appraisal of capital expenditure proposal in transmission

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Appraisal of Capital Expenditure Proposal in Transmission Business of KSEB for the Control Period FY19 - FY22 KSERC

31 March 2020

Final

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PricewaterhouseCoopers Private Limited, #8-2-624/A/1; 4th Floor, Road No. 10, Banjara Hills, Hyderabad 500 034 India,

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31 March 2020

To

The Hon’ble Chairman Kerala State Electricity Regulatory Commission (KSERC), K.P.F.C. Bhavanam, C.V. Raman Pillai Road, Vellayambalam, Thiruvananthapuram, Kerala - 695 010.

Reference:

1. Work Order No 1 dated 26 June 2019 2. Agreement No 1 dated 24 July 2019 between Kerala State Electricity Regulatory Commission and

PricewaterhouseCoopers Private Limited. 3. Inception Presentation at your office on 22 July 2019 4. Presentation on the findings at your office on 25 September 2019 5. Draft report submitted to your office on October 29th, 2019 6. Presentation before Hon’ble Commission on 21st January 2020 7. Letter No 0233/DD(T)/2019/KSERC dated 18th March 2020 regarding time extension of contract

Subject: Submission of Final Report for “Appraisal of the Capital Expenditure Proposal in Transmission business of KSEB for the Control Period, FY 19 - FY 22”

Dear Sir,

Subsequent to the work order awarded to us, we have evaluated the Capital Expenditure Proposal of Kerala State Electricity Board Limited for its SBU-T. The prudence check was done by evaluating the Detailed Project Reports of TRANSGRID 2.0 and New Capital Works Program based on the evaluation framework developed after discussing with KSERC. The findings and recommendations of our analysis were already presented before the Hon’ble Commission.

Further, we are pleased to submit the final report, for your kind perusal.

Should you have any clarifications on the same, please feel free to discuss with us.

PricewaterhouseCoopers Private Limited

Kameswara Rao

Leader and Partner

Power & Utilities

Email: [email protected]

http://www.pwc.com/

mailto:[email protected]

Final

Appraisal of Capital Expenditure Proposal in Transmission Business of KSEB for the Control Period FY19 - FY22 31 March 2020

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Disclaimer

This document is strictly private and confidential and has been prepared by PricewaterhouseCoopers Private Limited (PwC) specifically for Kerala State Electricity Regulatory Commission (KSERC), for the purpose specified therein. The information and observations contained in this document is intended solely for the use and reliance of KSERC and is not to be used, circulated, quoted or otherwise referred to for any other purpose or relied upon without the express prior written permission of PwC, in each instance. This document is limited to the matters expressly provided herein and no comment is implied or may be inferred beyond the matters expressly stated therein.

It is hereby clarified that in no event, PwC shall be responsible for any unauthorized use of this document or be liable for any loss or damage, whether directly, indirectly or consequently, that may be suffered or incurred by any party other than KSERC arising out of or in connection with the same.

Final


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Abbreviation

The following is the list of abbreviations used in this report:

Table 1: List of Abbreviations

Abbreviation Description

ACSR Aluminium Conductor Steel Reinforced Conductor

ACSS Aluminium Conductor Steel Supported Conductor

AIS Air Insulated Substation

ARR Aggregate Revenue Requirement

BCR Benefit- Cost Ratio

CBA Cost Benefit Analysis

CBR Cost Benefit Analysis

CCC Cost Benefit Ratio

CEA Central Electricity Authority

COD Commercial Operation Date

Cr Crore

DC Direct Current

DC Double Circuit

DPR Detailed Project Report

DSR Delhi Schedule of Rates

EHT Extra-High Tension

EHV Extra High Voltage

EIRR Economic Internal Rate of Return

EMPP Edamon Paruthippara

EMTP Study Study for Switching / Dynamic over-voltages, Insulation coordination

EOT Electric Overhead Traveling Crane

EPC Engineering Procurement and Construction

EPS Electric Power Survey

FY Financial Year

GFA Gross Fixed Asset

GIB Gas Insulated Bus

GIS Gas Insulated Substation

GST Goods & Services Tax

HEP Hydro Electric Plant

HTLS High-Temperature Low-Sag Conductor

HVDC High-Voltage Direct Current

ICT Inter Connecting Transformer

INR Indian Rupee

IRR Internal Rate of Return

ISTS Interstate Transmission System

JUSNL Jharkhand Urja Sancharan Nigam Limited

KIIFB Kerala Infrastructure Investment Fund Board

KIPP Kilimanoor Paruthippara

KLKA Kaloor Kalamassery Line

KPI Key Performance Indicator

KPTCL Karnataka Power Transmission Corporation Limited

KPWD Karnataka Public Works Department

KSEB Kerala State Electricity Board Limited

KSERC Kerala State Electricity Regulatory Commission

kV Kilo Volt

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Abbreviation Description

kWh Kilowatt Hours

KVAT Kerala Value Added Tax

LFS Load Flow Study

LILO Line-In Line-Out

LOI Letter of Interest

LPHEP Lower Periyar Hydro Electric Plant

MCMV Multi-Circuit Multi Voltage

MIS Management Information System

MLMJ Malappuram-Manjeri Line

MU Million Units

MVA Mega Volt Ampere

MVAR Mega Volt Ampere (Reactive)

MW Mega Watt

MWAC Mega Watt Alternating Current

MYT Multi Year Tariff

NMLP North Malabar Lines Package

NPV Net Present Value

NRHTLS Northern Region High Temperature Low Sag Package

NSIP North South Interlink Package

PBP Pay Back Period

PES Pallivasal Extension Scheme

PGCIL Power Grid Corporation of India Limited

PSDF Power System Development Fund

PTCC Power and Telecommunication Coordination Committee

PWD Public Works Department

ROE Return on Equity

ROW Right of Way

SAS Substation Automation System

SBU-T Strategic Business Unit- Transmission

SCADA Supervisory Control And Data Acquisition

SLDC State Load Dispatch Centre

SOR Schedule of Rates

SS Substation

STACIR Super Thermal Alloy Conductor Invar Reinforced Conductor

TLSP Thrissivaperur Line Strengthening Package

TVT Trivandrum- Thakkalai

VAT Value Added Tax

VSC Voltage Source Converter

WPI Wholesale Price Index

XLPE Cross-linked PolyEthylene

Final

Table of Contents

1. Executive Summary ................................................................................................12

1.1 Background .............................................................................................................................. 12

1.2 Philosophy for the new transmission projects ........................................................................... 12

1.3 Appraisal of TRANSGRID 2.0 and New Capital Works ............................................................. 12

1.3.1 Outcome of Appraisal for TRANSGRID 2.0 Program ........................................................ 13

1.3.2 Outcome of Appraisal for New Capital Works Program ..................................................... 13

1.4 Impact of non-deducible projects on GFA addition ................................................................... 14

1.5 Impact of proposed TRANSGRID 2.0 and New Capital Works program on the grid and tariff... 14

1.6 Assessment of Execution Capability of SBU-T........................................................................... 16

1.7 Recommendations and Way forward .........................................................................................17

2. Introduction .......................................................................................................... 18

2.1 Background .............................................................................................................................. 18

2.2 Overview of TRANSGRID 2.0 program and New Capital Works program ................................. 18

2.2.1 TRANSGRID 2.0 program ................................................................................................ 19

2.2.2 New Capital Works program ............................................................................................. 20

2.3 Gross Fixed Asset (GFA) addition – proposed by SBU-T vs provisionally approved by KSERC.. 23

3. Evaluation framework ........................................................................................... 25

3.1 Guiding principle ..................................................................................................................... 25

3.1.1 Preamble .......................................................................................................................... 25

3.1.2 Overview of the principle .................................................................................................. 25

3.2 Framework for evaluation ........................................................................................................ 26

3.2.1 Framework for evaluation at the planning stage................................................................ 26

3.2.2 Framework for evaluation of project at the implementation stage ..................................... 30

3.2.3 Framework for evaluation of project at post-execution stage ............................................. 31

3.3 Methodology for scoring/grading the Capital Investment Proposal ........................................... 31

3.3.1 Procedure for scoring the capital investment proposal projects at the planning stage ........ 32

3.3.2 Procedure for scoring the Capital Investment Proposal Projects at the implementation stage43

3.3.3 Procedure for scoring the Capital Investment Proposal Projects at post-execution stage ... 43

4. Appraisal of Capital Expenditure Program .............................................................. 45

4.1 Philosophy for TRANSGRID 2.0 program and New Capital Works program ............................. 45

4.2 Impact of transmission capacity proposed under TRANSGRID 2.0 and New Capital Works ..... 47

4.2.1 Capacity addition proposed for the control period FY 19 to FY 22 ..................................... 47

4.2.2 Effect of proposed projects on the grid and transmission charges ..................................... 49

4.3 Key Gaps in the investment proposals submitted by KSEB SBU-T ............................................ 55

4.3.1 Data gaps in the investment proposal ............................................................................... 55

4.3.2 Limitations in appraising the investment proposals .......................................................... 55

4.4 Selection of priority projects among TRANSGRID 2.0 and New Capital Works program........... 56

4.5 Overview of appraisal of SBU-T investment proposals .............................................................. 56

4.5.1 TRANSGRID Projects ....................................................................................................... 57

4.5.2 New Capital Works ........................................................................................................... 64

Final

4.6 Appraisal of Projects under TRANSGRID 2.0 Program ............................................................. 72

4.6.1 Aluva Upgradation Package .............................................................................................. 72

4.6.2 Chalakudy 220kV AIS Substation (AIS Package-1) and North-South Inter Link Package (NSIP

Phase 1: Project A) .......................................................................................................................... 78

4.6.3 Kaloor Upgradation Package............................................................................................. 84

4.6.4 Kothamangalam and Chithirapuram Package ................................................................... 90

4.6.5 Kottayam Upgradation Package ........................................................................................ 96

4.6.6 Kunnamangalam - 220 kV GIS ........................................................................................101

4.6.7 Kunnamkulam 220/110 kV GIS ...................................................................................... 108

4.6.8 Thalassery 220/110 kV GIS .............................................................................................. 114

4.6.9 Manjeri 220kV AIS ......................................................................................................... 120

4.6.10 Kolathunadu Line Strengthening Package....................................................................... 126

4.6.11 NRHTLS.......................................................................................................................... 131

4.6.12 Ernad Lines Package....................................................................................................... 135

4.7 Appraisal of New Capital Works of SBU-T Expenditure Program ............................................ 142

4.7.1 Chemperi, 110kV Substation ........................................................................................... 142

4.7.2 Kollam-Kottiyam Interlinking..........................................................................................147

4.7.3 Mylatty – Vidhyanagar line upgradation ......................................................................... 152

4.7.4 Pallom - Ettumanoor 110kV Upgradation ........................................................................157

4.7.5 Panthalacode 110kV Switching cum Substation............................................................... 162

4.7.6 Seethangoli 110kV Substation ..........................................................................................167

4.7.7 Thambalamanna 110kV Substation .................................................................................. 171

4.7.8 Vennakkara 110 kV GIS ...................................................................................................176

5. Estimate Review and Commercial Impact of the Capital Investment Proposals ........182

5.1 Preamble ................................................................................................................................ 182

5.2 Objective of the estimate review ............................................................................................. 183

5.3 Methodology for cost estimate review ..................................................................................... 183

5.3.1 Methodology for review of Material Costs ....................................................................... 183

5.3.2 Methodology for review of Labour, Civil and Erection Costs ........................................... 184

5.3.3 Methodology for review of Tax estimates ........................................................................ 185

5.3.4 Methodology for review of Other costs ............................................................................ 185

5.4 Detailed appraisal of cost estimate for TRANSGRID 2.0 and New Capital Works program ..... 185

5.4.1 TRANSGRID 2.0 Projects ............................................................................................... 185

5.4.2 New Capital Works ......................................................................................................... 204

5.5 The commercial impact of the proposed projects .................................................................... 219

5.5.1 Appraisal of Financial Assumptions ................................................................................ 219

5.5.2 Impact on Debt-Equity requirements of proposed investment projects ........................... 222

5.5.3 Financial performance of proposed investment projects ................................................. 225

6. Assessment of SBU-T ability to undertake TRANSGRID 2.0 and New Capital Works

Projects ......................................................................................................................... 232

6.1 Human Capital ....................................................................................................................... 232

6.1.1 Overview of SBU-T organization structure for TRANSGRID 2.0 Projects ........................ 232

6.2 Materiality.............................................................................................................................. 233

Final

6.3 Project Financing ................................................................................................................... 234

6.4 Progress achieved in FY 19 by SBU-T ...................................................................................... 234

6.4.1 TRANSGRID 2.0 ............................................................................................................ 235


6.5 Highlights of constraints experienced by KSEB SBU-T in FY 19 for implementing the projects236

7. Summary..............................................................................................................237

7.1 Summary of TRANSGRID 2.0 and New Capital Works program Appraisal results .................. 237

7.1.1 TRANSGRID 2.0 Projects ............................................................................................... 237

7.1.2 New Capital Works Projects............................................................................................ 239

7.1.3 Summary of project observations under TRANSGRID 2.0 and New Capital Works projects241

7.2 Summary of Cost Estimate Appraisal...................................................................................... 249

7.2.1 TRANSGRID 2.0 projects ............................................................................................... 249


7.3 Summary of SBU-T capacity to implement the proposed investment projects ......................... 263

7.3.1 Project Financing............................................................................................................ 263

7.3.2 Progress achieved in FY 19 by SBU-T .............................................................................. 264

7.3.3 Highlights of constraints experienced by KSEB SBU-T in FY 19 for implementing projects266

7.4 Corollary for TRANSGRID 2.0 and New Capital Works Program ............................................ 266

7.4.1 TRANSGRID 2.0 program .............................................................................................. 266


7.4.3 Impact of proposed TRANSGRID 2.0 and New Capital Works program on the grid ........ 273

7.4.4 Impact of non-deducible projects on GFA addition ......................................................... 274

Appendix A. - Appendices ............................................................................................... 276

A.1. Appendix – KPI’s for Capital Investment Proposals ...................................................................... 276

A.2. Appendix – Typical Template Structure for Transmission Capital Investment Proposal/DPR....... 278

A.3. Appendix – Default Objectives for Transmission Capital Investment Proposal ............................. 279

A.4. Appendix – Template for Capital Expenditure Assessment ...........................................................280

A.5. Appendix – Project wise details of proposed capacity addition in MVA and Ckt-km under 12 projects of

TRANSGRID 2.0 and 40 projects of New Capital Work ....................................................................... 281

A.6. Appendix – Data gaps in the DPRs and response received from SBU-T ........................................ 285

A.7. Appendix – Progress of TRANSGRID 2.0 and New Capital Work Projects .................................... 286

A.8. Appendix – KSEB SBU-T Response for the Questionnaire on SBU-T Capacity Assessment ..........288

A.9. Appendix – Project wise Appraisal of Cost Estimate ..................................................................... 289

A.10. Appendix – Calculation of Impact of TRANSGRID 2.0 and New Capital Works on-grid and

transmission charges........................................................................................................................... 352

Final

List of Tables

Table 1: List of Abbreviations ............................................................................................................................. 3 Table 2: Appraisal of TRANSGRID 2.0 Projects ............................................................................................... 13 Table 3: Appraisal of New Capital Works Projects ............................................................................................ 14 Table 4:Proposed capital expenditure and technical benefits of the Non-Deducible Projects ............................ 14 Table 5: Summary of technical benefits anticipated from the proposed transmission capacities ....................... 15 Table 6: KSEB proposed transmission losses and Intrastate Transmission Charges ......................................... 15 Table 7: Transmission losses and Intrastate Transmission Charges in the absence of TRANSGRID 2.0 and New Capital Works .................................................................................................................................................. 16 Table 8: Summary of projects under TRANSGRID 2.0 program....................................................................... 19 Table 9: Summary of projects under the New Capital Works program..............................................................20 Table 10: GFA addition proposed by SBU-T ..................................................................................................... 23 Table 11: GFA addition provisionally approved by KSERC................................................................................ 23 Table 12: Summary of the GFA addition provisionally approved for depreciation, interest on loan and O&M cost of the control period ........................................................................................................................................ 24 Table 13: Assessment Parameters and corresponding weightages .................................................................... 32 Table 14: Scoring Framework........................................................................................................................... 35 Table 15: Scoring Index for Planning................................................................................................................ 43 Table 16: Scoring Index for Implementation .................................................................................................... 44 Table 17: Scoring Index for Ex-Post Performance............................................................................................. 44 Table 18: Summary of Scoring/Grading ........................................................................................................... 44 Table 19: Existing Capacity and Proposed Capacity Addition ...........................................................................48 Table 20: Technical benefits anticipated from the proposed transmission capacities........................................ 49 Table 21: Approved transmission losses and Intrastate Transmission Charges .................................................50 Table 22: KSEB proposed transmission losses and Intrastate Transmission Charges .......................................50 Table 23: Transmission losses and Intrastate Transmission Charges in the absence of TRANSGRID 2.0 and New Capital Works .......................................................................................................................................... 51 Table 24: KSEB Estimated Total Project Costs of TRANSGRID 2.0 ................................................................ 186 Table 25: Component-wise KSEB Estimated Project cost of TRANSGRID 2.0 ................................................ 187 Table 26: TRANSGRID 2.0 – KSEB Estimated Total Project Cost vs. Anticipated Total Project Cost .............. 189 Table 27: KSEB estimated Total Material Costs of TRANSGRID 2.0 ...............................................................191 Table 28: KSEB Estimated Total Material Cost per capacity for TRANSGRID 2.0 .......................................... 192 Table 29: Details of the factors of concerned projects ..................................................................................... 194 Table 30: Price details of the conductors and towers ...................................................................................... 195 Table 31: TRANSGRID 2.0 – KSEB Estimated Material Cost vs. Anticipated Material Cost ............................ 195 Table 32: TRANSGRID 2.0 – KSEB Estimated Material Cost vs. Anticipated Material Cost ........................... 196 Table 33: KSEB Estimated Labour, Civil and Erection Cost per capacity for TRANSGRID 2.0........................ 197 Table 34: TRANSGRID 2.0 – KSEB Estimated Labour, Civil and Erection Cost vs. Anticipated Cost .............. 199 Table 35: KSEB Estimated Tax for TRANSGRID 2.0 ..................................................................................... 200 Table 36: TRANSGRID 2.0 - Anticipated Tax................................................................................................. 201 Table 37: KSEB Estimated Compensation for TRANSGRID 2.0 Projects ........................................................ 201 Table 38: KSEB Estimated ‘Other Costs’ for TRANSGRID 2.0........................................................................202 Table 39: TRANSGRID – Land Purchase details as per DPR ..........................................................................203 Table 40: KSEB Estimated Total Project Costs of New Capital Works ............................................................204 Table 41: Component-wise KSEB Estimated Project cost of New Capital Works .............................................205 Table 42: New Capital Works – KSEB Estimated Total Project Cost vs. Anticipated Total Project Cost........... 207 Table 43: KSEB Estimated Total Material Costs of New Capital Works ..........................................................209 Table 44: KSEB Estimated Total Material Cost per capacity for New Capital Works ....................................... 210 Table 45: Details of cost variable factors for concerned projects ..................................................................... 212 Table 46: KSEB Estimated Project Cost of Individual Projects and its Anticipated Project Cost ...................... 213 Table 47: KSEB Estimated Cost of Labour, Civil and Erection works for New Capital Projects........................ 213 Table 48: KSEB Estimated Labour, Civil and Erection Cost per capacity for New Capital Works .................... 214 Table 49: New Capital Works – KSEB Estimated Labour, Civil and Erection Cost vs. Anticipated Cost .......... 216 Table 50: KSEB Estimated Tax for New Capital Projects ................................................................................ 217 Table 51: New Capital Works - Anticipated Tax .............................................................................................. 217 Table 52: New Capital Works Projects – KSEB Estimated Compensation ....................................................... 218 Table 53: KSEB Estimated ‘Other Costs’ for New Capital Works Projects ....................................................... 218 Table 54: New Capital Works – Land Purchase details ................................................................................... 219 Table 55: Financial Assumptions considered in the investment proposal ....................................................... 219 Table 56: Annexure-VIII of Tariff Regulations, 2018 - O&M norms for the transmission business of KSEB and transmission licensee..................................................................................................................................... 221 Table 57: TRANSGRID 2.0 – KSEB Estimated vs. Anticipated Cost of Major components ............................. 222 Table 58: Anticipated Debt & Equity for TRANSGRID 2.0 projects excluding grant ....................................... 223 Table 59: 8 New Capital Works – KSEB Estimated vs. Anticipated Cost of Major components ....................... 223

