued and paid up equity share capital shall be held by
POWERGRID and the balance 50% shall be held by BSP(H)CL.
ii) BGCL shall be managed by its Board of Directors, and shall follow the rates
and guidelines of CPSU. It shall be responsible for formulating the policy of the
company in all matters as per CPSU guidelines.

1.5 The BERC in exercise of power vested in it under section 62(1) (b) read with section
62(3) and section 64(3) (a) of the Electricity Act 2003 and the BERC Terms and
Conditions for Determination of Tariff Regulations, 2007 and other enabling provision
on this behalf has asked to prepare and submit Business Plans for Transmission
scheme Part-II of Phase-IV to avail the tariff in line with Multi Year Tariff as per BERC
notification dated 24th April 2007 and its amendment order dated 10.03.2014.

1.6 Accordingly, the Bihar Grid Company Limited in compliance with the BERC Terms
and Conditions of Tariff Regulations, 2007 has prepared Business plan for the three
years control period (from FY 2017-18, 2018-19 & 2019-20).The objective of the
Business Plan is to project the Capital Investments, Financing costs, various
expenses and performance of the Transmission function of BIHAR GRID during the
MYT control period.

Approach to Development of Business Plan

1.7 The Business Plan for the Bihar Grid is prepared based on the review of erstwhile
Transmission profile, challenges faced in intra-state transmission and operational
performance. While preparing the Business Plan, past trends of various parameters

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have been considered so as to project the same appropriately for the years covered
under the control period.

1.8 Normally, the capital investment is based on projected demand growth in distribution
sector commensurate with the economic growth and generation capacity addition
necessitating increased evacuation requirement. Based on these projections,
addition of transmission lines and substations or augmentation of existing
transmission& transformation capacity are planned.

1.9 Accordingly, the Transmission Business Plan for the control period would include
following:

 Capital Investment Plan: Capital investments in the transmission function

are required for both, addition of new lines and substations necessary for
allowing flow of increased power onwards to the distribution utilities as well as
system strengthening and improvement schemes for increased reliability and
grid stability. The planning of Capital Investment is to essentially
commensurate with the anticipated load growth and quality improvement
measures. The Capital Investment Plan broadly includes the proposed year
wise Capital Investment towards new assets to be added.

 Capitalisation Schedule and Funding of Capex: The Business Plan also

includes the schedule of capitalisation for the proposed investments for the
new schemes. Considering the year wise amount envisaged, the funding of
Capital Investment has been proposed.

 Major Transmission Assets: The major Transmission Lines and Substations

proposed to be added, along with capacity additions have also been
summarised in this Business Plan.

1.10 Each of the above mentioned components of the Business Plan has been detailed
out in subsequent chapters. The Business Plan has been prepared according to the
BERC Terms and Conditions of Tariff Regulations, 2007, the Electricity Act, 2003
and applicable rules/ regulations/ provision of the law, Standard Accounting Practices
and generally accepted O&M norms etc.

2 PROFILE OF BIHAR GRID COMPANY LIMITED

2.1 The share holder agreement between Power Grid Corporation of India Ltd and Bihar
State Power (Holding) Company Ltd was made on 29th Dec,2012 and accordingly
implementation and transmission service agreement between Bihar State Power
(Holding) Company Ltd and Bihar Grid Company Ltd for intra-state transmission
projects in the state of Bihar was signed on 5th Jan’2013.

Considering the rapid load growth and the upcoming generation in the State of Bihar
in the next 5-6 years, a comprehensive study was carried out by POWERGRID in
2011-12 in association with BSEB and CEA. As per the study, the following
mentioned future transmission schemes including strengthening of existing system in
Bihar were planned, which were to be covered under 12th plan. Some of the works
were assigned to M/s Bihar Grid Company Limited (BGCL). The scheme was divided
in three parts as indicated below:

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- Part-1: Bihar Sub-Transmission Phase-II extension scheme (Annexure-1)

- Part-2(a): Strengthening scheme: Phase-1: Schemes identified for year 2012-
13, 2013-14 & 2014-15 (Annexure-2a)- under Phase-III
- Part-2(b): Strengthening Scheme: Phase-2: Schemes identified for year 2015-
16 & additional strengthening for year 2016-17 (Annexure-2b) - under Phase-
IV
- Part-3: Generation Linked Scheme: Transmission System for evacuation of
power from Lakhisarai, Pirpainti & Buxer generation projects (identified for
year 2016-17) – under Phase-V (Annexure- 3)

Note 1: The broad indicative cost of the transmission system is about 6300 Cr. (Part-
1-Rs. 300 Cr., Part-2(a) : Rs.1400 Cr, Part-2(b): Rs.3000 Cr., Part-3-Rs.1600
Cr.)
Note 2: Additional scope of work shall be assigned by BSP(H)CL/its Subsidiaries,
from time to time, on mutually agreeable basis.
Note 3: The list in annexures is an indicative list. BSP(H)CL/its Subsidiaries on its
own or on direction of the State Government can change the scope of
work/the schemes listed by addition or omission as per requirement.