Final

Table 60: Anticipated Debt & Equity for New Capital Works Projects ............................................................ 224 Table 61: KSEB estimated O&M cost vs. Allowable O&M cost for the first year of operation ........................... 225 Table 62: Details of representative projects.................................................................................................... 226 Table 63: KSEB Estimated vs. Anticipated Financial Indicators with financial assumptions as per Tariff Regulations and without considering financing costs ..................................................................................... 227 Table 64: KSEB Estimated financial indicators of New Capital Works Project ................................................ 229 Table 65: Projects under TRANSGRID Northern and Southern Circle............................................................ 232 Table 66: Debt and equity of Transmission Projects- KSEB Estimate vs. Envisaged Revision ......................... 234 Table 67: Financial Position of KSEB for FY 18 .............................................................................................. 234 Table 68: TRANSGRID 2.0 – KSEB Estimated vs. Anticipated Cost of Major components ............................ 249 Table 69: KSEB Estimated Total Material Cost per capacity for TRANSGRID 2.0 ..........................................250 Table 70: Details of the factors of concerned projects ..................................................................................... 252 Table 71: Price details of the conductors and towers ....................................................................................... 253 Table 72: KSEB Estimated Labour, Civil and Erection Cost per unit capacity for TRANSGRID 2.0................. 253 Table 73: TRANSGRID – Land Purchase details ............................................................................................ 256 Table 74: New Capital Works – KSEB Estimated vs. Anticipated Cost of Major components .......................... 256 Table 75: KSEB Estimated Component-wise Project cost of New Capital Works ............................................. 257 Table 76: KSEB Estimated Total Material Cost per capacity for New Capital Works .......................................258 Table 77: Details of cost variable factors for concerned projects .....................................................................260 Table 78: KSEB Estimated Cost of Labour, Civil and Erection works for New Capital Works ..........................260 Table 79: KSEB Estimated Labour, Civil and Erection Cost per capacity for New Capital Works .................... 261 Table 80: New Capital Works – Land Purchase details .................................................................................. 263 Table 81: Debt and equity of Transmission Projects- KSEB Estimate vs. Envisaged Revision ......................... 264 Table 82: Financial Position of KSEB for FY 18 .............................................................................................. 264 Table 83: Appraisal of TRANSGRID 2.0 Projects ........................................................................................... 266 Table 84: Details of representative projects ...................................................................................................268 Table 85: Appraisal of New Capital Works ..................................................................................................... 270 Table 86: Summary of technical benefits anticipated from the proposed transmission capacities ................... 273 Table 87: KSEB proposed transmission losses and Intrastate Transmission Charges ..................................... 273 Table 88: Transmission losses and Intrastate Transmission Charges in the absence of TRANSGRID 2.0 and New Capital Works ........................................................................................................................................ 274 Table 89:Proposed capital expenditure and technical benefits of the Non-Deducible Projects ........................ 275 Table 90: Proposed GFA under TRANSGRID 2.0 program for the control period FY 19 to FY 22 ................... 275

Final

List of Figures

Figure 1: Objective of TRANSGRID 2.0 program.............................................................................................. 19 Figure 2: Aspects of Capital Expenditure Appraisal .......................................................................................... 26 Figure 3: Parameters to be assessed for appraising the performance at the implementation stage .................... 43 Figure 4: Actual Peak Demand (MW) of Kerala for FY 18 ................................................................................. 45 Figure 5: Growth of Peak Demand (MW) in Kerala .......................................................................................... 46 Figure 6: No of Months Minimum Voltage Breaches (CEA Planning Criteria Limit) in TRANSGRID Projects Substation in FY 19 .......................................................................................................................................... 46 Figure 7: No of Months Minimum Voltage Breaches (CEA Planning Criteria Limit) in New Capital Work Projects Substation in FY 19............................................................................................................................ 47 Figure 8:Proposed Substation Capacity Addition for FY 19-FY 22 ....................................................................48 Figure 9: Proposed Line Length Addition for FY 19-FY 22 ...............................................................................48 Figure 10: TRANSGRID 2.0 – Peak Loss Saving .............................................................................................. 52 Figure 11: TRANSGRID 2.0 – Additional Sale of Energy (MU) ........................................................................ 52 Figure 12: New Capital Works – Peak Loss Saving ........................................................................................... 53 Figure 13: New Capital Works –Additional Sale of Energy (MU) ...................................................................... 54 Figure 14: Three scenario that are emerging out of appraisal of investment projects ........................................ 56 Figure 15: TRANSGRID 2.0 Prudent and Non-Deducible Investment Proposals under Scenario-1 ................... 57 Figure 16: TRANSGRID 2.0 Prudent and Non-Deducible Investment Proposals under Scenario-2 ..................58 Figure 17: TRANSGRID 2.0 N-1 criteria projects under Scenario-3 .................................................................. 59 Figure 18: TRANSGRID 2.0 – Grading in Identification of Objectives ..............................................................60 Figure 19: TRANSGRID 2.0 – Grading in Capital Investment Schemes Category .............................................60 Figure 20: TRANSGRID 2.0 – Grading in CEA Transmission Planning Criteria ............................................... 61 Figure 21: TRANSGRID 2.0 – Grading in Method of Project Identification ...................................................... 61 Figure 22: TRANSGRID 2.0 – Grading in Alternatives Assessment.................................................................. 61 Figure 23: TRANSGRID 2.0 – Grading in Need for Investment ....................................................................... 62 Figure 24: TRANSGRID 2.0 – Grading in Technical Benefits ........................................................................... 62 Figure 25: TRANSGRID 2.0 – Grading in Timing of Investment ...................................................................... 62 Figure 26: TRANSGRID 2.0 – Grading in Project Risk and Mitigation Measures ............................................. 63 Figure 27: TRANSGRID 2.0 – Grading in Project Estimates ............................................................................ 63 Figure 28: TRANSGRID 2.0 – Grading in Financial Justification and Cost-Benefit Analysis ............................ 63 Figure 29: TRANSGRID 2.0 – Grading in Implementation Plan ...................................................................... 64 Figure 30: New Capital Works - Prudent and Non-Prudent Investment Proposals under Scenario-1 ................ 64 Figure 31: New Capital Works - Prudent and Non-Prudent Investment Proposals under Scenario-2 ................ 65 Figure 32: New Capital Works – N-1 contingency projects under Scenario-3.................................................... 65 Figure 33: New Capital Works – Grading in Identification of Objectives .......................................................... 66 Figure 34: New Capital Works – Grading in Capital Investment Schemes Category ......................................... 66 Figure 35: New Capital Works – Grading in CEA Transmission Planning Criteria ............................................ 67 Figure 36: New Capital Works – Grading in Method of Project Identification .................................................. 67 Figure 37: New Capital Works – Grading in Method of Project Identification ..................................................68 Figure 38: New Capital Works – Grading in Need for Investment ....................................................................68 Figure 39: New Capital Works – Grading in Technical Benefits........................................................................ 69 Figure 40: New Capital Works – Grading in Timing of Investment .................................................................. 69 Figure 41: New Capital Works – Grading in Project Risk and Mitigation Measures .......................................... 70 Figure 42: New Capital Works – Grading in Project Estimates ......................................................................... 70 Figure 43: New Capital Works – Grading in Financial Justification and Cost-Benefit Analysis ......................... 71 Figure 44: New Capital Works – Grading in Implementation Plan ................................................................... 71 Figure 45: Main Components of Cost Estimates ............................................................................................. 182 Figure 46: Sources for estimates considered in the investment proposal ........................................................ 183 Figure 47: References used for appraising the investment proposal ............................................................... 183 Figure 48: List of SORs and rationale for its consideration............................................................................. 184 Figure 49: Scenarios regarding cost deviation ................................................................................................ 184 Figure 50: Categories of projects under TRANSGRID 2.0 program ................................................................ 186 Figure 51: KSEB Estimated Total Project cost of TRANSGRID 2.0 (Project-wise)........................................... 187 Figure 52: Component-wise Cost Break-up as % of the respective project cost ............................................... 188 Figure 53: TRANSGRID 2.0 – Total KSEB Estimated Project Cost vs Increase in the Total Project Cost......... 189 Figure 54: TRANSGRID 2.0 – Total KSEB Estimated Material Cost vs Increase in Total Material Cost .......... 190 Figure 55: TRANSGRID 2.0 – Total KSEB Estimated Labour, Civil and Erection Costs.................................. 190 Figure 56: KSEB Estimated Material Costs as % of total project cost (for Substation and line) ........................191 Figure 57: Substation Material Cost per MVA TRANSGRID 2.0 ..................................................................... 192 Figure 58: Transmission Line Material Cost per Ckt-km TRANSGRID 2.0 ..................................................... 193 Figure 59: Labour, Civil and Erection Cost as % of Total Project Cost............................................................. 197 Figure 60: KSEB Estimated Labour, Civil and Erection Cost per MVA for TRANSGRID 2.0 projects ............. 198 Figure 61: Estimated Labour, Civil and Erection Cost per Ckt-km. for TRANSGRID 2.0 projects ................... 199

Final

Figure 62: Categories of projects under the New Capital Works Program .......................................................204 Figure 63: KSEB Estimated Total Project Cost of New Capital Works (Project-wise) ......................................205 Figure 64: Component-wise Cost Break-up as % of respective project cost .....................................................206 Figure 65: New Capital Works – Total KSEB Estimated Project Cost vs Increase in the Total Project Cost ..... 207 Figure 66: New Capital Works – Total KSEB Estimated Material Cost vs Increase in Total Material Cost...... 208 Figure 67: New Capital Works – Total KSEB Estimated Labour, Civil and Erection Costs vs Increase in Estimated Costs ............................................................................................................................................ 208 Figure 68: KSEB Estimated Material Costs as a % of the total project cost of New Capital Works (for Substation and Transmission line) ..................................................................................................................................209 Figure 69: KSEB Estimated Substation - Material Cost per MVA for New Capital Works projects .................. 210 Figure 70: Transmission Line - Material Cost per Ckt-km for New Capital Works Projects ..............................211 Figure 71: Labour, Civil and Erection Cost as % of Total Project Cost ............................................................. 214 Figure 72: KSEB Estimated Labour, Civil and Erection Cost per MVA for New Capital projects...................... 215 Figure 73: Estimated Labour, Civil and Erection Cost per Ckt-km. for New Capital Works Projects................ 215 Figure 74: KSEB Estimated IRR vs Anticipated IRR of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations ....................................................................................228 Figure 75: KSEB Estimated vs Anticipated NPV of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations ....................................................................................228 Figure 76: KSEB Estimated IRR of New Capital Works ..................................................................................230 Figure 77: KSEB Estimated NPV of New Capital Works ................................................................................. 231 Figure 78: Aspects required for implementation of transmission works ......................................................... 232 Figure 79: Workforce for TRANSGRID 2.0 Program ...................................................................................... 232 Figure 80: Skillset required in each level of management............................................................................... 233 Figure 81: Progress Status of TRANSGRID 2.0 Projects (as on Sep 2019) ...................................................... 235 Figure 82: Progress Status of New Capital Works Projects (as of Sep 2019).................................................... 236 Figure 83: Key constraints experienced by KSEB in implementing the proposed capital investment projects . 236 Figure 84: Scenario that is emerging out as a result of appraisal of investment projects ................................. 237 Figure 85: TRANSGRID 2.0 Prudent and Non-Deducible Investment Proposals under Scenario-1 ................238 Figure 86: TRANSGRID 2.0 Prudent, Non-prudent and Non-Deducible Investment Proposals under Scenario-2 ....................................................................................................................................................................238 Figure 87: TRANSGRID 2.0 N-1 Contingency Projects under Scenario-3 ....................................................... 239 Figure 88: New Capital Works Prudent, Non-Prudent and Non-Deducible Investment Proposals under Scenario-1......................................................................................................................................................240 Figure 89: New Capital Works Prudent, Non-Prudent and Non-Deducible Investment Proposals under Scenario-2 .....................................................................................................................................................240 Figure 90: New Capital Works – N-1 Contingency Projects under Scenario-3................................................. 241 Figure 91: Component-wise Cost Break-up as % of respective project cost ..................................................... 249 Figure 92: Substation Material Cost per MVA TRANSGRID 2.0..................................................................... 251 Figure 93: Transmission Line Material Cost per Ckt-km TRANSGRID 2.0 ..................................................... 251 Figure 94: KSEB Estimated Labour, Civil and Erection Cost per MVA for TRANSGRID 2.0 projects.............. 254 Figure 95: KSEB Estimated Labour, Civil and Erection Cost per Ckt-km. for TRANSGRID 2.0 projects ......... 255 Figure 96: Component-wise Cost Break-up as % of respective project cost ..................................................... 257 Figure 97: KSEB Estimated Substation - Material Cost per MVA for New Capital Works Projects.................. 259 Figure 98: Transmission Line - Material Cost per Ckt-km for New Capital Works ......................................... 259 Figure 99: KSEB Estimated Labour, Civil and Erection Cost per unit of MVA for New Capital Works projects262 Figure 100: Estimated Labour, Civil and Erection Cost per Ckt-km. for New Capital Works projects.............. 262 Figure 101: Progress Status of TRANSGRID Projects (as on Sep 2019) ........................................................... 265 Figure 102: Progress Status of New Capital Work Projects (as of Sep 2019).................................................... 265 Figure 103: Key constraints experienced by KSEB in implementing the projects ............................................ 266 Figure 104: KSEB Estimated IRR vs Anticipated IRR of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations ..................................................................... 269 Figure 105: KSEB Estimated vs Anticipated NPV of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations .................................................................................... 269 Figure 106: KSEB Estimated IRR of New Capital Works ................................................................................ 271 Figure 107: KSEB Estimated NPV of New Capital Works ............................................................................... 272

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1. Executive Summary

1.1 Background

Strategic Business Unit-Transmission (SBU-T) under Kerala State Electricity Board Limited (KSEB) has submitted a petition to Kerala State Electricity Regulatory Commission (KSERC) for the approval of Capital Expenditure Programs namely TRANSGRID 2.0 and New Capital Works along with the Aggregate Revenue Requirement for the control period, FY 19 to FY 22.

The TRANSGRID 2.0 and New Capital Works are envisaged by the Kerala State Electricity Board Limited (KSEB) to cater to the current and future energy demand in the state as the present intra-state transmission capacity in the state is not sufficient and the state is import-dependent to meet its energy demand. In the past, there were insignificant capacity addition of transmission lines in the state (since 1992), especially at 220 kV and 400 kV voltage level, which resulted in the creation of extreme low voltage pockets across Kerala and violation of contingent/security criteria (i.e. N-1, N-2, etc.).Further, KSEB envisages that the current situation can potentially lead to a reduction of import capability and collapse of the transmission system.

In order to remove the transmission constraints, the SBU-T of KSEB has conceptualized and submitted the capital investment plan under the programs TRANSGRID 2.0 and New Capital Works. There are about 12 projects proposed under TRANSGRID 2.0 and 40 projects under New Capital Works.

KSERC has subsequently appointed PricewaterhouseCoopers Private Limited (PwC) as its consultant through a competitive bidding process to assist them in carrying out appraisal of the capital expenditure program in the transmission business of KSEB for the control period, FY 19 to FY 22. In this assessment, we have conducted a detailed appraisal of the investment proposals submitted for 12 projects under the TRANSGRID 2.0 program and 10 select projects under the New Capital Works program, based on mutual discussions with the KSERC.

The projects proposed under TRANSGRID 2.0 and New Capital Works programs constitute about 66% of the total Gross Fixed Assets (GFA) proposed under the transmission business (excluding SLDC operations) by KSEB for the control period FY 19 to FY 22.

1.2 Philosophy for the new transmission projects

In the investment proposals of TRANSGRID 2.0 program and New Capital Works program, the rapid increase in power demand in the state (maximum demand of 4,000 MW in April 2017) and an anticipated demand of 4,900 MW by 2021 is cited as the fundamental basis for new investments in transmission capacity. Further, the 18th Electric Power Survey (EPS) by CEA has indicated that the maximum demand of the state would reach about 5,479 MW by FY 22.

Considering the above scenario, about 4,900 MW is taken as peak load for the control period FY 19 to FY 22 and the Load Flow Study (LFS) has been carried out by the KSEB SBU-T for analyzing the future capacity addition requirements in the transmission system. It is to note that, the peak load study considered for the LFS is varying between 3,900 MW to 4,900 MW across investment proposals under TRANSGRID 2.0 and New Capital Works program. As per the latest available actual demand details of Kerala, from Central Electricity Authority (CEA), the maximum demand recorded in the state during FY 18 is 3,892 MW and the peak demand is recorded during the months of February, March, April and May (covering summer spell).

As the TRANSGRID 2.0 and New Capital Works projects are proposed on the basis of the Load Flow Study conducted by KSEB, there is a need for independent validation of Load Flow Study results in order to ascertain the energy demand growth envisaged in the state.

1.3 Appraisal of TRANSGRID 2.0 and New Capital Works

The appraisal of projects under TRANSGRID 2.0 and New Capital Works program is performed on the basis of the evaluation framework developed with due consideration of inputs from;

1. KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2018 i.e. Annexure-IV Guidelines for in-principle clearance of investment schemes;

2. CEA Manual on Transmission Planning Criteria; and

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3. Regulations/guidelines of other state utilities (Karnataka, Maharashtra, and Delhi ) in India for prudence check of capital expenditure.

Further, an evidence-based approach has been adopted in appraising the projects by reviewing its baseline data points such as demand in the project region, capacity utilization of existing infrastructure, voltage profile, loading profile and other factors.

1.3.1 Outcome of Appraisal for TRANSGRID 2.0 Program

The detailed assessment of 12 projects under TRANSGRID 2.0 program has been carried out by applying the evaluation framework and it is found that 2 projects namely Aluva and Kunnamkulam are non-deducible due to lack of baseline information. The appraisal results of TRANSGRID 2.0 projects are as below.

Table 2: Appraisal of TRANSGRID 2.0 Projects

S.No. Project Name Project Type

Total Project Cost

(including grant)

(Crore INR)

Project Status

1 Aluva Line & Substation 168.0 Non-Deducible 2 Chalakudy Line & Substation 63.1 Prudent 3 Kaloor Line & Substation 165.4 Prudent 4 Kothamangalam Line & Substation 370.9 Prudent 5 Kottayam Line & Substation 501.4 Prudent 6 Kunnamangalam Line & Substation 82.2 Prudent 7 Kunnamkulam Line & Substation 118.0 Non-Deducible 8 Thalassery Line & Substation 133.5 Prudent 9 Manjeri Line & Substation 44.5 Prudent

10 Kolathanadu Only Line Upgradation 239.8 Prudent 11 NRHTLS Only Line Upgradation 89.1 Prudent 12 Ernad Only Line Upgradation 551.7 Prudent

Total 2,527.55

As mentioned, the projects namely Aluva and Kunnamkulam are appraised as Non-Deducible and the reasons for the same are discussed below. In terms of project cost, Aluva and Kunnamkulam (286 Crore INR) constitutes about 11.3% of the total project cost under TRANSGRID 2.0 program.

In the case of Aluva, the details on the growing demand for power in the Aluva region (baseline) are not discussed in the investment proposal. During approval of the project, the Hon’ble Commission may duly consider the growing demand in the Aluva region and the utilization of the proposed capacity (with envisaged additional demand) to avoid sub-optimal operation of the asset.

In the case of Kunnamkulam, the improvement in performance envisaged from the project scenario is not discussed in the investment proposal. During the approval of the project, the Hon’ble Commission may duly consider the performance improvement envisaged under the proposed project and the utilization of the proposed capacity (with envisaged additional demand) to avoid sub-optimal operation of the asset.

1.3.2 Outcome of Appraisal for New Capital Works Program

New Capital Works consists of 40 projects, out of which 10 projects have been appraised under this study. Among the 10 projects, 2 projects namely Mannuthy and Kottayi have not been pursued by the KSEB during appraisal, on account of lack of grant and land-related issues. Hence, the results of these two projects are not considered in the assessment.

Out of the appraised 8 projects under the New Capital Works program, all the projects have scored the minimum scoring requirement of 60 grade out of 100, which may be considered as prudent by the Hon’ble Commission. The appraisal of New Capital Works is tabulated below.

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Table 3: Appraisal of New Capital Works Projects


Total Project Cost (including

grant) (Crore INR)

Project Status

1 Chemperi Line & Substation 25.00 Prudent

2 Seethangoli Line & Substation 10.00 Prudent

3 Thambalamanna Line & Substation 33.25 Prudent

4 Pallom Ettumanoor Line & Substation 62.00 Prudent

5 Kollam – Kottiyam Line Upgradation 54.37 Prudent

6 Mylatty – Vidhyanagar Line Upgradation 47.00 Prudent

7 Panthalacode Substation 22.18 Prudent

8 Vennakkara Substation 39.50 Prudent

Total 293.31

1.4 Impact of non-deducible projects on GFA addition

The total project cost of non-deducible investment proposals in the TRANSGRID 2.0 is 285.98 Crore INR and the envisaged benefits from these projects are 44.08 MU in terms of peak loss energy saving; 9.1 MW in term of peak power-saving; and 193.77 MU in term of additional sale of energy.

The proposed capital expenditure and technical benefits of the Non-deducible Projects are as shown below.

Table 4:Proposed capital expenditure and technical benefits of the Non-Deducible Projects

S.No Non-Deducible Project

Capital Cost (Crore INR)

Envisaged Technical Benefits

Peak Loss Saving (MU)

Peak Power Saving (MW)

Additional Energy Sale

(MU)

1 Aluva 168 37.3 7.7 0

2 Kunnamkulam 117.98 6.7 1.4 193.77

Total 285.98 44.08 9.1 193.77

Source: KSEB SBU-T DPR

The proposed GFA under TRANSGRID 2.0 program for the control period FY 19 to FY 22 is 2,697.37 Crore INR whereas the Non- Deducible investment proposal is about 11% of the proposed GFA.

The commission may consider the above-mentioned project as prudent, if the justification and substantiating baseline information is provided by the SBU-T to support the investment proposal.

Among the appraisal of select New Capital Works, no project is evaluated as Non-Prudent. However, the prudence of remaining New Capital Works needs to be assessed on a case to case basis and it shall be approved by the Hon’ble Commission accordingly.

1.5 Impact of proposed TRANSGRID 2.0 and New Capital Works program on the grid and tariff

The total proposed transmission capacity addition under 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Works is about 4,273 MVA substation capacity with about 846 Ckt-km line length at different voltage levels (110 kV, 220 kV and 400 kV).

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These proposals are envisaged to get completed between FY 19 and FY 22, and the proposed capacity addition makes about 21% and 7% of the prevailing substation capacity (MVA) and line length capacity (Ckt-km) as on the end of the FY 18. It is to note that proposed MVA and Ckt-km is a combination of new capacity addition as well as upgradation of existing capacity, hence it is not a cumulative increase in capacity in MVA and Ckt-km.

The investment proposals under TRANSGRID 2.0 and New Capital Works program shows the envisaged benefits of 171 MW in term of peak loss reduction; 773 MU in term of peak energy loss reduction; and 3,798 MU in terms of additional sale of energy. It is to note that, a few investment proposals have not quantified the technical benefits.

The TRANSGRID 2.0 program is envisaged to have maximum peak loss reductions benefits when compared to the New Capital Works, and the New Capital Works program is envisaged to have maximum additional sale of energy compared to TRANSGRID 2.0 program. The summary of technical benefits anticipated from the proposed transmission capacities are as below.

Table 5: Summary of technical benefits anticipated from the proposed transmission capacities

S.No

Transmission Program

No of Projects

Peak Loss Reduction Additional

Sale of Energy (MU)

Investment Cost (Crore INR) (as per

ARR Petition) MW MU

1 TRANSGRID 2.0 12 151 599 1,688 2,697

2 New Capital Works 40 21 173 2,109 1,126

Total 171 773 3,798 3,823

Source: KSEB DPRs and ARR Petition, 2018

In the ARR petition filed by SBU-T of KSEB, the proposed transmission charges are computed on the basis that all the TRANSGRID 2.0 and New Capital Works projects would be 100% allowed by the Hon’ble Commission. The summary of proposed transmission losses and Intra State Transmission charges by KSEB are as below.

Table 6: KSEB proposed transmission losses and Intrastate Transmission Charges

S.No Particulars Unit FY 19 FY 20 FY 21 FY 22

1 Energy Input MU 24,846 26,243 27,248 28,295

2 Percentage of Loss % 4.05% 3.95% 3.85% 3.75%

3 Energy Loss MU 1,006.27 1,042.33 1,058.41 1,074.19

4 Energy Handled MU 23,839.88 25,201.11 26,189.12 27,221.11

5 Cost of Intrastate Transmission (ARR) Crore INR 951.08 1,106.19 1,394.26 1,637.13

6 Transmission Charges [6=5/4] INR/ kWh 0.40 0.44 0.53 0.60

Source: KSERC ARR Order, 2019

In the above table, the energy input parameter includes the additional sale of energy and the energy loss parameter includes the peak loss reduction envisaged under the projects of TRANSGRID 2.0 and New Capital Works program1. Further, the ARR includes the existing GFA as well as the proposed projects under TRANSGRID 2.0 and New Capital program.

In order to assess the impact of projects under TRANSGRID 2.0 and New Capital Works program on the transmission charges, the additional sale of energy has been deducted from the energy input; and peak loss savings has been added to the energy loss. Further, ARR under TRANSGRID 2.0 and New Capital Works

1 As confirmed by SBU-T

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program has been deducted from the year-wise intrastate transmission cost to arrive the transmission charges contributed by TRANSGRID 2.0 and New Capital Works program.

The impact of 3,798 MU of additional sale of energy, 773 MU of peak loss reduction and ARR of proposed projects under TRANSGRID 2.0 and New Capital Works program result in an increase of transmission charges by INR 0.03 – 0.06 per kWh (FY 19 – FY 22) and the details are as below.

Table 7: Transmission losses and Intrastate Transmission Charges in the absence of TRANSGRID 2.0 and New Capital Works

S.No

. Particulars Unit FY 19 FY 20 FY 21 FY 22

1 Energy Input (excluding addition sale of energy from TRANSGRID and New Capital Works program)

MU 24,846.15 24,808.98 23,892.64 24,497.75

2 Peak loss savings MU 0.00 220.98 722.03 772.53

3 Loss of Energy (including peak loss saving from TRANSGRID and New Capital Works program)

MU 1,006.27 1,277.56 1,831.44 1,937.41


5 Cost of Intrastate Transmission (excluding ARR of TRANSGRID and New Capital Works program)

Crore INR 874.60 955.45 1,029.21 1,241.90

6 Marginal Tariff of New Projects Crore INR - 0.90 0.88 0.85

7 Estimated Transmission Charges in the absence of projects [(7) = (5)/(4)]

INR/ kWh 0.37 0.41 0.47 0.55

8 KSEB computed Transmission Charges considering 100% approval of projects

INR/ kWh 0.40 0.44 0.53 0.60

9 Difference in Charges [(9)=(8)-(7)]

INR/ kWh 0.03 0.03 0.06 0.05

Source: PwC Analysis, KSERC ARR Order, 2019

1.6 Assessment of Execution Capability of SBU-T

The capability of SBU-T to implement the proposed transmission projects has been assessed on the basis of three aspects such as Human Capital, Materiality and Financial Capability.

Human Capital: Based on the details of human capital allocation shared by SBU-T, it is advised that SBU-T shall undertake case to case assessment of resources and necessary deployments.

Material: It is inferred from the discussion with SBU-T that the proposed projects under TRANSGRID 2.0 program will be implemented through “Total Turnkey” arrangement. Hence, the SBU-T would not be involved in the procurement of materials required for the project implementation and it is under the scope of EPC player. On reviewing the team qualification and experiences, it is noted that the SBU-T team has the capability of project management at middle and top management level to review the EPC progress. Further, we understand from SBU-T that the part of projects under New Capital Works program will be executed through partial turnkey arrangements where SBU-T team would be involved in materials procurement.

Financing Capability: We have reviewed the financial position of KSEBL from FY16 to FY18, and it is noted that the utility appears to be holding insufficient financial reserves to fund the financial requirements for the proposed projects, however it is mentioned in the investment proposal that the debt part will be secured from Kerala Infrastructure Investment Fund Board (KIIFB) and few projects would be partially funded with grants.

Current Progress of Projects: We have reviewed the current progress of projects as on August 2019 and it noted that out of the 12 TRANSGRID 2.0 projects, 8 projects worth 1,534.91 Crore INR (~ 60%) are on on-track, and 4 projects worth 992.64 Crore INR (~40%) are delayed by about one year. Out of 8 New Capital

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Works projects, 6 projects worth 221.31 Crore INR (~ 89%) are delayed by about one year and 1 project worth 25 Crore INR (~11%) is on-track. The delayed projects are exposed to time overrun, which in turn may end up in possible cost overrun as well.

1.7 Recommendations and Way forward

The TRANSGRID 2.0 program consist of 12 projects, out of which 2 projects namely, Aluva and Kunnamkulam are Non-deducible and the remaining 10 projects are appraised as Prudent.

In the case of Aluva, the project is envisaged to meet the growing energy demand in the Aluva region, however the support for growing energy demand is not part of the investment proposal and subsequently it was not available for validation. Further, the proposed capacity of substation is four times higher than the prevailing loading in the substation and the rational for need of 2x200 MVA transformer at existing 138.5 MVA Aluva substation is not explained in the investment proposal. Hence, the prudency of Aluva project is appraised as Non-deducible due to lack of information on energy demand and proposed capacity.

The Hon’ble Commission may consider Aluva project as Prudent, if an envisaged demand in the Aluva region supports the need for new substation and the proposed capacity is sufficient to cater the additional demand.

In the case of Kunnamkulam, the project is envisaged to satisfy the N-1 criteria. However, the envisaged benefits of removing the prevailing N-1 constraint by upgradation the existing 66 kV line to 220 kV is not deliberated in the investment proposal and subsequently it was not available for validation. In addition, the proposed capacity for the substation (2x100 MVA) is about six time higher than the prevailing load (31.68 MVA) of existing Kunnamkulam substation. Due to the lack of information on baseline performance and the proposed capacity, the prudency of Kunnamkulam project is appraised as Non-deducible.

Therefore, the Hon’ble Commission may consider Kunnamkulam project as Prudent, if the performance improvement due to the proposed project, and the utilization of the proposed capacity through envisaged additional demand, are justified with relevant quantification by the SBU-T.

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2. Introduction

2.1 Background

Strategic Business Unit-Transmission (SBU-T) under Kerala State Electricity Board Limited (KSEB) is responsible for carrying out the power transmission activities in Kerala. SBU-T handles the transmission assets of KSEB and manages the bulk transmission of power within Kerala for supply to Strategic Business Unit-Distribution (SBU-D). SBU-T is geographically divided into two zones – the North Zone headquartered at Kozhikode and the South Zone headquartered at Thiruvananthapuram.

As per Clause 10, Chapter-III of the Tariff Regulations, 2018, SBU-T has submitted a petition to Kerala State Electricity Regulatory Commission (KSERC) for the approval of the Capital Expenditure Program along with the Aggregate Revenue Requirement for the control period, FY 19 to FY 22.

The Capital Expenditure Program submitted by KSEB to KSERC covers the following:

• TRANSGRID 2.0 program for 12 projects,

• New Capital Works program with capital cost above 10 Crore INR for 40 projects,

• Ongoing and new works with capital cost less than 10 Crore INR,

• Edamon-Kochi Line Compensation, and

• SLDC works.

Further, KSERC needs to evaluate the projects under the Capital Expenditure Program in terms of technical, financial and economic aspects to assess the prudent and non-prudent works, based on the statutory powers conferred on the Hon’ble Commission as per the Electricity Act, 2003.

KSERC has appointed PricewaterhouseCoopers Private Limited (PwC) through a competitive bidding process to assist them in carrying out appraisal of the capital expenditure program in the transmission business of KSEB for the control period, FY 19 to FY 22. In this assessment, we have conducted a detailed appraisal of the DPRs submitted for 12 projects under the TRANSGRID 2.0 program and 10 select projects under the New Capital Works program, based on the mutual discussions.

2.2 Overview of TRANSGRID 2.0 program and New Capital Works program

In the ARR petition submitted by SBU-T to KSERC in 2018, it is stated that the present intrastate transmission system in the state is not sufficient to cater to the prevailing demand. In addition, it is mentioned that KSEB has not made significant capacity additions for 220kV and 400kV transmission system, since 1992. As a result of minimal transmission infrastructure at 220kV and 400kV voltage level certain regions of Kerala are facing critical consequences such as extreme low voltage, which leads to chances of frequent system interruptions. Further, KSEB cautioned in the petition that constraints such as low voltages and security issues violating the N-1 contingency criteria would lead to reduction of import capability, as the state is majorly dependent on import of power.