Accordingly, the scheme under Part-1 was undertaken by BSPTCL as the works
under this scheme was to be taken up on priority.

Further, the scheme under Part-2(a) was also undertaken by BSPTCL as the works
under this scheme is primarily for removal of system constraints, existing as well as
anticipated in the near future.

2.2 Subsequently, a substantial portion of the scope of works under Part 2(b) of the
scheme viz. “Strengthening of Transmission System in Bihar – Phase-IV (Part 1
of 2) at a cost of Rs.1699.36 Crores(as per April 2013 price index) is presently
undertaken by BGCL, MYT for which has already been approved by BERC. The
detailed list of works under this scheme is enclosed herewith as Annexure-I.

2.3 Now, the revised DPR for the BGCL portion of work under Part 2(b) of the scheme
viz. “Strengthening of Transmission System in Bihar – Phase-IV (Part 2 of 2,
BGCL Scope) at a cost of Rs.1688.36 Crores (as per April 2016 price level) has
been prepared. The same is proposed to be implemented by BGCL on Build, Own &
Operate (BOO) basis. The agenda for Board resolution shall be put up shortly and
after resolution intimation shall be furnished to BERC.

2.4 Main functions and duties of Bihar Grid Company Limited:

2.4.1 To undertake planning and coordination activities in regard to Intra-State

Transmission, works connected with the inter-State Transmission System in
the State of Bihar, to introduce open access in transmission on payment of
transmission charges. To ensure development of an efficient, coordinated and
economical system of Intra-State Transmission lines for smooth flow of electricity
from a generating station to load centres and to provide non-discriminatory open

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access as per requirement. Other functions as may be assigned to the company by

law or otherwise by Government or Government Authority concerning the operation
of the Power System.

2.4.2 To plan, acquire, develop, establish, built, take over, erect, lay, operate, run,
manage, renovate, modernize, electrical transmission lines and / or net works
through various voltage lines and associated sub-stations, including cables, wires,
meters, computers and materials connected with transmission, ancillary services,
telecommunication and tele-metering equipment etc.

2.4.3 BGCL shall make available the entire transmission capacity of the Project to
BSP(H)CL on a commercial basis subject to the conditions laid down in the ITSA.

2.4.4 BGCL will derive its revenue by recovery of transmission charges from transmission
system users. The Company shall be primarily in the business of transmission of
electricity and it shall be vested with the transmission assets, interest in property,
rights and liabilities. The company shall act as Transmission Licensee under the
Provisions of Section 14 of the Electricity Act, 2003

2.4.5 BGCL will also define its own `Safety policy ` keeping in view the motto of `ZERO
ACCIDENT GOAL `.

2.4.6 BGCL will also adopt the Environmental Social Policy and Procedure(ESPP) and
also the Corporate Social Responsibility (CSR) in line with POWERGRID’s
established Policy and Procedure and will make a sincere contribution towards the
under privileged community by supporting a wide range of educational initiatives so
as to make a positive difference in their lives.

2.4.7 BGCL as a part of its energy conservation programme will contribute towards energy
conservation by spreading awareness amongst the people and adopt energy efficient
state of the art technology.

3 ENERGY SCENARIO

3.1 Primarily, the transmission of power in the State of Bihar takes place at 400kV,
220kV and 132kV voltage levels. The transmission network of the State
Transmission Utility (STU) i.e. BSPTCL consists of 103 substations and
approximately 1951.46 Circuit Kilometres (CKM) (220KV level) and 7375.32 Circuit
Kilometres (CKM) (132KV level) long transmission lines with 5590 MVA (220/132KV)
and 8570 MVA (132/33KV) MVA transformation capacity as on date.