In this regard, SBU-T has submitted the Capital Expenditure Program under the below two major programs for the purpose of addressing the above constraints:

• TRANSGRID 2.0 program

• New Capital Works program or Normal Transmission program (above 10 Crore INR)

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2.2.1 TRANSGRID 2.0 program

The overall objective of the TRANSGRID 2.0 program is to relieve the system constraints and reduce losses to the maximum extent. The specific objectives are as under:

Figure 1: Objective of TRANSGRID 2.0 program

The TRANSGRID 2.0 program consists of a mix of projects covering the following 2 categories;

• Upgradation of line(s) and substation(s), and

• Upgradation of line

The following is the summary of 12 projects under TRANSGRID 2.0 program:

Table 8: Summary of projects under TRANSGRID 2.0 program

S.No. Project Outlay (Amount in Crore INR) Expected

COD

Total (Crore

INR) FY 19 FY 20 FY 21 FY 22

1 Aluva* 127.87 54.80 0.00 - FY 20 182.67

2 Kaloor* 125.93 53.97 0.00 - FY 20 179.90

3 Kothamangalam & Chithirapuram*

119.66 219.37 59.83 - FY 21 398.86

4 Kottayam, Thuravur & Ettumanoor*

- 379.17 162.5 - FY 21

541.67

5 Chalakudy* 7.14 35.71 28.57 - FY 21 71.42

6 Kunnamkulam* 13.03 65.15 52.12 - FY 21 130.30

7 Manjeri* 5.11 25.55 20.44 - FY 21 51.10

8 Thalasseri* 15.70 78.52 62.81 - FY 21 157.03

9 Kunnamangalam* 9.19 45.95 36.76 - FY 21 91.90

10 Ernad** 195.00 295.00 62.00 - FY 21 552.00

11 NRHTLS** 23.88 23.88 31.81 - FY 21 79.57

12 Kolathunadu** 26.1 104.38 78.29 52.19 FY 22 260.96

Total 668.61 1,381.45 595.13 52.19 2,697.38 Source: KSEB tariff petition for FY 19 to FY 22, 2018

* Upgradation of line(s) and substation(s) ** Upgradation of line The total capital cost of 12 projects under the TRANSGRID 2.0 program is about 2,697.38 Crore INR, whereas the total capital cost (without excluding grant) of these projects as per the DPR (Investment Proposal) is about 2,527.55 Crore INR. The capital expenditure proposed in the petition is about 169 Core INR higher than the estimated cost provided in the DPR (Investment Proposal).

The variation in capital cost among ARR petition and DPR (Investment Proposal) has not been clarified by the SBU-T2. Further, the project's cost is subject to the market price and inflation, and largely dependent on the prices to be discovered through a transparent bidding process. The details of the financial performance of the individual projects are discussed in Section 5 of this report.

2 Clarification sought vide letter dated 27th Sep, 2019 and response received from KSEB dated 14th Oct, 2019

4. To reduce losses to the maximum possible

3. Facilitate complete power evacuation from generating stations within the state

2. Building sufficient import capability for the future

1. Relieve the system of its present constraints

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2.2.2 New Capital Works program

The New Capital Works program consists of a mix of projects covering the following 3 categories;

• Upgradation of line(s) and substation(s),

• Upgradation of line, and

• Upgradation of substation.

The following is the summary of 40 projects under New Capital Works program:

Table 9: Summary of projects under the New Capital Works program

S.No. Project

Outlay (Amount in Crore INR) Expected

COD

Total (Crore

INR)

Sample projects

for study

FY 19 FY 20 FY 21 FY 22

1

Linking between 110kV Kanhangad – Cheruvathuer feeder to 220kV S/s Ambalathara**

30.00 6.06 - - FY 20 36.06

2

Upgradation of 66kV Palakkad Medical College Substation and line*

4.00 19.10 - - FY 20 23.1

3 110kV GIS Project Vennakkara## 5.00 39.60 - - FY 20 44.6 Sample 1

4

Construction of Palakkad- Malampuzha 110kV Line**

4.38 10.00 - - FY 20 14.38

5 110kV Substation Pattambi#

5.00 20.50 - - FY 20 25.5

6 Mannuthy 110kV GIS Project#

6.30 20.00 - - FY 20 26.3 Sample 2

7 Upgradation of 66kV Substation Ettumanoor to 110kV#

8.00 12.80 - - FY 20 20.8

8

Upgradation of 66kV Substation, Kuravilangadu and Koothattukulam- Kuravilangadu to 110kV*

6.65 15.00 - - FY 20 21.65

9

Upgradation of 66kV Substation Koothattukulam to 110kV#

6.00 9.01 - - FY 20 15.01

10

Upgradation of 66kV Kothamangalam- Kotthttukulam Feeder to 110kV*

4.67 10.00 - - FY 20 14.67

11 Upgradation of 66kV SC Pala-Ettumanoor feeders to 110kV**

3.00 12.55 - - FY 20 15.55

12

Upgradation of 66kV Substation Anchal to 110kV and Upgradation of 66kV SC Edamon – Anchal-Ayur line to 110kV DC*

29.86 12.80 - - FY 20 42.66

13 Up-gradation of 66kV Substation,

12.74

5.46

- - FY 20 18.2

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S.No. Project


COD

Total (Crore

INR)

Sample projects

for study

FY 19 FY 20 FY 21 FY 22

Karunagappally and 66kV SC Sasthamcotta- Karunagapally line to 110kV DC*

14 Construction of 110kV Substation, Chithara#

3.68

8.59

- - FY 20 12.27

15

Interlinking 110kV GIS Substation, Kollam and 110kV Kottiyam Substation****

12.65

50.58

- - FY 20 63.23 Sample 3

16 110kV GIS substation at Kowdiar, Thiruvananthapuram#

- 34.93

- - FY 20 34.93

17 Upgradation of 66kV Substation Palode to 110kV#

- 18.45

- - FY 20 18.45

18

66kV Substation, Ambalavayal and 66kV DC line from 66kV Kaniyambetta-Sulthanbathery feeder in 110kV Parameters*

5.00

8.49

- - FY 20 13.49

19 110kV Substation, Chemperi and line**

14.00

13.77

- - FY 20 27.77 Sample 4

20

Upgradation of Kunnamangalam _ Thamarasserry line to 110kV**

8.06

10.00

- - FY 20 18.06

21 Upgradation of Kuthumunda to 110kV GIS#

3.98

30.00

- - FY 20 33.98

22 Upgradation of Mankada S/s to 110kV#

4.65

10.00

- - FY 20 14.65

23 Upgradation of 66kV Substation, Mankavu to 110kV#

5.56

8.00

- - FY 20 13.56

24

Upgradation of 110kV SC/DC line to 220/110kV MC MV line from Mylatty s/s to Vidyanagar***

20.00

9.43

- - FY 20 29.43 Sample 5

25 110kV Substation, Pulikkal#

1.68

13.00

- - FY 20 14.68

26 110kV Substation, Seethangoli*

4.59

7.00

- - FY 20 11.59 Sample 6

27

Upgradation of 33 kV Substation Thambalamanna to 110 kV & 110 kV Agasthiamuzhy -Thambalamanna (S/c, UG cable)**

18.02

20.00

- - FY 20 38.02 Sample 7

28 220kV Substation Kottayi#

0.50

30.50

35.00

- FY 21 66 Sample 8

29

Upgradation of Pudukkad to Kattoor 66kV SC Line to 110kV DC Line**

1.00

7.00

5.91

- FY 21 13.91

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S.No. Project


COD

Total (Crore

INR)

Sample projects

for study

FY 19 FY 20 FY 21 FY 22

30 Conversion of Ollur Viyyur feeder to 110 kV**

0.72

7.00

9.00

- FY 21 16.72

31

Upgradation of 66kV Pallom-Ettumanoor feeder and associated substations to 110kV**

9.00

35.00

25.54

- FY 21 69.54 Sample 9

32 Construction of 110kV substation Vazhoor#

1.00 8.00 5.40 - FY 21 14.4

33 Upgradation of 66kV Substation Kuttanadu to 110kV#

- 7.58 7.58 - FY 21 15.16

34 Upgradation of 66kV Punnapra-Alappuzha DC Feeder to 110 kV**

- 8.77 8.77 - FY 21 17.54

35 110kV Switching Cum Substation at Panthalacode##

- 12.58 12.58 - FY 21 25.16 Sample

10

36 Upgradation of 66kV TVT No. I & II feeders**

18.00 30.00 12.03 - FY 21 60.03

37

Renovation and modernisation 110kV GIS Substation, Malappuram#

2.02 30.00 30.00 - FY 21 62.02

38 LILO on 110kV Edarikode- Tirur to Parappanangadi S/s**

1.96 10.00 3.00 - FY 21 14.96

39 Construction of 110kV GIS Substation, Vengaloor#

2.00 19.48 24.91 - FY 21 46.39

40

Construction of new 110kV DC line from Kayamkulam to Karunagapally**

- 15.30 13.30 13.05 FY 22 41.65

Total 263.67 656.33 193.02 13.05 1,126.07 Source: KSEB tariff petition for FY19 to FY22, 2018

* Upgradation of lines and substations ** Upgradation of line # Upgradation of substation

For the purpose of appraisal of the projects under the New Capital Works program, the Hon’ble Commission has nominated a list of 10 projects, as identified in the table above (represented as samples).

The total capital cost of 40 projects under the New Capital Works program is about 1,126.07 Crore INR, whereas the total capital cost of these projects as per the DPR (Investment Proposal) is about 1,153.44 Crore INR. The capital expenditure proposed in the petition is about 27 Core INR less than the estimated cost provided in the DPR (Investment Proposal).

The variation in capital cost among ARR petition and DPR (Investment Proposal) has not been clarified by the SBU-T3. Further, the project cost is subject to the market price and inflation, and largely dependent on the prices to be discovered through a transparent bidding process. The details of the financial performance of the individual projects are discussed in Section 5 of this report.

3 Clarification sought vide letter dated 27th Sep, 2019 and response received from KSEB dated 14th Oct, 2019

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2.3 Gross Fixed Asset (GFA) addition – proposed by SBU-T vs provisionally approved by KSERC

In the petition filed by SBU-T, the projects proposed under TRANSGRID 2.0 program and New Capital Works program constitute about 66% of the total GFA proposed under the transmission business (excluding SLDC works).

The below is the details of GFA addition proposed by SBU-T:

Table 10: GFA addition proposed by SBU-T

S.No. Name of Work FY 19 FY 20 FY 21 FY 22 Total

Crore INR

A Capital Expenditure Program (excluding SLDC works)

1 Ongoing and new works with capital cost less than 10 Crore INR

804.12 568.73 196.28 254.26 1,823.39

2 New Capital Works program with capital cost above 10 Crore INR

- 662.59 421.83 41.65 1,126.07

3 TRANSGRID 2.0 program - 362.57 2,073.84 260.96 2,697.38

4 Edamon-Kochi Line compensation 10.00 118.02 - - 128.02

Total 814.12 1,711.91 2,691.95 556.87 5,774.85

B SLDC Works

1 Ongoing projects plus new small works 14.72 7.14 - - 21.86

2 New projects 12.00 53.00 12.00 212.45 289.45

Total 26.72 60.14 12.00 212.45 311.31

C Total for Capital Expenditure Program 840.84 1,772.05 2,703.95 769.32 6,086.16 Source: KSERC Tariff Order, 2019 and KSEB tariff petition for FY 19 to FY 22, 2018

In the order OA No. 15/2018 dated 8 July 2019, KSERC has provisionally approved about 69.3% of the GFA addition proposed under the TRANSGRID 2.0 program and about 57.4% of the GFA addition proposed under New Capital Works program.

The below is the details of GFA addition provisionally approved by the Hon’ble Commission:

Table 11: GFA addition provisionally approved by KSERC

S. No.

Particulars FY 19 FY 20 FY 21 FY 22 Total Approved

% Crore INR

1 Ongoing and new works with capital cost less than 10 Crore INR

499.60 312.80 20.00 - 832.40 46%

2 New Capital Works program with capital cost above 10 Crore INR

- 353.74 150.92 141.80 646.46 57.4%

3 TRANSGRID 2.0 program

- 362.57 1,244.84 260.96 1,868.37 69.3%

4 SLDC works 12.00 53.00 12.00 212.45 289.45 93%

5 Total 511.60 1,082.11 1,427.76 615.21 3,636.68 59.75%

6 PSDF grant - 25.00 389.58 100.00 514.58 -

7 GFA excluding consumer contribution and grants

511.60 1057.11 1,038.18 515.21 3,122.10 -

Source: KSERC Tariff Order and KSEB tariff petition for FY 19 to FY 22

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The below are the key observations of the Hon’ble Commission on the Capital Expenditure Programs:

• Ongoing and new works with capital cost less than 10 Crore INR: Large number of works proposed by SBU-T are still not tendered or yet to be started. Therefore, the Hon’ble Commission has excluded such works, while granting provisional approval of GFA addition for about 832.40 Crore INR out of total proposed outlay of about 1,823.39 Crore INR.

• New Capital Works program with capital cost above 10 Crore INR: Many of the projects proposed are either at the tendering stage or yet to get commenced. Hence, the Hon’ble Commission has excluded such projects, while granting provisional approval of GFA addition for about 646.46 Crore INR out of total proposed outlay of about 1,126.07 Crore INR.

• TRANSGRID 2.0 program: Three projects namely Kottayam, Thuravur & Ettumanoor, Kunnamkulam, Thalasseri are likely to be delayed beyond the current MYT period. Hence, the GFA addition of these projects were not considered by the Hon’ble Commission.

• Edamon-Kochi Line compensation: No GFA addition is associated with this package. Hence, this work was not considered as part of the GFA addition of SBU-T at this stage.

• SLDC works: KSEB has not submitted the details of the ongoing projects under SLDC. Hence, it was not considered complete by KSERC.

• PSDF grant: 514.58 Crore INR is available under the PSDF grant. Hence, the assets created using the PSDF grant are not considered towards depreciation and interest & financing charges.

With the above interpretation, the Hon’ble Commission has provisionally approved about 59.75% of the GFA addition proposed by SBU-T under the Capital Works Programs for the control period FY 19 to FY 22.

Table 12: Summary of the GFA addition provisionally approved for depreciation, interest on loan and O&M cost of the control period

S.No. Particulars FY 19 FY 20 FY 21 FY 22 Total

Crore INR

1 Proposed by KSEB under Capital Works Program 840.84 1,772.05 2,703.95 769.32 6,086.16

2 Provisionally approved by KSERC 511.60 1,082.11 1,427.76 615.21 3,636.68

3 GFA approved as a % of proposal for Capital Works Program (Including consumer contribution and grants)

60.84% 61.07% 52.80% 79.97% 59.75%

Source: KSERC Tariff Order and KSEB tariff petition for FY 19 to FY 22

The key highlights of the Hon’ble Commission’s views on the submitted investment proposal shows that the projects are principally approved on the basis of its implementation progress and there is a need for a detailed appraisal of the capital investment proposal under both TRANSGRID 2.0 and New Capital Works program from the perspective of its needs, technical justification, the timing of investments, expected benefits, investment requirement, source of funds, cost-benefit analysis, the impact of the proposed investment in the power system and likely impact on tariff.

The framework proposed and adopted for appraisal of the projects are discussed in Section 3 and the result of the appraisal of projects under the TRANSGRID 2.0 program and New Capital Works program is covered in Section 4.

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3. Evaluation framework

3.1 Guiding principle

3.1.1 Preamble

Prudence check of capital investments is an important part of regulatory oversight and it is aimed at ascertaining if the results achieved through capital expenditure justify the amount invested. Any proposed expenditure not fully justified by the results would mean that the customers are burdened with the costs of redundant investments. Hence, it demands that an objective framework be developed to ensure the investments are evaluated thoroughly.

The following guidelines may be considered to ascertain whether capital investment is made in a prudent manner or not.

3.1.2 Overview of the principle

For the purpose of evaluation of Capital Expenditure Program and its projects, any works costing more than 3 Crore INR (or the value to be fixed by the Hon’ble Commission) need to be reviewed as per this proposed guideline for the appraisal of Capital Expenditure Program.

The Capital Expenditure Program and projects may be evaluated on either a sample basis or 100% of the projects, depending on the volume of projects and/or as decided by the Hon’ble Commission as per the framework. Any capital expenditure plan that consists of less than 10 projects with cost more than 3 Crore INR each (or the minimum volume and value to be fixed by the Hon’ble Commission) shall be evaluated on a 100% basis. Any capital expenditure plan having more than 10 projects/DPR may be evaluated on the sample basis.

While deciding the size of the sample through stratified random sampling, it shall be ensured that project type, terrain nature, voltage level, cost, number of projects and other factors are adequately represented and justifiable. The sample selection may typically represent the following type of projects for the SBU-T.

• Development of new sub-station,

• Augmentation of existing sub-station,

• Use of GIS / Hybrid switchgear (for urban, coastal, polluted areas, etc.),

• Addition of new transmission lines/ substations to avoid overloading of the existing system including adoption of next higher voltage,

• Up-gradation of the existing AC transmission lines to higher voltage using the same right-of-way,

• Re-conductoring of the existing AC transmission line with higher ampacity conductors,

• Use of multi-voltage level and multi-circuit transmission lines,

• Upgradation/Augmentation of transmission line,

• Construction of new transmission line,

• Construction of exclusive transmission lines,

• Use of narrow base towers and pole type towers in semi-urban / urban areas keeping in view cost and right-of-way optimization,

• Use of HVDC transmission – both conventional as well as voltage source converter (VSC) based,

• Application of Series Capacitors, FACTS devices and phase-shifting transformers in existing and new transmission systems to increase power transfer capability,

• Other types of works such as the construction of terminal bays, construction of intermediate towers, etc.

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It is to note that the above list is indicative and while appraising the capital expenditure and its performance (post-implementation of the project), the focus shall be on the following key three aspects

Figure 2: Aspects of Capital Expenditure Appraisal

For the purpose of the appraisal, all the above aspects will carry weights and each of the investments under review shall be scored and measured across the project phases (i.e. planning, implementation and ex-post performance) based on the framework presented in this section.

Framework for appraising the investment proposal is shown in the below subsection 3.2 and the methodology of scoring the projects as per the proposed framework is discussed separately in the subsequent subsection 3.3.

3.2 Framework for evaluation

The framework for appraisal of projects under the Capital Expenditure Program is separated into three parts, as below

• Framework for evaluation at the planning stage,

• Framework for evaluation at the implementation stage, and

• Framework for evaluation at the Ex-post performance stage.

3.2.1 Framework for evaluation at the planning stage

The framework for appraisal of projects under the Capital Expenditure Program at the planning stage or proposal stage by SBU-T is discussed in this section. This framework is developed with due consideration of inputs and requirements from the KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2018 i.e. Annexure-IV Guidelines for in-principle clearance of investment schemes, CEA Manual on Transmission Planning Criteria and regulations/guidelines of other state utilities (Karnataka, Maharashtra, and Delhi4) in India for prudence check of capital expenditure.

Utility shall need to comply with the following pre-requisites while submitting the investment proposal.

a. Pre-requisites

i. DPR for Transmission Projects:

Transmission utility shall mandatorily prepare a Detailed Project Report (DPR).

KSEB needs to prepare the required DPR along with the estimates, and justification for the proposed investment. The justification indicated in the DPR shall be based on field requirements, baseline issues5 or prevailing issues, studies undertaken, or directives issued by the Regulator or Government initiatives, etc. Wherever necessary, supporting documents should be available for review (Example: log details for baseline technical performance information, recently discovered tender data for market price in estimates, detailed spreadsheet-based financial model for financial analysis, detailed spreadsheet-based calculation for technical benefit envisaged from the project, etc.). The capital investment proposal shall clearly define the existing or baseline performance parameters (Example:

4 Karnataka, Maharashtra and Delhi are selected, as these states have guidelines for capital expenditure program similar to Kerala, and state such as Karnataka have specific detailed guideline for evaluation of the expenditure program. 5 Examples of baselines issues include voltage profile problems, high interruptions, N-1 contingency constraints and others.

1. Planning and its Parameters

2. Implementation and its Parameters

3. Ex-post performance and its Parameters

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Voltage profile, loading details, Interruptions, etc.) and shall mention the improvement envisaged upon those baseline performance parameters in the project scenario, in a quantified manner. This would act as KPI for ex-post monitoring of the project. Incase KPIs are not defined at the time of investment, certain default KPIs will be assigned as outlined in Appendix -A.1. Further, the key components of any investment proposal that shall be covered and analyzed is presented in the Appendix-A.2.

ii. Primary and Secondary Objectives:

In the investment proposal, the utility shall have to identify Primary and Secondary objectives for each investment or project. In case objectives are not defined at the time of investment, certain default objectives will be assigned as outlined in Appendix-A.3 depending on the nature of investment and the performance will be evaluated against those set objectives along with the quantified KPIs. The Commission may consider deviation from the above requirements at its own discretion for acceptance of the investment proposal.

b. Planning Criteria for Transmission Project

i. Category of project

The transmission project proposed by the utility shall be any of the below categories as defined in Annexure-IV of KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2018.

a. Acquisition, construction or improvement of permanent facility b. Replacement, renovation and modernization or life extension of existing fixed assets

ii. Period of Investment Horizon

The utility should plan the project considering the maximum investment horizon of four years.

iii. Compliance to CEA Transmission Planning Criteria

Augmentation

1. In case of augmentation of transmission system to cater to the long-term requirements, the proposal shall be on account of an increase in power demand and/or generation capacity addition etc. Further, the utility shall augment the system considering the feedback regarding operational constraints and feedback from drawing entities.

2. Utility shall provide the reason for augmentation in the DPR. The reason shall be supported with facts such as load details of sub-station (MW, MVAr, voltage profile, etc.) to substantiate the need for augmentation. In case, augmentation is triggered due to overloading or envisaged overloading of the downstream station, the proposal shall be backed up with the empirical evidences for such an increase in demand.

3. In the case of augmentation due to an increase in demand, such an increase shall be based on either Electric Power Survey by CEA or actual increase in demand based on the last three years average. It is recommended that the utility shall use the metered data of the past three-years for arriving at an increase in demand.

4. In case of augmentation due to generation capacity addition or/and operational constraint, the details along supporting evidence shall be discussed in the DPR in a quantitative manner.

Up-gradation and/or Reconductoring

1. In case of upgradation and/or reconductoring of system, the utility shall mention the baseline performance parameters and the envisaged improvement in performance in terms of improvement in downtime, voltage profile, etc.

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2. In case of strengthening of the transmission network, the choice shall be based on cost, reliability, right-of-way requirements, transmission losses, downtime, etc.

Voltage Limits of System

1. The utility shall mention the maximum and minimum voltage profile of the baseline scenario (i.e. in the prevailing condition) in the DPR. The necessity of a new proposed project may be assessed based on the voltage profile of the baseline scenario vis-à-vis the variation from the Voltage Limit prescribed in Clause 5.3 of the CEA Manual on Transmission Planning Criteria6, 2013 or whichever latest.

2. The utility shall also assess about the duration of the maximum voltage or load profile in annual peak and seasonal peak (i.e. winter, summer and monsoon), in order to assess the opportunity for deferment of investment in transmission network through viable peak load management measures. In the case of a shorter duration of peak load, the utility needs to assess the peak load management measures under its alternatives among other alternatives.

Reliability Criteria

1. The utility shall comply with criteria for No Contingency (N-0), Single Contingency (N-1), Second Contingency (N-1-1) and generation radially connected with the grid as appropriately in-line with the CEA Manual on Transmission Planning Criteria 2013 or whichever latest.

Simulation and Studies for Planning

1. The utility shall plan the system based on one or more of the below power system studies, as per the requirements

a. Power Flow Studies b. Short Circuit Studies c. Stability Studies (including transient stability and voltage stability) d. EMTP studies (for switching/dynamic over-voltages, insulation coordination, etc.)

EHV Sub-Station Planning

1. In case of new sub-station, the existing sub-station capacity shall be exhausted as per the capacity mentioned in Clause 15.4 of CEA Manual on Transmission Planning Criteria, 2013 or whichever latest.

2. In the case of non-exhaust of existing capacity, the utility may justify the case for a new substation with supporting baseline information and envisaged project scenario information, in a quantitative way.

HVDC Transmission System

1. In the case of the HVDC line, the bulk power transmitting capacity of the network shall be more than 2,000 MW over a long distance of 700 km (capacity and distance to be as per the latest CEA Transmission Planning Criteria).

2. The Utility may also consider HVDC transmission, in case the existing AC transmission corridors carry heavy flows more than 5000 MW to control and supplement the AC transmission network (capacity and distance to be as per the latest CEA Transmission Planning Criteria).

iv. Methodology of Identification of Project 1. The utility shall identify the project either based on field assessments, field

requirements or based on the government directives. 2. In case of field assessment, the baseline performance information shall support the

need of the project. v. Alternatives Considered

6 Web link: http://cea.nic.in/reports/others/ps/pspa2/tr_plg_criteria_manual_jan13.pdf

http://cea.nic.in/reports/others/ps/pspa2/tr_plg_criteria_manual_jan13.pdf

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1. The utility shall have considered various alternative options to meet the objective(s) or improving prevailing baseline performance at the time of conceptualization of the investment. Identification of various alternatives, and comparison of alternatives covering its engineering aspects, economic costs and benefits shall be carried out and presented in the DPR.

2. The utility shall also provide justification for selecting the proposed project out of the identified project alternatives and reasoning for eliminating the identified alternatives from techno-commercial aspects.

vi. Need for investment

Existing Scenario/ Baseline Scenario Performance

1. The utility shall quantify the baseline performance parameters that are being negatively impacted and any prevailing scenario that adversely impacts the quality of supply and benefits to the consumer.

2. The utility shall consider for new project after the optimal utilization of existing asset/capacity and it shall complete its lifetime, unless the new project is necessary to address the negatively impacted baseline scenario. The investment proposal shall evidently indicate the lifetime of existing assets and baseline performance parameters to substantiate the need for new projects when the existing system has a remaining lifetime.

Project Scenario Performance

1. The utility shall quantify the performance parameters of the project that would improve the constraint(s) identified in the baseline scenario. The investment proposal shall also indicate the envisaged incremental improvement in constraints identified in the baseline scenario in a quantified way.

2. The utility shall also identify the derived benefits of the project in addition to the benefits that address the project objectives. The derived benefits may include strengthening of system to meet the normal growth load, supplying to new consumers, improving the quality of supply and others.

Proactive and Reactive Investment Proposal

1. The utility shall proactively identify the project to eliminate any constraints in network operation. In case of proactive investment, the investment proposal shall indicate about the necessity of the project to pursue with substantiating baseline information in a quantified way.

2. Reactive proposals shall also be submitted with substantiating baseline information in support of the project in a quantified way.

As the TRANSGRID 2.0 and New Capital Works projects are proposed on the basis of Load Flow Study conducted by KSEB, there is a need for independent validation of Load Flow Study results in order to ascertain the energy demand growth envisaged in the state.

vii. Technical Justification 1. The investment proposal shall quantify the technical benefits envisaged from the project

such as energy loss reduction, additional sale of energy, improvement in voltage profile, etc. The proposal shall also have detailed calculation for arriving such benefits with all assumptions and variabilities considered.

2. The utility shall also assess the impact of the project on the quality of supply and benefit to the consumer in a quantitative way.

3. The proposed project and the technology shall have a reasonable life span and the proposed technology should not get redundant with emerging technologies.

viii. Timing of the Investment 1. In the investment proposal, the utility shall provide justification with substantiating data

evidence for implementing the project in the proposed timeline.

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2. Planning of transmission project shall also consider the timeline necessary for the procurement process, Right of Way (ROW), approvals etc. along with the timeline or period in which the project needs to achieve Commercial Operation Date (COD).

ix. Project Risk and Mitigation Measures 1. The utility shall carry out detailed risk assessment in the investment proposal and it shall

identify the various risks as per the magnitude (High/Medium/Low). Risk assessment shall cover technical aspects, economic aspects, operational aspects, political aspects, environmental aspects, market aspects and others.

2. The utility shall also mandatorily identify the appropriate measures to mitigate the identified risks.

x. Project Estimates

1. For estimating the cost, the utility shall adopt the latest Schedule of Rates (SOR) for

arriving at the project cost. The market price data and other reliable sources shall also be referred for estimating the project cost.

2. The estimate shall be robust, and utility shall ensure that the estimate of the total project cost shall not exceed more than 5% (or the value to be decided by the Commission) with prevailing market price or actuals, unless it is majorly due to any force majeure or any change in the law.

xi. Financial Justification 1. The investment proposal shall have a detailed assessment of financial returns for each

project. For projects that have debt and equity components, the Internal Rate of Return (IRR) computation is necessary and the Project IRR shall need to be more than the cost of capital or appropriate benchmark rate.

2. In addition, the utility shall also compute Net Present Value (NPV) and Payback period for the projects.

3. The utility shall also compute and account for the social benefits envisaged from the investment proposal. Intangible and social benefits resulting from the construction and operation of the proposed projects over their economic lives shall be represented using the Economic Internal Rate of Return (EIRR) as a financial indicator in addition to Project IRR.

4. All assumptions shall be reasonable and shall fulfill with tariff regulation where necessary and appropriate.

xii. Prudence of the Investment 1. The proposed project shall not be duplication of the existing infrastructure and the utility

shall provide justification with substantiating information.

xiii. Implementation Plan 1. The investment proposal shall have a detailed implementation plan with the mapping of

required resources including human capital, materiality and financial aspects.

3.2.2 Framework for evaluation of project at the implementation stage

i. Procurement: The utility shall select the contractor or procure the material through a competitive bidding process. The documents pertaining to the same should be retained and produced by the utility during the assessment stage. For partial-turnkey projects or projects in which material was to be supplied by the utility, care should have been taken to ensure that the required resources are procured in time and made available for timely execution.

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ii. Time overrun and Cost overrun: The Utility shall ensure that there is no time overrun or cost

overrun in the project. In case of time overrun or cost overrun, the utility should provide specific reasons for the same. The utility also has to specify whether the delay/increase in cost can be attributed to utility or contractor or external factors. In case the delay is attributable to the contractor, the utility should provide details pertaining to the imposition of liquidated damages. In case they are not levied the utility shall provide specific reasons to the satisfaction of the Commission, for waiving of the same.

iii. Variations: The Utility shall specify if there were changes in the design or scope of the project executed when compared to DPR/estimate. Reasons for deviation should be documented and necessary approvals shall be obtained for such deviations.

iv. Quality of Execution: The utility shall ensure the quality execution of works as per the industry guidelines

v. Project Management and Monitoring: The utility shall deploy required resources including but not limited to human capital, funds, materials, and others for successful completion of the project within the envisaged timeline. In case of slippage of achieving the milestone, the utility shall have corrective plans to recourse the project progress. The execution of the project should have been monitored from time to time and any issues that crop in causing time/cost overruns should have been reported/ addressed at an early stage. Status reports for longer construction time project should be prepared regularly and completion report has to be prepared containing date of commissioning and cost of completion.

3.2.3 Framework for evaluation of project at post-execution stage

i. Performance Monitoring: The utility shall periodically monitor and record the performance parameters and KPIs that are identified during the planning stage of the project. The utility shall also periodically record the other benefits achieved from the project. The year on year details related to project performance parameters, achieved should be compared with the estimated benefits in terms of:

• Whether the primary and secondary objectives as listed out are met • Improvement in baseline performance parameters and constraints identified

• Cost-benefit analysis - estimated vs actual recorded • Whether IRR, NPV, and payback period is in line with the estimated performance indicators

• Social benefits are in line with the estimated benefits • Energy loss saving and additional sale of energy in line with the estimated volume.

ii. Performance Validation: The responsibility of providing the proof of achieving the objectives,

performance parameters and KPIs will be on the utility. The Commission may independently verify the authenticity of data provided, wherever the benefits are quantitative in nature. For all those projects where the estimated benefits have not been quantified in the planning stages, the utility shall provide details with regard to the performance of the system prior to the commissioning of the project and performance of the system post-commissioning.

3.3 Methodology for scoring/grading the Capital Investment Proposal

The capital investment proposal shall be appraised using the proposed framework and while carrying out the assessment, the scoring of each parameter under the framework shall be adopted using the below-discussed procedures.

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Each of the parameters discussed under the framework will carry weights and each of the investment proposals under review will be scored and measured on those parameters.

3.3.1 Procedure for scoring the capital investment proposal projects at the planning stage

In the planning stage framework, there are 12 major parameters for appraisal of the capital investment project. The distribution of score and weightage for each of the parameters has been given below and the Hon’ble Commission may relook into the weightage to accommodate any forthcoming changes in the framework, regulation, guidelines, policy and others.

Table 13: Assessment Parameters and corresponding weightages

S.No Assessment Parameters Maximum Score Minimum Score Required Rational

1 Identification of Objective 10 -

Objective is necessary to track the performance

Primary Objective 6 - -

Secondary Objective 4 -

2

Compliance to Capital Investment Schemes Categories (As per Annexure IV of Tariff Regulation)

2 -

Requirement as per KSERC Tariff Regulation

Scheme Type 0.5 - -

Scheme Category 0.5 - -

Period of Investment Horizon 1 - -

3 Compliance to CEA Transmission Planning Criteria

20 15 Requirement by CEA

a

Augmentation in-line with CEA Transmission Planning Criteria

10 - -

Up-gradation and/or Reconductoring in line with CEA Planning Criterial

10 - -

New Substation 10 - -

Compliance to HVDC Bulk Power Transmission

10 - -

Compliance to HVDC AC Bulk Power Transmission

10 - -

b Voltage Limits 3 - -

c System Study Analysis 5 - -

d Planning Margin Consideration 1 - -

e Voltage Margin Consideration 1 - -

4 Method of Project Identification 3 - For knowing the

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investment prompting factor

5 Alternatives Assessment 5 - For selecting the right solution

6 Need for Investment (Baseline & Project Scenario Impact)

25 20

For prioritizing the project and assess the need.

a Quantification of impacted baseline

scenario 10 -

-

b

Quantification and justification of envisaged outcome (performance) of the proposed project addressing the

baseline constraints

10 -

-

c Proactive Proposal 2 - -

d Reactive Proposal 1 - -

e Justification for Investment 3 - -

7 Technical Benefits of the Project 5 - For weighing the technical benefits

a Quantification of Project Technical

Benefits 3 -

-

b Impact of Project on Quality of Supply

and Consumers 2 -

-

8 Timing of Investment 5 -

For understanding the immediate and gradual need of investment

9 Project Risk & Mitigation Measures

5 - For evading high-risk projects

a Risk analysis and its strength 2 - -

b Risk mitigation plan and its strength 3 - -

10 Project Estimates 5 -

For bringing accuracy in the cost estimation and better fiscal management

11 Financial Justification and Cost-Benefit Analysis

10 - For assessing the financial

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returns of the investment

12 Implementation Plan 5 - To address cost and time overrun

Total 100

60

(min. score

out of total 100)

60 marks as adopted in Karnataka

For the investment to be considered prudent, it is necessary that the project satisfies the following conditions under the scoring system

1. The project shall achieve an overall score of 60 out of 100 [Note: More the minimum score (i.e. say 70 or 80 marks out of 100 marks) means, more parameters shall need to be addressed by the utility with the level of near accuracy in order to improve the quality of the investment proposal]

(and) 2. The project shall receive at least 15 marks out of 20 for “Compliance to CEA Transmission

Planning Criteria” and 20 marks out of 25 for the “Need for Investment” parameters.