3.2 The power supply position in the State of Bihar remained very poor and consequently
the peak deficit in the State has comparatively remained worst than the national
average for the country. The deficits in terms of energy availability and peak demand
for Bihar in 2013-14 were 4.1% and 6.2% and the same at national level were 4.2%
and 4.5% respectively as per Load Generation Balance Report (LGBR) 2014-15 of
CEA. Further, as per the said report, the deficits in terms of energy availability and
peak demand anticipated for State of Bihar in 2014-15 are 15.3% and 25.9%
whereas the same at national level are anticipated at 5.1% and 2.0% (Copy of the
relevant annexures of CEA report enclosed). The details are represented in the
charts below:

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16000 25.0%
15000
21.3%
14000 20.2% 20.0%
13000
14.4% 15.0%
12000
13.0%
11000
10.0%
10000
9000 5.0%
4.1%
8000
7000 0.0%
2009-10 2010-11 2011-12 2012-13 2013-14

Requirement (MU) Availability (MU) Deficit

3000 35.0%
32.9%
31.0% 30.0%
2500
25.0%
2000 22.5%
20.0%
1500
14.4% 15.0%
1000
10.0%
500 6.2% 5.0%

0 0.0%
2009-10 2010-11 2011-12 2012-13 2013-14

Peak Demand (MW) Peak Met (MW) Peak Deficit

3.3

3.4 Bihar has witnessed sharp increase in the economic growth during 11th&12th plan
period mainly on account of the developments in the secondary sector which has led
to a sharp rise in the per-capita income. However, the same is yet to reflect in the
energy/ power sector growth, as evident from the per capita energy consumption of
state, which is very low at 258kwh (source:BSP(H)CL) in comparison to the national
average of 1010kwh (for FY 2014-15). Therefore, to cater to the need and growth,
schemes like R-APDRP and RGGVY are being implemented in the State which will
definitely improve the distribution sector.

3.5 The Electricity Distribution Companies in the State of Bihar relies for its energy
requirement mainly on Central Sector Generating Stations as state owned capacity is
not at-all adequate to cater to the need. Further, the T&D loss of the Distribution
Companies are around 41%. Therefore, the State EHV transmission system needs to
be strengthened suitably for proper interface with the Inter State Network for meeting
the requirement by wheeling the power through the length and breadth of the state.

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3.6 The State of Bihar has experienced tremendous economic growth since the last few
years. The developmental activities in the various sectors in the state have resulted
in impressive growth rate of the state. During the 11thplan period, against the all India
growth rate of 7.94%, Bihar achieved a growth rate of 12.08% .The per capita income
of Bihar grew at 10.47% during the 11th plan, which is 4% higher than the same for
the country. The primary sector of the state is experiencing a decline in the share of
state’s domestic product – from 37.49% in 2000-01 to 18.12% in 2011-12 (Adv.). This
is due to the increased pace of developments in the secondary sector.

4 TWELFTH PLAN OBJECTIVES FOR GROWTH TRENDS

4.1 The State Government of Bihar has set following objectives to meet 12-13% growth
rate during the Twelfth plan period:

 To attempt for a high growth rate (7%) in Agriculture and allied sectors by
adopting the strategy of the Rainbow Revolution;
 To develop infrastructure at a much higher pace;
 To focus on industrialization;
 To emphasize the development of the social sector further, particularly education
and health;
 To make a sustained effort for reduction in poverty;
 To make a substantial increase in the income level of the lowest strata of society;
and
 To make an attempt at equitable regional development.

4.2 Due to rapid growth in Bihar, the current level of demand is anticipated to increase
drastically from current level of 3717 MW to 5660MW by 2017-18.To facilitate the
growth of the State and in order to meet the increasing demand for power, the state
Government of Bihar has planned various power generation capacity addition
programmes and allocation of fresh/ increased power from upcoming Central and
Private sector projects. With the progress of materialisation of these capacities, the
Transmission system needs to be adequately enhanced and strengthened so that
power from various new/ additional generating sources is evacuated efficiently for
further transmission and supply to the consumers at distribution ends in the State.

5 TRANSMISSION BUSINESS-ISSUES AND CHALLENGES

5.1 Transmission network serves as an important link between the Generation and
Distribution segments of electricity supply business. The issues and challenges
pertaining to the Transmission business are mostly in terms of keeping up with the
growth needs of the other two segments. The growth in the demand along with
increasing electrification at distribution end drive the need to meet the peak demand
and energy requirement by arranging supply from internal and external generation
sources. For which the transmission system has to be strengthened adequately and
timely for maintaining grid stability and supply quality.

5.2 Considering the very limited power generating capacity, the State Government of
Bihar has taken several initiatives in order to fulfil the supply needs of the state by

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setting up a few Independent Power Projects (IPPs), State Sector Projects and
arranging shares from Central Projects. Thus, by FY 2016-17 the power available
from these sources is going to touch around 5018MW.

5.3 As projected by CEA in its 18th Electric Power Survey (EPS), the peak demand(MW)
and Energy requirement (MU) for the coming year are as follows:-

2015-16 2016-17 2017-18

Peak Demand (MW) : 4352 5018 5660
Energy Requirement (MU) : 26330 29539 33050

5.4 The Commercial losses on account of theft and pilferage are major components of
the losses. With the increasing electrification initiatives at distribution end, certain
portion of energy is pilfered through unauthorised means. Though, it’s a challenge for
Distribution Function to reduce the losses, the Transmission system has to
accommodate the loss component as well along with legitimate retail sales so far as
the transmission infrastructure requirement is concerned.