3. The projects, that are not supported with evidence/ information, for the purpose of scoring are to be classified at ‘Non-Deducible’.

The Hon’ble Commission may consider revising the minimum marks required for treating the investment proposal as prudent. Further, the criteria of minimum mark required for Compliance to CEA Transmission Planning Criteria and Need for Investment may be optional for the evaluation. The rights of eliminating the investment proposal in a case where the project is not fulfilling the minimum mark required is solely based on the decision of the Hon’ble Commission.

Further, the Hon’ble Commission may set minimum scoring marks for any other parameters within the framework and the amendments shall be communicated to the utilities in advance for enabling them to prepare the capital investment projects in compliance with the appraisal framework. The amendments may be considered by the Hon’ble Commission on a yearly basis.

In addition, the Hon’ble Commission shall reject the capital investment projects, if any of the key framework parameters are not satisfactorily addressed in the proposal. The details of key parameters where the option of rejection of investment proposal may be considered, is discussed in the below scoring/grading index.

Index for scoring the capital investment projects under the proposed framework for appraisal

The index for allocation of score under each parameter shall be based on the satisfaction of conditions formulated against each parameter as under.

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Scoring Framework

Table 14: Scoring Framework

* Mandatory

S.No Assessment Parameters

Scoring/Grading Index Mark Scored by Investment Proposal/Project

1 Identification of Objective*

Identification of Objectives: 10 Marks

Primary Objective

• Identification of Primary Objective: 6 Marks • Objective identified as per default objectives, as it is not

explicitly mentioned in the DPR: 5 Marks • No objective is identified: 0 Mark

Secondary Objective

• Identification of Secondary Objective and Others: 4 Marks

• Objective identified as per default objectives, as it is not explicitly mentioned in the DPR: 3 Marks

• No objective is identified: 0 Mark

2

Compliance to Capital Investment Schemes Categories (As per Annexure IV of Tariff Regulation)*

Compliance to Capital Investment Schemes Category: 2 Marks

Scheme Type If the proposed project type is either acquisition or construction or improvement of permanent facility: 0.5 Marks

Scheme Category If proposed project category is replacement / renovation / modernization / life extension :0.5 Marks

Period of Investment

Horizon If the proposed period of investment horizon is within 4 years: 1 Mark


Compliance to CEA Transmission Planning Criteria: 20 Marks

a

Augmentation in-line with CEA

Transmission Planning Criteria

(or)

I. Justification for Augmentation in the proposal:10 Marks

a. If prevailing sub-station/system loading details provided in the DPR /proposal and the given details substantiate the need for augmentation due to system overloading: 5 Marks (or)

If prevailing sub-station/system loading details provided in the DPR /proposal and the given details partially substantiate the need for augmentation due to system overloading: 3 Marks (or)

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If prevailing sub-station/system loading details provided in the DPR /proposal and the given details not substantiating the need for augmentation: 2 Marks (or)

If prevailing sub-station/system loading details not provided in the DPR /proposal and the details not substantiating the need for augmentation : 0 Mark or Rejection of Project

and

b. If augmentation is triggered due to demand growth and an increase in power demand is considered in the proposal based on actual metered data: 5 Marks (or)

If an increase in power demand is considered based on EPS data: 3 Marks (or)

If an increase in power demand is not qualitatively referred: 0 Marks

(or)

c. Augmentation to evacuate new generation capacity: 5 Marks

(or)

d. Augmentation to remove operation constraint:5 Marks

Up-gradation and/or Reconductoring in

line with CEA Planning Criterial

(or)

Reason for Up-gradation and/or Reconductoring is given in the Proposal: 10 Marks

a. If existing downtime is indicated and envisaged improvements from the proposed project is quantified: 5 Marks (or) If existing downtime is indicated and envisaged improvements from the proposed project is not quantified: 3 Marks (or) If existing downtime is qualitatively indicated and envisaged improvements from the proposed project is qualitatively mentioned: 1 Mark (or) If existing downtime is not indicated and envisaged improvements from the proposed project is not mentioned or not resulting in improving the existing downtime: 0 Mark or Rejection of Project

b. If other reasons are provided in the proposal in a quantified manner: 5 Marks (or) If other reasons are provided in the proposal in a non-quantified manner: 1 Marks

New Substation (or) New Substation due to exhaust of capacity in existing substation - 10 Marks

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Compliance to HVDC Bulk Power

Transmission (or)

HVDC project with carrying capacity more than 2,000MW, for more than 700 km - 10 Marks

(or)

HVDC project with carrying capacity less than 2,000MW, for less than 700 km - Proportionate Marks w.r.t to carrying capacity and distance from 2,000 MW and 700 km

Compliance to HVDC AC Bulk Power

Transmission

HVDC in AC Transmission Corridor with carrying capacity more than 5,000 MWAC - 10 Marks

(or)

HVDC in AC Transmission Corridor with carrying capacity less than 5,000 MWAC: Proportionate Mark w.r.t to capacity

b Voltage Limits

Voltage Limits: 3 Marks

If the voltage limit is beyond the CEA transmission planning manual and the prevailing voltage profile indicates for new project/system augmentation/upgradation: 3 Marks

(or)

If the voltage limit is not provided; however, if it is partially verifiable with public domain data and it indicates for new project/system augmentation/upgradation: 1 Mark

(or)

If the voltage limit is not beyond the CEA transmission planning manual and the prevailing voltage profile doesn’t indicate for new project/system augmentation/upgradation: 0 Mark

c System Study

Analysis

If any of the system study is undertaken: 5 Marks

(or)

If no study is undertaken: 0 Mark or Rejection of Project

d Planning Margin

Consideration

If planning margin is considered: 1 Marks

(or)

If planning margin is not considered: 0 Mark

e Voltage Margin

Consideration

If voltage margin is considered during the planning stage: 1 Marks

(or)

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If voltage margin is not considered during the planning stage: 0 Mark

4 Method of Project Identification

Method of Project Identification: Based on Field Requirements or Govt. Directives - 3 Marks

Project identified through field requirements or govt. directives: 3 Marks

(or)

Any other approach: Rejection of Project

5 Alternatives Assessment*

Alternatives Considered: 5 Marks

Alternatives are considered, analyzed and then proposed project is identified: 5 Marks

(or)

Alternatives are considered but not analyzed in detail: 2 Marks

(or)

Alternatives are not considered and analyzed: 0 Mark or Rejection of Project

6

Need for Investment (Baseline & Project Scenario Impact)*

Need for Investment: 25 Marks

a Quantification of

impacted baseline scenario

I. If details of existing scenario impacting the power quality is quantified and mentioned in the proposal: 10 Marks

a. Quantification of existing scenario that negatively impacts the quality of supply and benefits to the consumers: 3 Marks

(or)

Partial quantification of existing scenario that negatively impacts the quality of supply and benefits to the consumers: 1 Marks

(or)

No quantification of existing scenario that negatively impacts the quality of supply and benefits to the consumers: 0 Mark

and

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b. If existing project completed its lifetime: 2 Marks

(or)

If existing project having life more than 10 years: 0 Mark

(or)

If existing project having life less than 10 years: 1 Mark

c. Quantification of existing energy scenario: 2 Marks

(or)

Partial quantification of existing energy scenario: 1 Mark

(or)

No quantification of existing energy scenario: 0 Mark

d. Quantification of Performance Parameters of Existing Scenario/Baseline Scenario/Existing Project : 3 Marks

(or)

Partial quantification of Performance Parameters of Existing Scenario/Baseline Scenario/Existing Project: 2 Marks

(or)

No quantification of Performance Parameters of Existing Scenario/Baseline Scenario/Existing Project : 0 Marks

b

Quantification and justification of

envisaged outcome (performance) of the

proposed project addressing the


If the envisaged outcome (performance) of the proposed project is quantified and describes the manner in which the project will remove the constraints identified in the baseline scenario: 10 Marks

(or)

If the envisaged outcome (performance) of the proposed project is partially quantified and describes the manner in which the project will remove the constraints identified in the baseline scenario: 5 Marks

(or)

If envisaged outcome (performance) of the proposed project is not quantified and qualitatively describes the manner in which the project will remove the constraints identified in the baseline scenario: 2 Marks

(or)

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If envisaged outcome (performance) of the proposed project is not quantified and not describing the manner in which the project will remove the constraints identified in the baseline scenario : 0 Marks or Rejection of Project

c Proactive Proposal Proactive Proposal: 2 Marks

d Reactive Proposal Reactive Proposal: 1 Marks

e Justification for

Investment

Description of justification (narratives) for the need of investment with quantification : 3 Marks

(or)

Partial description of justification (narratives) for the need of investment with partial quantification: 1 Marks

(or)

No justification for need of investment without any quantification: 0 Marks

7 Technical Benefits of the Project*

Technical Justification of the Project: 5 Marks


Benefits

I. Quantification of technical benefits: 3 Marks

b Impact of Project on

Quality of Supply and Consumers

II. Quantification of the impact of the project on quality of supply and benefits to the consumers:2 Marks

(or)

No quantification of the impact of the project on quality of supply and benefits to the consumers: 0 Mark

8 Timing of Investment

Timing of Investment: 5 Marks

I. Justification provided in line with the reason for the need of the project which necessitates for immediate start of the project within proposed timeline:3 Marks

(or)

Proposal with no justification for immediate implementation with quantified backup data - 0 Mark or considered for next control period

and

II. If the proposed project is to cater to the increased demand or new generation capacity: 2 Marks


Project Risk & Mitigation Measures:5 Marks

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a Risk analysis and its

strength

I. Identification and analysis of project risks: 2 Marks

(or)

Partial analysis of project risks: 1 Marks

(or)

No risk analysis performed : 0 Mark

b Risk mitigation plan

and its strength

Identification of mitigation plan for identified risks: 3 Marks

(or)

Partial mitigation plan: 2 Marks

(or)

Mitigation plan needs strengthening: 1 Mark

(or)

No mitigation plan: 0 Mark

10 Project Estimates

Project Estimates: 5 Marks

I. Estimates based on SOR, Market Rates & Others and the total project cost variation is less than 5% (compared to prevailing market rate): 5 Marks

(or)

II. Estimates based on a blend of SOR, Market Rates & Others and the total project cost variation is > 5% to <10 % (compared to prevailing market rate): 4 Marks

(or)

III. Estimates based on a blend of SOR, Market Rates & Others and the total project cost variation is >10% to <20 % (compared to prevailing market rate): 3 Marks

(or)

IV. Estimates based on blend of SOR, Market Rates & Others and the total project cost variation is > 20% and <25 % (compared to prevailing market rate): 2 Marks

(or)

V. Irrational Estimates or estimates based on thumb rule OR the total project cost variation is > 25% (compared to prevailing market rate): 0 Mark or sent for reconsideration of an investment proposal

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11

Financial Justification and Cost-Benefit Analysis*

Financial Justification and Cost-Benefit Analysis: 10 Marks

1.If financial Indicators are within acceptable range (i.e. IRR > 10% or > Cost of Capital, CBR > 1, PBP < 10 yrs., NPV +ve) and socio-economic benefits are accounted: 10 Marks

(or)

2. If, the justification provided for taking up the project when indicators are not within the acceptable range and socio-economic benefits are accounted: 5 Marks

(or)

3. If no justification is provided, financial indicators not within the acceptable range and socio-economic benefits are not accounted: 0 Mark or Rejection of Project

12 Implementation Plan

Implementation Plan: 5 Marks

Detailed Implementation Plan in the proposal: 5 Marks

Total 100

As seen above, the below six sub-parameters are considered as key mandatory requirements irrespective of its scoring weightage.

• Objectives

• System Study Analysis (i.e. Compliance to CEA Transmission Planning Criteria)

• Alternatives Assessment

• Quantification and justification of envisaged outcome (performance) of the proposed project addressing the baseline constraints (i.e. Need for Investment)

• Technical Benefits of the Project

• Financial Justification and Cost-Benefit Analysis

The Hon’ble Commission may also consider rejecting the investment proposal, if the project is not satisfactorily addressing the above six mandatory parameters as per the scoring/grading index.

For the purpose of appraisal of capital investment project as per the framework, the template for capital expenditure assessment is appended in Appendix A.4.

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3.3.2 Procedure for scoring the Capital Investment Proposal Projects at the implementation stage

The parameters to be assessed for appraising the performance at the implementation stage are as follows:

Figure 3: Parameters to be assessed for appraising the performance at the implementation stage

The scoring of implementation can be performed post-execution of the work, however, the same shall be considered in parallel with its ex-post performance to assess the prudence of the investment. Hence, the scoring for the implementation stage is deliberated along with its ex-post performance assessment in the below subsection 3.3.3.

3.3.3 Procedure for scoring the Capital Investment Proposal Projects at post-execution stage

During the post-execution stage, the capital investment project shall be viewed holistically from the planning, implementation and ex-post performance perspective to assess the prudence of the investment.

The Hon’ble Commission may independently conduct the prudence check of the investment on an annual basis once the transmission projects are implemented by the utility and submitted the petition for true-up.

Scoring index in ex-post scenario for planning, implementation and post-performance of the investment projects are as below:

A. Scoring/Grading Index for Planning

Table 15: Scoring Index for Planning

S.No Scoring/Grading Index for Planning Marks Scored by the Project

1 If the project was taken up as part of an existing broad plan or as a reactive measure to an urgent need : 3 Marks

• Part of the plan: 3 Marks • Unplanned: 2 Marks

• No information provided: 0 Marks

2 If the DPR/Estimate prepared with Cost-benefit Analysis: 2 Marks

• DPR/Estimate with Cost-Benefit Analysis: 2 Marks

• Only DPR/Estimate available: 1 Mark

3 If alternatives to the project considered and mentioned in DPR: 5 Marks

• In case alternatives considered: 5 marks • No alternatives assessed: 0 marks

1. Schedule of Implementation

2. Cost of Implementation

3. Quality of Execution

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B. Scoring/Grading Index for Implementation

Table 16: Scoring Index for Implementation


1 Schedule of Implementation: 5 Marks • Completed within the estimated timeline: 5 Marks • Completed beyond the estimated timeline

▪ Within one year: 4 Marks ▪ Between one year and two years: 2 Marks ▪ Above two years

2 Cost of Implementation: 5 Marks • Completed within the estimated cost: 5 Marks

• Excess of expenditure over sanctioned estimate: ▪ Within 10% : 4 Marks ▪ 10% to 25% : 2 Marks ▪ Above 25% : 0 Marks

3 Quality of Execution: 10 Marks [Proportionate scoring of project as per the quality of execution. Example: Alignment of lines, erection of tower, stringing of conductors in terms of sag, etc.]

C. Scoring/Grading Index for Ex-Post Performance

Table 17: Scoring Index for Ex-Post Performance


1 Primary objective and baseline constraints/KPI achieved and improved: 40 Marks

2 Secondary objective and baseline constraints achieved and improved: 10 Marks

3 Monitoring and Reporting of KPIs: 20 Marks

Considering the project performance as decisive purpose of the investment, higher weightage is given for meeting the objectives, removing the baseline constraints, improving the pre-identified KPIs in the planning stage along with monitoring and reporting of project performance at the ex-post scenario.

D. Summary of Scoring/Grading

Table 18: Summary of Scoring/Grading

S.No Scoring/Grading Index for Planning Marks 1 Planning 10 Investment – Proactive or Reactive 3 DPR and cost-benefit analysis 2 Alternatives 5

2 Implementation 20 Schedule of Implementation 5 Cost of Implementation 5 Quality of Execution 10

3 Ex-Post Analysis 70 Achievement of Primary objective and improvement of baseline constraints/KPI 40 Achievement of Secondary objective and improvement of baseline

constraints/KPI 10

Monitoring and Reporting of KPIs 20 Total 100

The results of the appraisal of projects under TRANSGRID 2.0 and New Capital Works program using the above framework is discussed in Section 4.

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4. Appraisal of Capital Expenditure Program

4.1 Philosophy for TRANSGRID 2.0 program and New Capital Works program

In the investment proposals under TRANSGRID 2.0 program and New Capital Works program, the rapid increase in power demand in the state (maximum demand of 4,000 MW in April 2017) and the anticipated demand of 4,900 MW in 2021 is cited as a fundamental basis for the need of the new investments in transmission capacity. Further, the 18th Electric Power Survey (EPS) by CEA has indicated that the maximum demand of the state would reach about 5,479 MW by FY 22.

Considering the above scenario, about 4,900 MW is taken as peak load for the control period FY 19 to FY 22 and the Load Flow Study (LFS) has been carried out by KSEB SBU-T for analyzing the future capacity addition requirements in the transmission system. It is to note that, the peak load study considered for the LFS is varying between 3,900 MW to 4,900 MW across investment proposals under TRANSGRID 2.0 and New Capital Works program.

As per the latest available actual demand details of Kerala, from CEA, the maximum demand recorded in the state during FY 18 is 3,892 MW and the peak demands are recorded during the months of February, March, April and May (covering summer spell). The peak load requirement in the state is about 150 MW (3,892 MW – 3,745 MW) higher than the average peak demand recorded across months. It is to note that, the SBU-T in its petition has sought the Hon’ble Commission’s approval for 150 MW peak power procurement on a short term basis for the period Oct 2018 to May 2019. This peak load requirement scenario opens up an opportunity to the state for peak load management measures (on either supply & demand side) to differ investment in transmission capacities.

Figure 4: Actual Peak Demand (MW) of Kerala for FY 18

Source: CEA

Further, the growth pattern of peak demand during the last 5 years shows that the peak demand in the state is growing at an average rate of 3 % between FY 14 and FY 19. However, the peak demand is not uniform in magnitude between FY 16 and FY 19 (as shown below). It means that there is a need for transmission and distribution capacity to handle the peak load requirements irrespective of its magnitude of duration (either short or long).

3885 3889

3597

36673634

3548

3745

36473629

3547

3844

3892 3892

Apr-17 May-17 Jun-17 Jul-17 Aug-17 Sep-17 Oct-17 Nov-17 Dec-17 Jan-18 Feb-18 Mar-18 FY 18

Pe

ak

De

ma

nd

(M

W)

Trendline

Monthly Demand Yearly Demand

Final


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Figure 5: Growth of Peak Demand (MW) in Kerala

Source: CEA Load Generation Balance Report

With average peak load growth of 3%, the state is likely to reach the peak load of about 4,519 MW by FY 22 from its present load level of 4,136 MW in FY 19. Considering the trend of load growth, the peak load details considered for LFS in the investment proposals appears to be within the reasonable range, with a difference of about 380 MW (i.e. 4,900 MW-4,519 MW).

Though the peak demand has reached about 4,136 MW in FY 19, the baseline information i.e. loading details of various substations at the individual project level does not wholly support the entitlement that, the peak demand is equally distributed across the state. During the select appraisal of capital investment projects under TRANSGRID 2.0 and New Capital Works program, it is noted that many of the substations are either partially loaded or overloaded only for a short duration (i.e. a few months in a year), based on the review of FY 19 data as provided by KSEB SBU-T. Details of project wise substation loading are discussed subsequently in sections 4.6 and 4.7. It is to note that the majority of substations under 22 projects of TRANSGRID 2.0 and New Capital Works program are not recording any breach of minimum voltage because of its peak loading in FY 19. Among these projects, the existing substation in the proposed project such as Thalassery, Thamabalamanna and Kolathanadu are facing frequent breach of minimum voltage level. This implies the need to study the duration magnitude of this peak and accordingly necessary actions may be mooted to undertake peak load management measures. In the current scenario, no investment proposal has evaluated the peak management measures as its alternative.

Figure 6: No of Months Minimum Voltage Breaches (CEA Planning Criteria Limit) in TRANSGRID Projects Substation in FY 19

Source: KSEB SBU-T

3671

3760

3977

4132

3892

4136

2%

6%

4%

-6%

6%

-8%

-6%

-4%

-2%

0%

2%

4%

6%

8%

3400

3500

3600

3700

3800

3900

4000

4100

4200

FY 14 FY 15 FY 16 FY 17 FY 18 FY 19

% G

row

th o

f P

ea

k D

em

an

d

Pe

ak

De

ma

n (

MW

)

Trendline

Peak Demand Growth Rate

0 0

2

4

0 0

1

0 0

6

0

1

No

. o

f M

on

ths

Final


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Figure 7: No of Months Minimum Voltage Breaches (CEA Planning Criteria Limit) in New Capital Work Projects Substation in FY 19

Source: KSEB SBU-T

Further, the above scenarios specify that the peak load is not equally distributed across the state (substations); hence the enhancement of transmission capacities is required to handle the peak requirements. This might be a costlier affair considering the present situation of dependency on imported power to meet the power demand in the state.

Long-term plan for peak load management, either through supply-side management (enhancing in-house generation capacities, decentralized energy generation, energy storage and others) and/or demand side management is required to defer or optimize the investments in the transmission business.

It is also noted from the investment proposals that; many existing projects are required to be upgraded or modernized even before the completion of its remaining lifetime. This scenario is likely to continue in future investments as well if the supply and demand management is not enhanced from the present scenario. It also means that the proposed investment projects may also need to be augmented in near future, even before the end of its life period whenever the peak load of the state grows further to a significant extent as experienced in the present scenario.

4.2 Impact of transmission capacity proposed under TRANSGRID 2.0 and New Capital Works

4.2.1 Capacity addition proposed for the control period FY 19 to FY 22

The total proposed transmission capacity addition under the 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Works program is about 4,288 MVA substation capacity with about 846 Ckt-km line length at different voltage levels (110 kV, 220 kV and 400 kV).

These proposals are envisaged to get completed between FY 19 and FY 22, and the proposed capacity addition makes about 21% and 7% of the prevailing substation capacity (MVA) and line length capacity (Ckt-km) by end of FY 18. It is to note that proposed MVA and Ckt-km is a combination of new capacity addition as well as upgradation of existing capacity, hence it is not a cumulative increase in capacity in MVA and Ckt-km.

1

0 0

1

9

1

0 0

No

. of

Mo

nth

s

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Figure 8:Proposed Substation Capacity Addition for FY 19-FY 22

Source: KSEB ARR Petition and DPRs

Figure 9: Proposed Line Length Addition for FY 19-FY 22

Source: KSEB ARR Petition and DPRs

Details of existing capacity addition and the total proposed capacity addition are shown below and the project-wise details of proposed capacity addition in MVA and Ckt-km under 12 projects of TRANSGRID 2.0 and New Capital Work program are appended in Appendix A.5.

Table 19: Existing Capacity and Proposed Capacity Addition

S.No Item Unit Transmission Capacity as on 31st March 2018

Proposed Transmission Capacity

1 400 kV Lines Ckt-km 855.96*

845.91 Ckt-km proposed under 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Works (excluding 66 kV and 33 kV)

2 220 kV Lines Ckt-km 2,855.98



5 33kV lines Ckt-km 1,945.64

Total Line Length Ckt-km Ckt-km 12,340.29 845.91

21% of existing MVA

capacity

7% of existing Ckt-km line

length

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S.No Item Unit Transmission Capacity as on 31st March 2018

Proposed Transmission Capacity

6 400 kV Substations Nos 5* + 1

4,288 MVA proposed under 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Works (excluding 66 kV and 33 kV)

7 220 kV Substations Nos 22


9 66kV Substations Nos 76


Total transmission capacity (MVA)

MVA 19,994.70 4,288.5

*owned by PGCIL

Source: KSEB ARR Petition, 2018 and SBU-T DPR

4.2.2 Effect of proposed projects on the grid and transmission charges

The investment proposals under TRANSGRID 2.0 and New Capital Works program shows the envisaged benefits of 171 MW in term of peak loss reduction, 773 MU in term of peak energy loss reduction and 3,798 MU in term of additional sale of energy. It is to note that, a few investment proposals have not quantified technical benefits which is not accounted for the impact review in this section.

The envisaged peak loss reduction and the additional sale of energy are arrived by the KSEB SBU-T using Load Flow Study (LFS), however, the basis for arriving at the peak loss reduction and additional sale of energy envisaged from the investment proposals is not discussed in the investment proposal.

The projects under TRANSGRID 2.0 program are envisaged to have maximum peak loss reduction benefits than the projects under New Capital Works program. Further, the projects under New Capital Works program are envisaged to have maximum additional sale of energy benefits than the projects under TRANSGRID 2.0 . The summary of the technical benefits anticipated from the proposed transmission capacities are as shown below.

Table 20: Technical benefits anticipated from the proposed transmission capacities

S.No Transmission

Program No of

Projects

Peak Loss Reduction Additional Sale of Energy (MU)

Investment Cost (Crore INR) (as

per ARR Petition) MW MU

1 TRANSGRID 12 151 599 1,688 2,697

2 New Capital Works

40 21 173 2,109 1,126

Total 171 773 3,798 3,823


As per the KSERC Order OA No.15/2018, dated 8 July 2018, the Commission has approved the transmission loss between 4.05% and 3.75% for the control period (FY 19 to FY 22) and in the absolute terms, the approved losses range between 1,006 MU and 1,061 MU.

The summary of approved transmission losses and Intrastate Transmission Charges are as below.

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Table 21: Approved transmission losses and Intrastate Transmission Charges


1 Energy Input MU 24,846 26,243 27,248 28,295


3 Energy Loss MU 1,006.27 1,036.62 1,049.03 1,061.07

4 SS Auxiliary Consumption MU 15.58 16.36 17.18 18.04


6 Cost of Intrastate Transmission Crore INR 874.6 983.69 1,162.47 1,283.53

7 Transmission Charges [(7)= (6)-(5)]

INR/ kWh

0.37 0.39 0.44 0.47


The approved transmission charges estimation in the above table has been computed by considering partial approval of projects under TRANSGRID 2.0 (69%) and New Capital Works (57%). However, the KSEB proposed transmission charges estimation considers 100% approval of projects under TRANSGRID 2.0 and New Capital Works. The energy input, loss of energy and cost of intrastate transmission assumes that the TRANSGRID 2.0 and New Capital Works projects exist in the system from FY 18 onwards based on the expected COD of individual projects7. The summary of proposed transmission losses and Intrastate Transmission charges are as below.



1 Energy Input MU 24,846 26,243 27,248 28,295


3 Energy Loss MU 1,006.27 1,042.33 1,058.41 1,074.19


5 Cost of Intrastate Transmission Crore INR 951.08 1,106.19 1,394.26 1,637.13

6 Transmission Charges [(6)= (5)-(4)]

INR/ kWh

0.40 0.44 0.53 0.60


In the above table, the energy input parameter includes the additional sale of energy and the energy loss parameter includes the peak loss reduction envisaged under the projects of TRANSGRID 2.0 and New Capital Works program. Further, the ARR includes the existing GFA as well as the proposed projects under TRANSGRID 2.0 and New Capital Works program.

In order to assess the impact of projects under TRANSGRID 2.0 and New Capital Works program on the transmission charges, the additional sale of energy has been deducted from energy input; and peak loss savings have been added to the energy loss. Further, ARR under TRANSGRID 2.0 and New Capital Transmission Works program has been deducted from the year-wise intrastate transmission cost to arrive the transmission

7 As confirmed by KSEB, that the energy input includes the additional sale of energy, loss of energy includes the peak loss reduction benefits from the envisaged projects of TRANSGRID 2.0 and New Capital Transmission Works. Also, the cost of Intrastate transmission charges includes the Aggregate Revenue Requirement (ARR) of the envisaged projects.

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charges contributed by TRANSGRID 2.0 and New Capital Works program . The data for additional sale of energy and peak loss savings has been extracted from the investment proposals.

The details of impact on the transmission charges are as below and calculations are attached in Appendix - A.10.


S.No.

Particulars Unit FY 19 FY 20 FY 21 FY 22

1 Energy Input (excluding addition sale of energy from TRANSGRID and New Capital Works program)

MU 24,846.15 24,808.98 23,892.64 24,497.75


3 Loss of Energy (including peak loss saving from TRANSGRID and New Capital Works program)

MU 1,006.27 1,277.56 1,831.44 1,937.41


5 Cost of Intrastate Transmission (excluding ARR of TRANSGRID and New Capital Works program)

Crore INR 874.60 955.45 1,029.21 1,241.90

6 Marginal Tariff of New Projects Crore INR - 0.90 0.88 0.85


INR/ kWh 0.37 0.41 0.47 0.55

8 KSEB computed Transmission Charges considering 100% approval of projects

INR/ kWh 0.40 0.44 0.53 0.60


INR/ kWh 0.03 0.03 0.06 0.05


The impact of 3,798 MU of additional sale of energy, 773 MU of peak loss reduction and ARR of proposed projects under TRANSGRID 2.0 and New Capital Works program result in an increase of transmission charges by INR 0.03 – 0.06 per kWh (FY 19 – FY 22).

The project-wise envisaged peak load loss reduction and the additional sale of energy is given below:

Final


PwC 52

Figure 10: TRANSGRID 2.0 – Peak Loss Saving

Source: KSEB TRANSGRID 2.0 DPR

Figure 11: TRANSGRID 2.0 – Additional Sale of Energy (MU)

Source: KSEB TRANSGRID 2.0 DPR

The zero benefits in the above figures show that the benefits are not quantified in the investment proposals (especially Manjeri, NRHTLS and Ernad).

7.71.6

10.7

28.6 24.7

5.5 1.4

26.2

7.2 9.64.3

23.3

37.3

0.0

52.0

138.5

119.7

26.6

6.8

24.234.9

46.5

0.0

112.9

0.0

20.0

40.0

60.0

80.0

100.0

120.0

140.0

160.0

Annual Peak Loss Savings(MW)

Annual Peak Loss Savings(MU)

0.0

131.8

0.0

370.7387.5

96.9

193.8

116.2

0.0

391.4

0.0 0.00.0

50.0

100.0

150.0

200.0

250.0

300.0

350.0

400.0

450.0

Additional Sale of Energy(MU)

High benefit yielding projects with high 'Additional Sale of energy' among TRANSGRID 2.0 program

High benefit yielding projects with high “Peak loss saving” among TRANSGRID 2.0 program

Final


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Figure 12: New Capital Works – Peak Loss Saving

Source: KSEB DPR

0.519

0.029

0.28

0.11

0

0

0

0

0

4.312

4.312

4.312

0.138

0.284

1.14

0.627

0.352

0.352

0.863

3.027

3.5

4.55

6.6

3.5

1.28

0.58

3.4

4.98

0.22

0.33

0.605

6.73

0

1.62

0.62

0

0

11.7683

2.3

4.7

20.9

20.9

20.9

1.25

4.7

6.1

0.7

1.62

1.9

5.48

2.99

3.81

2.3

2.3

3.99

6.23

7.95

1.85

Chemperi

Kollam - Kottiyam

Mylatty - Vidhyanagar

Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal

Edarikode-Parappanagadi

Kunnamangalam-Thamarassery

Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal

Reliable Communication & Data Acquisition System

Solar Park Ambalathara

Vengallur

Chandranagar

Ettumanoor

Koothattukulam

Koothattukulam-Kuravilangad

Kothamangalam-Koothattukulam

Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

Chithara

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar

Kayamkulam to Karunagapally

Palode

Punnapra-Allappuzha

TVT

Annual Peak Loss Savings(MU)

Annual Peak Loss Savings(MW)

High benefit yielding schemes with high ‘Peak loss savings ‘among New Capital Transmission schemes

Final


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Figure 13: New Capital Works –Additional Sale of Energy (MU)

Source: KSEB DPR

The zero benefits in the above figures show that the benefits are not quantified in the investment proposal. Further, the financial attractiveness of these projects is discussed separately in Section 5 of this report. However, the weightage for the project financial attractiveness is already accounted for in the appraisal and results are discussed in this section.

50

99.16

33

78.9

44.2

0

157.6

18.96

22.90

74.00

51.88

96.78

0

38.35

43.26

0

0

96.78

39.42

42

108

108

108

55.1

42

73.6

15.7

25.01

31.54

24.22

87.5

36.6

101.23

101.23

51.25

36.621

16.56

99.93

Chemperi

Kollam - Kottiyam


Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal



Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal



Vengallur

Chandranagar

Ettumanoor

Koothattukulam



Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

Chithara

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar


Palode

Punnapra-Allappuzha

TVT

Annual Additional Sale of Energy(MU)

High benefits yielding schemes with high 'Additional Sale of energy' among New Capital Transmission schemes

Final


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4.3 Key Gaps in the investment proposals submitted by KSEB SBU-T

4.3.1 Data gaps in the investment proposal

The 12 projects of TRANSGRID 2.0 and 10 projects of New Capital Works has been evaluated in line with the capital investment project appraisal framework as discussed in Section 3, and the key gaps that has been noted in the investment proposals are as follows:

1. Disconnect between project objectives and results i.e. (quantified) way in which project will fulfil the objectives

2. Specific information on existing performance scenario or baseline scenario in quantified form (other than load flow study)

3. Identification of KPIs and performance parameters to be monitored after the project implementation

4. Inadequate assessment of alternatives

5. Inadequate assessment of project risks

6. Absence of calculations and assumptions for peak loss saving and additional energy sale.

During the process of the appraisal, the data gaps in the investment proposal has been shared and discussed with KSEB SBU-T, and the response to information gaps from SBU-T has been considered subsequently during the course of the evaluation. The details of data gaps identified in the DPRs and the subsequent response received from SBU-T is appended in Appendix-A.6. It is to note that, the response to data gaps in the DPRs is not wholly comprehensive, hence, the appraisal of the investment proposal is carried out based on the information provided in the DPRs, Load Flow Study and the offered information in response to the data gaps.

4.3.2 Limitations in appraising the investment proposals

The investment proposals of the TRANSGRID 2.0 and New Capital Works program has been appraised in this section based on the proposed framework prepared in line with the KSERC (Terms and Conditions for Determination of Tariff) Regulations, 2018 i.e. Annexure-IV Guidelines for in-principle clearance of investment projects, CEA Manual on Transmission Planning Criteria and regulations/guidelines of other state utilities (Karnataka, Maharashtra, and Delhi) in India for prudence check of capital expenditure.

While carrying out the appraisal, the actual performance details of the network/substation during FY 198 in the proposed project region is considered as baseline information for assessing the need of the project in addition to the premise discussed in the investment proposal and Load Flow Study.

During the course of appraisal of the investment proposals, the following limitations were encountered:

1. Detailed calculation of technical benefits (peak loss saving, additional energy sale) along with assumptions were not provided for validation. Hence, the correctness of peak loss savings (MW, MU) and additional energy sale is not validated as part of the scope under this study. Further, it is assumed that the envisaged technical benefits (peak loss saving, additional energy sale) are computed as per industrial practice.

2. TRANSGRID 2.0 and New Capital Works program consists of many projects out of which only the 12 projects under TRANSGRID 2.0 and 10 projects under New Capital Works is appraised in this report. Hence, any need for augmentation or new projects to cater to the increased demand or peak load requirement in the downstream substation or network is not traceable from the appraised 22-standalone projects.

3. Further, it is noted that on individual project level, most of the prevailing network or substation is either not fully loaded nor breached the voltage limits as prescribed by CEA Transmission Planning Criteria, however, at a macro level, the state has recorded the peak load of about 4100 MW in FY 19,

8 We have requested for last three years details (i.e. FY 17,FY 18, FY 19) as baseline, however FY 19 information were provided for validation. Hence, the same information has been considered for investment proposal appraisal.

Final


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which is closer to the peak load considered in the Load Flow Study conducted by the KSEB. This variation indicates that the peak load requirements are distributed across the state, which necessitates the need for system improvement across various locations; however, it is not being reflected while appraising the individual projects with its baseline/existing performance information.