OTHER KEY CHALLENGES

5.5 The growth of Transmission Lines and Transformation capacity/Substationsadditions

over the past few years is represented in the following chart.

Line Length (CKM) Transformation Capacity

6000 (MVA)
4000 6000
2000 4000
0 2000
0
2009-10 2010-11 2011-12 2012-13 2013-14

400KV 220KV 132KV 220KV 132KV

5.6 Observing the past trend shows that the circuit km of 400kV Transmission line
remained at 75 Ckm level, whereas it has grown at minimal 0.4% CAGR for 220kV
and 4.4% CAGR for 132kV level during five years.

5.7 Similarly, the number of 220kV substations grew at 3% and 132kV substations
increased at 5.65% CAGR during this period. The 220kV transformation capacity
increased at 8.8% CAGR and that for 132kV increased at 13% CAGR.

5.8 Taking into account the tremendous growth that is expected to take place during the
ensuing MYT control period in terms of power availability and retail sales, the
Transmission segment has to cope up by suitably enhancing the growth rate of
infrastructure additions and undertaking appropriate R&M schemes. Thus, keeping

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pace with the ever increasing power requirements would be a major business
challenge for the Transmission Company during the ensuing MYT control period.

5.9 The Open Access regulations were issued by BERC in 2006 according to which the
eligible person (Licensee, Generating Company, Consumer etc.) is allowed for non-
discriminatory open access to the intra-state transmission system subject to
availability of adequate transmission capacity. With the growth of the power market,
the open access consumers may put a challenge before the Transmission Company
in terms of providing access to transmission facilities. Transmission Company has to
take care of additional capacity that might be required to accommodate such needs
as such open access consumers may not necessarily be existing customers.

5.10 At execution level, the key challenge for Transmission Company shall be to manage
the multiple clearances related to projects, lands and right of way issues efficiently to
ensure that all the schemes are approved and implemented without any time and
cost overrun.

5.11 Replacement of ageing assets is necessary to maintain reliability of supply. Further,

to maintain safety and reliability in operation of transmission system, it’s important to
improve the condition monitoring and augment or refurbish the network and control/
switchgear equipment.

6 BUSINESS PLAN FOR BIHAR GRID COMPANY LIMITED

6.1 Accordingly, the BIHAR GRID in compliance with the BERC Terms and Conditions of
Tariff Regulations, 2007has prepared Business plan for the three year control period
(from FY 2017-18 to 2019-20).The objective of the Business Plan is to project the
Capital Investments, Financing costs, various expenses and performance of the
Transmission function of BIHARGRID during the MYT control period.

This Business Plan is hence submitted for approval by the Hon’ble Commission.

6.2 Key Objectives

Broadly, the following key objectives were kept in mind while preparing the Business
Plan.

 Strategic Planning: The primary objective of the Business Plan is to analyse and
anticipate the future requirements in advance and strategically plan for the capital
investments, related means of financing and various associated costs and
document them which would serve as an effective tool for monitoring and
execution of future works. With the level of economic growth the State of Bihar is
experiencing, it becomes utmost important to project the growth in transmission
network infrastructure commensurate with the energy demand required for
fuelling the economic growth targets of the State.

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 Regulatory Compliance: As highlighted in aforesaid Para 6.1, the direction

issued by the Hon`ble Commission entails submission of function wise separate
Business Plan. Thus, it is an essential part of the regulatory compliance for the
Company.

 Better Operational Efficiency: The Business Plan is prepared so as to be useful

for the Managing Board, associated stakeholders, the Hon’ble Commission and
various government bodies. The future projections in the Plan would help the
BGCL in decision making and taking proactive actions, and thus improving the
overall operational efficiency of the transmission network infrastructure.

7 CONSTRUCTION ACTIVITIES OF BIHAR GRID COMPANY LIMITED

7.1 PROPOSED LINES/SUBSTATIONS UNDER PHASE IV PART-2 (BGCL Scope)

1 2X500 MVA + 2X160MVA + 2X80MVA ,400/220132/33 KV NEW GIS STATION

AT NAUBATPUR
2 LILO of 400 KV D/C (Quad),ckt 3&4, of Patna - Balia line, at Naubatpur (New)
3 LILO of 220 KVD/C Ara (PG) - Khagaul(BSPTCL) line at Naubatpur (New)
4 220 KV D/C Naubatpur(New)-Bihta(BSPTCL) Transmission line.
5 132KV D/C Naubatpur (New) – Masaurhi (BSPTCL)
6 132KV D/C Naubatpur (New) – Palliganj (BSPTCL)
7 2X500MVA + 3X160 MVA + 4X80MVA, 400/220/132/33 KV GIS STATION AT
JAKKANPUR
8 LILO of 400 kV D/C Nabinagar-II - Patna(PG) Transmission Line at Jakkanpur
(New)
9 LILO of 220 KV D/C Sipara(BSPTCL)-Bihta (BSPTCL) line at Jakkanpur (new).
10 LILO of 220 kV S/C Khagaul(BSPTCL) - Sipara (BSPTCL) at Jakkanpur (New)
11 LILO of 132 KV D/C Jakkanpur-Sipara line at Jakkanpur new (being re-
conductored with HTLS by BSPTCL)
12 LILO of 132 KV S/C Jakkanpur/Mithapur-Fatuha line at Jakkanpur new (being
re-conductored with HTLS by BSPTCL)
13 2X100MVA, 220/33 KV NEW GIS AT BHUSAULA
14 220 KV D/C Naubatpur (New)-Bhusaula (New) Transmission line
15 2X160MVA + 2X80MVA ,220/132/33 KV GIS at DUMRAON
16 LILO of 220 KV D/C Ara (PG) - Pusauli(PG) line at Dumraon (New)
17 132 kV D/C Dumraon (New) - Dumraon (BSPTCL) Transmission line. (ACSR
Zebra Conductor)
18 132 kV D/C Dumraon (new)-Buxar (BSPTCL)
19 132KV D/C Dumraon(New)- Jagdishpur (BSPTCL)
20 LILO of one Ckt of 132KV D/C Purnea–Naugachia/ Khagaria line at Katihar

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(BSPTCL)

7.2 PROJECTS COMMISSIONING TARGET:

1 2X500 MVA + 2X160MVA + 2X80MVA ,400/220/132/33 KV NEW GIS 30.11.2019

STATION AT NAUBATPUR
2 LILO of 400 KV D/C (Quad),ckt 3&4, of Patna - Balia line, at Naubatpur 30.11.2019
(New)
3 LILO of 220 KVD/C Ara (PG) - Khagaul(BSPTCL) line at Naubatpur (New) 30.11.2019
4 220 KV D/C Naubatpur(New)-Bihta(BSPTCL) Transmission line. 30.11.2019
5 132KV D/C Naubatpur (New) – Masaurhi (BSPTCL) 30.11.2019
6 132KV D/C Naubatpur (New) – Palliganj (BSPTCL) 30.11.2019
7 2X500MVA + 3X160 MVA + 4X80MVA, 400/220/132/33 KV GIS STATION 30.11.2019
AT JAKKANPUR
8 LILO of 400 kV D/C Nabinagar-II - Patna(PG) Transmission Line at 30.11.2019
Jakkanpur (New)
9 LILO of 220 KV D/C Sipara(BSPTCL)-Bihta (BSPTCL) line at Jakkanpur 30.11.2019
(new).
10 LILO of 220 kV S/C Khagaul(BSPTCL) - Sipara (BSPTCL) at Jakkanpur 30.11.2019
(New)
11 LILO of 132 KV D/C Jakkanpur-Sipara line at Jakkanpur new (being re- 30.11.2019
conductored with HTLS by BSPTCL)
12 LILO of 132 KV S/C Jakkanpur/Mithapur-Fatuha line at Jakkanpur new 30.11.2019
(being re-conductored with HTLS by BSPTCL)
13 2X100MVA, 220/33 KV NEW GIS AT BHUSAULA 30.11.2019
14 220 KV D/C Naubatpur (New)-Bhusaula (New) Transmission line 30.11.2019
15 2X160MVA + 2X80MVA ,220/132/33 KV GIS at DUMRAON 31.03.2019
16 LILO of 220 KV D/C Ara (PG) - Pusauli(PG) line at Dumraon (New) 31.03.2019
17 132 kV D/C Dumraon (New) - Dumraon (BSPTCL) Transmission line. 31.03.2019
(ACSR Zebra Conductor)
18 132 kV D/C Dumraon (new)-Buxar (BSPTCL) 31.03.2019
19 132KV D/C Dumraon(New)- Jagdishpur (BSPTCL) 31.03.2019
20 LILO of one Ckt of 132 KV D/C Purnea – Naugachia/ Khagaria line at 31.03.2019
Katihar (BSPTCL)

8 STATUTORY & REGULATION FRAMEWORK

8.1 Norms for Working Capital Requirement

S. No. Particulars Norm

1 Operation and maintenance O&M Expenses for one month
expenses
2 Maintenance spares 1% of Project cost.

3 Receivables Equivalent to two months of

transmission charges.

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4 Rate of interest on working Short –term Prime Lending Rate of State

capital Bank of India on 1st April of the year.

8.2 The rate of interest applied on the proposed working capital is as per the SBI PLR as
on 1 April 2016, which is 14.00%.

8.3 The Company prays to Hon’ble commission for approval of the proposed charges
towards interest on working capital.

Employee Expenses
8.4 The employee expenses primarily include costs towards salaries, dearness
allowances, perks, performance related pay, bonus, staff welfare and medical
benefits, leave travel and earned leave encashment, and the terminal benefits in the
form of pension, gratuity etc.

8.5 The Company has considered function wise actual employee cost provided in the
Statement of the Annual Account for FY 2015-16 for projecting the same for MYT
control period. While determining the employee cost, the Company has reduced the
same by employee cost capitalised to arrive at the net employee cost for the year.
For this purpose, the actual employee cost capitalised for the FY 2015-16 has been
apportioned across respective functions in the ratio of their employee costs.

8.6 The Consumer price index has increased from 125.4 in FY 2014-15 to 131.1 in FY
2015-16 which is an increase of 5.7%. Considering the same, the estimates that the
Employees expenses will increase by 5.7% in FY 2016-17 and during the MYT
period from FY 2017-18 to FY 2020-21.

8.7 The Company has applied escalation on employee cost capitalisation values for FY
2017-18, 2018-19, 2019-20 & 2020-21.

8.8 Based on the above, the net employee cost for tariff determination is projected in
following manner.

8.9 The Company would like to submit to the Hon`ble Commission that, though the O&M
costs are “controllable” as per the BERC (Terms and Conditions of Tariff) regulations,
2007, it shall consider the employee expenses as “uncontrollable” owing to the
following facts.
(a) Increase in the salaries of employees including dearness allowance,
(b) Increase in salaries due to recruitment of new employees and contractual
appointments; and
(c) Provision of retirement dues on the basis of actuarial valuation from current
financial year.

8.10 The Company prays to the Hon`ble commission to adopt a practicable approach
while determining the Transmission charges with due consideration of the above
factors appropriately since any disallowance in employee costs leads to cash losses
for the Company.

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Administration & General Expenses (A&G)

8.11 Administration and General expenses mainly comprise costs towards rent charges,
telephone and other communication expenses, professional charges, conveyance
and travelling allowances and other debits.

Repair & Maintenance (R&M) Expenses

8.12 The Repair & Maintenance Expenses primarily include the costs towards regular
upkeep of the system and network as well as the office establishments, office
equipment, building and civil works, furniture and fixtures etc. The R&M activities
form an integral part of the Company’s efforts to maintain reliable and quality power
supply as also in the reduction of losses in the system.

9 RETURN ON EQUITY(ROE)

9.1 The company has got the ROE at 16% as base rate of return as per the BERC Tariff
Regulations, 2007, amended in 2014.

10 TRANSMISSION CHARGES FOR FY 2013-14 AND MYT CONTROL PERIOD

10.1 The Annual Fixed Charges or Transmission charges are arrived at by aggregating all
the expenses detailed in pervious sections viz., Depreciation, Interest on Loan,
Interest on Working Capital, O&M expenses and ROE. The total expenses less Non-
Tariff Income are the net Annual Fixed Charges or Transmission charges.

10.2 Accordingly, following is the summary of projections for approval by Hon`ble

Commission for BGCL.

10.3 The Company would like to submit that the Transmission charges for the MYT control
period are estimated based on the applicable rules and regulations of CPSU and the
methods adopted by Hon’ble Commission in its tariff order for FY 2014-15. The
various costs are estimated in accordance with the regulatory norms, assumptions
and detailed justifications.

10.4 The company also proposed that Letter of Credit (LC) may be opened by the
beneficiary @ 105 % of the average monthly billing calculated every six months as
payment security mechanism. A rebate of 2% will be allowed if the payment is made
by the beneficiary on presentation of transmission charges bill and a rebate of 1 %
shall be allowed if the payment is made within one month of presentation of bill.

11 PHASED FUND REQUIRMENT FOR CAPEX FROM EQUITY AND LOAN

The anticipated year wise fund requirement (equity and loan) for the projects
including interest during construction is given below.

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(Rs in Crores)
Equity (20%) Loan (80%) Total
Year
2017-18 48.07 192.27 240.34

2018-19 100.70 402.78 503.48

2019-20 158.31 633.26 791.57

2020-21 30.59 122.38 152.97

Total 337.67 1350.69 1688.36

The above phased fund requirement is provisional and the final phased fund
requirement shall be submitted to the commission after investment approval by the
BGCL Board.

12 MODE OF FINANCING

Transmission lines and substations covered under this scheme are envisaged to be
implemented by BGCL through Domestic funding. The equity component (20% ) is
proposed to be met by promoters i.e. POWERGRID & BSPHCL and the loan
component (80%) proposed through Domestic Lender.

 THE ESTIMATED COST OF THE PROJECTS IS BASED ON APRIL 2016

PRICE LEVEL.

 THE INCIDENTAL EXPENDITURE DURING CONSTRUCTION ( IEDC ) :

12%

 CONTIGENCIES: 3%

13 INTEREST DURING CONSTRUCTION ( IDC ) @ 12 %

13.1 The interest during construction is the interest charged on the actual loan drawl
during the year. The interest rate considered for the IDC is the applicable interest
rate for the proposed loans. The following table shows the computation of IDC for FY
2017-18 as well as the MYT Control period.

Interest During Construction (Rs. Crore)

Year 2017-18 2018-19 2019-20 2020-21 Total
Total Fund Required
excluding IDC 229.46 458.91 688.36 152.97 1529.7
Loan Amount (80%) 192.27 402.78 633.26 122.38 1350.69
Interest During Construction 10.88 44.57 103.21 0 158.66

14 PROPOSED CAPEX( Capital Expenditure )PLAN

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14.1 Construction Activities Of 400kv Gas Insulated Switchgear (GIS) Substations

By BIHARGRID

( All figures in Crores)

New Projects 2017-18 2018-19 2019-20 2020-21 Total
i) Naubatpur 440KV GIS 42.74 91.59 143.50 27.48 305.31
ii) Jakkanpur 400KV GIS 48.87 104.73 164.08 31.42 349.11
iii) Bhusaula 220KV GIS 11.98 25.66 40.21 7.70 85.55
iv) Dumraon 220KV GIS 20.71 44.38 69.52 13.31 147.92
TOTAL 124.30 266.37 417.31 79.91 887.89

14.2 Extension Of BGCL GIS substation / BSPTCL (OLD) Substations By

BIHARGRID
( All figures in Crores)

Extension Projects 2017-18 2018-19 2019-20 2020-21 Total

i) 220kV Bihta GIS (BSPTCL) 3.89 8.33 13.05 2.50 27.77
ii) 132kV Dumraon (BSPTCL) 0.60 1.29 2.02 0.39 4.30
iii) 132kV Buxar (BSPTCL) 0.55 1.19 1.86 0.36 3.96
iv) 132kV Katihar (BSPTCL) 0.64 1.37 2.14 0.41 4.56
v) 132kV Jagdishpur GIS (BSPTCL) 4.01 8.60 13.48 2.58 28.67
vi) 132kV Palliganj (BSPTCL) 1.55 3.33 5.22 1.00 11.10
vii) 132kV Masuahri (BSPTCL) 1.56 3.33 5.22 1.00 11.11
TOTAL 12.80 27.44 42.99 8.23 91.46

14.3 Construction Activities Of Transmission Lines By BIHARGRID

Yearwise Fund Requirment (Rs.in Crores)

NAME OF LINES 2017-18 2018-19 2019-20 2020-21 TOTAL

1 LILO of 400kV D/C Nabinagar-II – 6.58 14.10 22.08 4.23 46.99
Patna(PG) transmission line at
Jakkanpur (New) (14 Kms)
2 LILO of 220kV D/C Sipara 1.85 3.97 6.21 1.19 13.22
(BSPTCL) – Bihta (BSPTCL) line
at Jakkanpur (New) (14 Kms)
3 LILO of 220kV S/C 1.50 3.21 5.03 0.96 10.70
Khagaul(BSPTCL)-Sipara
(BSPTCL) at Jakkanpur (New) (10
Kms)
4 LILO of 132kV D/C Jakkanpur- 4.34 9.31 14.58 2.79 31.02
Sipara line at Jakkanpur new
(being re-conductored with HTLS
by BSPTCL) (20 Kms)
5 LILO of 132kV S/C 3.07 6.57 10.29 1.97 21.90
Jakkanpur/Mithapur-Fatuha line at
Jakkanpur New( being re-
conductored with HTLS by
BSPTCL)(12 Kms)
6 LILO of 400kV D/C (Quad) ckt. 5.21 11.15 17.48 3.35 37.18
3&4 of Patna-Balia line at
Naubatpur (New)(12Kms)

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7 LILO of 220kV D/C Ara(PG) – 2.63 5.64 8.84 1.69 18.81

Khagaul(BSPTCL) line at
Naubatpur (New) (22 Kms)
8 220kV D/C Naubatpur(New) – 3.34 7.15 11.20 2.14 23.83
Bihta(BSPTCL) transmission line
(25 Kms)
9 220kV D/C Naubatpur (New) – 2.45 5.24 8.21 1.57 17.47
Bhusaula (New) Transmission line
(18 Kms)
10 LILO of 220kV D/C Ara (PG) – 5.49 11.76 18.42 3.53 39.20
Pusauli (PG) line at Dumraon
(New) (50 Kms)
11 132kV D/C Dumraon (New) – 0.86 1.83 2.87 0.55 6.11
Dumraon (BSPTCL) transmission
line (8 Kms)
12 132kV D/C Dumraon (new) – 1.76 3.77 5.90 1.13 12.56
Buxar (BSPTCL) (20 Kms)
13 LILO of one Ckt of 132kV D/C 2.52 5.40 8.46 1.62 18.00
Purnea-Naugachia/Khagaria line at
Katihar (BSPTCL) (30 Kms)
14 132kV D/C Dumaron(New)- 2.82 6.04 9.46 1.81 20.12
Jagdishpur(BSPTCL)(32 Kms)
15 132kV D/C Naubatpur – Masauhri 1.50 3.22 5.04 0.97 10.73
transmission line (11.5 Kms)
16 132kV D/C Naubatpur – Palliganj 3.22 6.89 10.80 2.07 22.97
transmission line (25.5 Kms)
Total 75.21 161.16 252.48 48.35 350.82
GRAND TOTAL (SS+Bay+line) 212.32 454.96 712.78 136.49 1330.17

15 ABSTRACT COST ESTIMATE

Description Amount (Rs. in

Crores)
Preliminary survey etc 1.51
Land Acquisition etc. 52.71
Cost of compensation for Transmission
lines 127.32
Civil works 24.06
Equipment cost
a) Transmission lines 271.35
b) Sub-Stations 901.88
Total: 1330.17
IEDC ( 12%) 159.62
CONTIGENCIES (3%) 39.91
Total Projects Cost: 1529.70

INTEREST DURING CONSTRUCTION 158.66

Grand Total: 1688.36

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16 CAPITALISATION SCHEDULE

16.1 While preparing the Business Plan, BGCL has considered Capitalisation Schedule in
following manner for new schemes and for Extension of BSPTCL (OLD) Substations.

(Rs. in crores)

Capitalisation Schedule 2017-18 2018-19 2019-20

For new schemes and Extension of Nil Nil 1688.36
BSPTCL (OLD) Substations

THE ENTIRE WORK TO BE COMMISSIONED WITHIN 36MONTHS FROM DATE OF

INVESTMENT APPROVAL BY BGCL BOARD.

17 MANPOWER FOR O&M

a)For one No. 400KV Sub-Station:1 no.In-Charge,2 no.Executive,1no.Supervisor

,1no.Workmenand 8no.Shift persons
b)For one no. 220kv Sub-Station:- 1 no. In- Charge,1no.Executive,1no.
Supervisor,1no.Workmen and 4no. Shift persons
c)For Every 300km T/L:1no.Executive,1no.Supervisor and1no.Workmen.

18 DIVIDEND PAYMENT

Dividend payment out of profit of the Company to be decided later on.

19 REVENUE PROJECTION

Transmission Charges:
19.1 The Annual Fixed Charges or Transmission charges are arrived at by aggregating all the
expenses detailed in pervious sections viz., Depreciation, Interest on Loan, Interest on
Working Capital, O&M expenses and Return on equity. The total expenses less Non-Tariff
Income are the net Annual Fixed Charges or Transmission charges.

19.2 Accordingly, following is the summary of projections as per Tariff petition and estimates of
Aggregate Revenue Requirement for Transmission Company are tabulated below.
Revenue Projection (Rs. Crores)

Particulars Amount Rate (%) FY2019-20

Depreciation 1688.36 5.28 89.15
Interest & Finance Charges 1350.69 12 162.08
Interest on Working Capital 78.13 14 10.94
O&M Cost 1688.36 2 33.77
Return on Equity 337.67 16 54.03
Total per Year Revenue(in Cr) 349.96

Revenue from Tariff to be 20.72 percent of the total cost of the Project.

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20 REVENUE COLLECTIONS FROM TRANSMISSION COMPANY

Revenue to be collected from Bihar State Power (Holding) Company Limited/its

Subsidiaries through a confirmed irrevocable, unconditional and revolving Letter of
Credit.

21 BENEFICIARY

The beneficiary of the project is Bihar State Power (Holding) Company Limited/its
Subsidiaries.

22 CONCLUSION

THE BUSINESS PLAN IS BEING SUBMITTED TO HON`BLE COMMISSION. HOWEVER,

IF ANY OTHER INFORMATION OR DOCUMENTS ARE REQUIRED, IT WILL BE
SUBMITTED ACCORDINGLY.

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