4. Out of 10 nominated New Capital Works by the Hon’ble Commission, 2 projects namely Kottayi and Mannuthy has been dropped by KSEB SBU-T during the course of the appraisal. Kottayi project is not pursued due to land issues and the Mannuthy project has not got the grant sanctioned. Hence, the response to the DPR appraisal of the above two projects has not been provided by the SBU-T and appraisal results of these two projects have not been considered in this assessment.

4.4 Selection of priority projects among TRANSGRID 2.0 and New Capital Works program

Among the submitted investment proposals, the investment proposals that are required to be pursued on priority by the utility shall be identified by the Hon’ble Commission as per the below orders of project position:

1. project that has no remaining lifetime and it may end in N-1 constraint on outage or breakdown;

2. project that satisfies the N-1 constraint elimination [Example: additional (secondary) supply source to the substation apart from the existing (primary) upstream lines in order to restore the supply if primary supply source is under outage condition];

3. project that is proposed by the government directives; and

4. project that has secured maximum scoring/grading under the “Need of Investment” parameter under appraisal framework and project that has exceeded the minimum score required under the “Need of Investment” parameter.

With the above criteria, the projects that need to be pursued on priority shall be identified among TRANSGRID 2.0 and New Capital Work program. The results of the applicability of the above criteria are discussed in the below subsection 4.5.1.3 and 4.5.2.3.

4.5 Overview of appraisal of SBU-T investment proposals

The result of appraisal of SBU-T investment proposals as per the framework is shown in this section and the detailed summary of appraisal outcome of individual investment proposal is subsequently discussed in subsection 4.6 and 4.7.

There are three scenarios that are emerging out of appraisal of investment projects submitted by the SBU-T.

Figure 14: Three scenario that are emerging out of appraisal of investment projects

For future investment proposals, the Commission shall consider all the three scenarios for selecting the prudent proposal, however, in the case of the present TRANSGRID 2.0 and New Capital Work program, some of the

• Investment proposal is considered as "prudent" when it scores the gross grading of 60 marks out of 100

Scenario 1

• Investment proposal is considered as "prudent" when it satisfies the gross grading of 60 marks out of 100 as well as minimum score requirements under "Compliance to CEA Transmission Planning Criteria" and "Need for Investment"

Scenario 2

• Investment proposal is considered as "prudent" when it satisfies the priority project selection criteria as mentioned in sub-section 4.5.1.3.

Scenario 3

Final


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projects has been already started. Hence, the Commission may consider either of the above three scenarios or combinations thereafter to approve the capital investment projects.

Individual parameter wise scoring of projects under TRANSGRID 2.0 and New Capital Works program using the appraisal framework is shown in Appendix-A.6.

4.5.1 TRANSGRID Projects

The prudent, non-prudent and non-deducible status of 12 TRANSGRID projects as per the above three scenarios are as follows

4.5.1.1 Scenario-1: Investment proposal is considered as "prudent" when it scores the gross grading of 60 marks out of 100

In this scenario, two projects i.e. Aluva and Kunnamkulam are Non-Deducible due to lack of baseline information regarding quantification of downstream demand and improvement in performance respectively.

Figure 15: TRANSGRID 2.0 Prudent and Non-Deducible Investment Proposals under Scenario-1

Source: PwC Analysis

Observations

1. Aluva: The project is envisaged to meet the growing demand in Aluva region. However, no quantification is provided in the investment proposal regarding the growing demand. In addition, the existing voltage profile is within the limits and the proposed capacity of substation is four times higher than the prevailing loading condition in the substation. The reason for need of 2x200 MVA at existing 138.5 MVA Aluva SS is not explained in the investment proposal other than the reason for being an interstate nodal point, given the maximum recorded demand in the substation for FY 19 is 99.15 MVA only.

Further to the above observation, clarification was requested from KSEB regarding the quantification to substantiate the growing demand to be handled by the Aluva substation. The response by KSEB conveys that, according to LFS, the voltage profile of the Aluva substation will be poor in the base case scenario without the upgradation. In addition, the LFS shows a loading of about 106% for 2x100 MVA transformers, while the loading is at 58% only for 2x200 MVA transformers, and hence the requirement of 2x200 MVA capacity has been proposed.

Further to the response from KSEB, it is inferred that:

• The proposed project is in the view of the upcoming projects. However, the quantification for the growing demand is not available. Hence, the prudency of the Aluva project is ‘Non-deducible’.

• From the perspective of upcoming projects, the 4x capacity may be considered by the Hon’ble Commission, provided the capacity is utilized within the current control period, with an increase in the demand. With reference to the LFS, the utility has also an option to consider 2x150 MVA in such loading scenario, instead of 2x200 MVA.

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• During approval of the project, the Hon’ble Commission may consider the quantification of the growing demand in the Aluva region and also the utilization of the proposed capacity (through envisaged additional demand) to prevent sub-optimal operation of the asset.

2. Kunnamkulam: The proposed project was envisaged to satisfy the N-1 criteria, however, there is no quantification (i.e. improvement in the performance by shifting from existing 66 kV line to upgraded 220 kV) for justifying the N-1 criteria mentioned in the investment proposal. In addition, the proposed capacity for the sub-station (i.e. 2x100 MVA) is higher than the prevailing load of the existing Kunnamkulam substation. The justification for the proposed capacity i.e. 2x100 MVA SS is not clear in the investment proposal. Further, the maximum and minimum voltage of the existing substation is within the limits.

Further to the above observation, clarification was requested from KSEB regarding the justification for the proposed 2x100 MVA capacity whereas the existing peak load in FY 19 is 31.68 only. The response from KSEB indicates that, the demand is expected to grow by another 35 MVA (total 66 MVA), after upgradation to 220 kV.

From the above response, it is inferred that:

• the N-1 criteria would be satisfied by the line upgradation. However, the quantification for the improvement in performance is not traceable. Hence the prudency of the Kunnamkulam project is ‘Non-deducible’; and

• the proposed 2x100 MVA transformers will be working in parallel whereas the expected demand in the immediate future (as anticipated by the utility) is about 66 MVA. It is noted that the anticipated demand (i.e. 66 MVA) and the proposed capacity (i.e. 200 MVA) is having a wider gap in terms of capacity. Therefore, during the approval of the project, the Hon’ble Commission may consider the performance improvement due to the proposed project and the utilization of the proposed capacity through envisaged additional demand to prevent sub-optimal operation of the asset.

In the investment proposals, the financial assumptions (namely, ROE, O&M cost and O&M escalation rate) deviate from the allowable assumptions as per KSERC Tariff Regulations, 2018, especially, the KSEB estimated O&M cost is higher than the O&M norms for most of the projects. The deviations in the financial assumptions are discussed in detail in Section 5.5.1. When the assumptions are corrected as per tariff regulations, the financial indicators (IRR and NPV) of all the projects under TRANSGRID 2.0 program appear to increase significantly, which improves the financial attractiveness of the projects. Due to increase in IRR, all the projects would score the maximum grade of 10 in the parameter ‘Financial Justification and Cost-Benefit Analysis’. Hence, the overall grade would increase, especially for Aluva (from 56 to 61 out of 100) and for Kunnamkulam (from 57 to 67 out of 100).

However, depending on the actual O&M and other costs of these projects, the resulting financial indicators would vary accordingly.

Details of appraisal of the above projects are discussed in detail in subsection 4.6 and Appendix-A.6.

4.5.1.2 Scenario-2: Investment proposal is considered as "prudent" when it satisfies the gross grading of 60 marks out of 100 as well as minimum score requirements under "Compliance to CEA Transmission Planning Criteria" and "Need for Investment"

In this scenario, all the projects are non-deducible as all the 12 projects has not scored the minimum score requirements of 20 marks out of total 25 under “Need for Investment” parameter and four projects namely Aluva, Kottayam, Kunnamkulam & Ernad has not scored the minimum requirements under “Compliance to CEA Transmission Panning Criteria” parameter.


Final


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4.5.1.3 Scenario-3: Investment proposal is considered as "prudent" when it satisfies the priority project selection criteria

In this scenario, nine projects are envisaged to remove the N-1 constraint; however, all these projects are not fulfilling the minimum scorings required under “Need for Investment” as in above Scenario-2. Further, all the non-prudent and non-deducible projects under scenario 1 are meeting a mandatory criterion for selection of priority project i.e. N-1 contingency.

Figure 17: TRANSGRID 2.0 N-1 criteria projects under Scenario-3


The priorities of projects to be pursued by KSEB SBU-T based on the scoring of projects in “Need for Investment” parameter is as below [Note: 1 - Top Priority and 10 - Least Priority]

1. Manjeri (18 marks out of 25)

2. Kothamangalam (16 marks out of 25)

3. NRHTLS ( 15 marks out of 25)

4. Kunnamangalam (14 marks out of 25)

5. Thalassery and Kolathanadu ( 13 marks out of 25)

6. Kottayam and Kunnamkulam (12 marks out of 25)

7. Chalakudy (11 marks out of 25)

8. Aluva and Ernad (8 marks out of 25)

9. Kaloor (7 marks out of 25)

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It is to note that, other than Kothamangalam, NRHTLS and Thalassery project, all other N-1 contingency projects are not sturdily justifying the need for investment with substantiating data in its investment proposal.

4.5.1.4 Performance of individual projects across techno-commercial parameters under the appraisal framework

Parameter wise high-level review of the performance of 12 projects under TRANSGRID 2.0 is discussed in this subsection, as below.

4.5.1.4.1 Identification of Objectives

• Most of the projects have secured a maximum score for the identification of objectives.

Figure 18: TRANSGRID 2.0 – Grading in Identification of Objectives


4.5.1.4.2 Compliance to Capital Investment Schemes Categories

• All 12 projects have scored maximum score under this category and it complies with the KSERC tariff regulation.

Figure 19: TRANSGRID 2.0 – Grading in Capital Investment Schemes Category


4.5.1.4.3 Compliance to CEA Transmission Planning Criteria

• Four projects namely Aluva, Kottayam, Kunnamkulam and Ernad are not meeting the minimum scoring requirements i.e. 15 out of 20 marks.

• Kolathanadu, Kothamangalam, and NRHTLS has secured relatively higher scores.

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Figure 20: TRANSGRID 2.0 – Grading in CEA Transmission Planning Criteria


4.5.1.4.4 Method of Project Identification

• All 12 projects have secured the maximum score

Figure 21: TRANSGRID 2.0 – Grading in Method of Project Identification


4.5.1.4.5 Alternatives Assessment

• Five projects have not considered alternatives in its assessment and maximum projects have scored minimal marks under this parameter other than Manjeri and Ernad.

Figure 22: TRANSGRID 2.0 – Grading in Alternatives Assessment


4.5.1.4.6 Need for Investment

• No projects have secured the minimum scoring requirement of 20 marks out of 25

1215 16

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Scores less than 15

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Figure 23: TRANSGRID 2.0 – Grading in Need for Investment


4.5.1.4.7 Technical Benefits of the Project

• All the projects have quantified technical benefits and secured the scoring between 2 and 4 out of 5.

Figure 24: TRANSGRID 2.0 – Grading in Technical Benefits


4.5.1.4.8 Timing of Investment

• Maximum projects insist on immediate implementation in the control period FY 19 to FY 22 whereas projects such as Aluva, Kaloor, Kottayam, and Kunnamkulam are not sturdily justifying the project for taking up in the control period FY 19 to FY 22.

Figure 25: TRANSGRID 2.0 – Grading in Timing of Investment


811

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4.5.1.4.9 Project Risk and Mitigation Measures

• The majority of projects have not assessed the risk in a detailed manner. There is a scope of improvement in risk identification and strengthening of mitigation measures.

Figure 26: TRANSGRID 2.0 – Grading in Project Risk and Mitigation Measures


4.5.1.4.10 Project Estimates

• The majority of projects have not estimated the project cost factoring the variables particularly the time period in which the project is envisaged to get implemented.

Figure 27: TRANSGRID 2.0 – Grading in Project Estimates


4.5.1.4.11 Financial Justification and Cost-Benefit Analysis

• Aluva, Kunnamkulam and Thalassery project has unattractive financial returns out of the 12 projects

Figure 28: TRANSGRID 2.0 – Grading in Financial Justification and Cost-Benefit Analysis


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4.5.1.4.12 Implementation Plan

• All projects have secured maximum score under this parameter.

Figure 29: TRANSGRID 2.0 – Grading in Implementation Plan


4.5.2 New Capital Works

The prudent, non-prudent and non-deducible status of 8 projects under New Capital Works program as per the discussed three scenarios are as follows


In this scenario, all projects are prudent as its scores more than the minimum scoring requirements of 60 marks.

Figure 30: New Capital Works - Prudent and Non-Prudent Investment Proposals under Scenario-1


Details of appraisal of the above projects are discussed in detail in the subsection 4.7 and Appendix-A.6.

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In this scenario, all the projects are non-deducible as all the 8 projects has not scored the minimum score requirements of 20 marks out of total 25 under “Need for Investment” parameter (Subsection 4.5.2.4.6) and no projects have breached the minimum score requirements under “Compliance to CEA Transmission Planning Criteria” parameter.

Figure 31: New Capital Works - Prudent and Non-Prudent Investment Proposals under Scenario-2



In this scenario, three projects are envisaged to remove the N-1 constraint, however, all these projects are not fulfilling the minimum scorings required under the “Need for Investment” parameter as in above Scenario-2.

Figure 32: New Capital Works – N-1 contingency projects under Scenario-3


The priorities of projects to be pursued by KSEB SBU-T based on the scoring of the project in “Need for Investment” parameter is as below [Note: 1 - Top Priority and 10 - Least Priority]

72 74

61 64 6168 70

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PwC 66

1. Thambalamanna and Chemperi ( 17 out of 25 marks)

2. Seethangoli and Pallom-Ettumanoor (14 out of 25 marks)

3. Kollam-Kottiyam, Vennakkara and Panthalacode ( 13 out of 25 marks)

It is to note that, all N-1 contingency projects are not sturdily justifying the need for investment with substantiating data in its investment proposal.

4.5.2.4 Performance of individual projects across techno-commercial parameters under appraisal framework

Parameter wise high-level review of performance of 8 projects of New Capital Work is discussed in this subsection, as below.

4.5.2.4.1 Identification of Objectives

• Most of the projects has secured maximum score for identification of objectives. The objective is not rich in the Seethangoli project and additional objectives are not identified for the Mylatty-Vidhyanagar project.

Figure 33: New Capital Works – Grading in Identification of Objectives


4.5.2.4.2 Compliance to Capital Investment Schemes Categories

• All eight projects have scored maximum score under this category and it complies with the KSERC tariff regulation.

Figure 34: New Capital Works – Grading in Capital Investment Schemes Category


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Final


PwC 67

4.5.2.4.3 Compliance to CEA Transmission Planning Criteria

• Vennakkara project is not meeting the minimum scoring requirements.

• Thambalamanna, Chemperi, Panthalacode and Seethangoli projects have secured relatively higher scores.

Figure 35: New Capital Works – Grading in CEA Transmission Planning Criteria


4.5.2.4.4 Method of Project Identification

• All 8 projects have secured the maximum score.

Figure 36: New Capital Works – Grading in Method of Project Identification


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Final


PwC 68

4.5.2.4.5 Alternatives Assessment

• One project out of the eight has not considered alternatives in its assessment and maximum projects have scored the minimal marks under this parameter.

Figure 37: New Capital Works – Grading in Method of Project Identification


4.5.2.4.6 Need for Investment

• No project has secured the minimum scoring requirement of 20 marks out of 25

Figure 38: New Capital Works – Grading in Need for Investment


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Final


PwC 69

4.5.2.4.7 Technical Benefits of the Project

• All the projects have quantified the technical benefits and secured the scoring between 3 and 4 out of 5.

Figure 39: New Capital Works – Grading in Technical Benefits


4.5.2.4.8 Timing of Investment

• Five projects (out of 8) insist on immediate implementation in the control period FY 19 to FY 22 whereas projects such as Kollam-Kottiyam, Panthalacode and Seethangoli are not sturdily justifying the project for taking up in the control period FY 19 to FY 22.

Figure 40: New Capital Works – Grading in Timing of Investment


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Final


PwC 70

4.5.2.4.9 Project Risk and Mitigation Measures

• The majority of projects have not assessed the risk in a detailed manner other than Kollam-Kottiyam. There is a scope for improvement in risk identification and strengthening of mitigation measures.

Figure 41: New Capital Works – Grading in Project Risk and Mitigation Measures


4.5.2.4.10 Project Estimates

• The majority of projects have minimal estimate variation from the market price.

Figure 42: New Capital Works – Grading in Project Estimates


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Final


PwC 71

4.5.2.4.11 Financial Justification and Cost-Benefit Analysis

• All projects other than Kollam-Kottiyam and Seethangoli has unattractive financial returns (out the 8 projects)

Figure 43: New Capital Works – Grading in Financial Justification and Cost-Benefit Analysis


4.5.2.4.12 Implementation Plan

• The majority of projects have secured maximum score under this parameter, other than Pallom-Ettumanoor which has an implementation plan without any timeline schedule.

Figure 44: New Capital Works – Grading in Implementation Plan


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Final


PwC 72

4.6 Appraisal of Projects under TRANSGRID 2.0 Program

4.6.1 Aluva Upgradation Package

a. Project Overview

S.No Particulars Details 1 Project Title Aluva Upgradation Package 2 Project Description • Construction of 11.10Km 220kV DC line from

440kV Cochin East (Pallikara) PGCIL substation to Aluva; and • Construction of 220 kV GIS at Aluva"

3 Project Cost Estimated Project Cost 168 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 18 months 5 Financial Returns IRR 7.04% NPV -79.79 Crore INR

b. Objective of the Project

S.No Particulars Details 1 Primary Objective To meet the growing demand in Aluva region 2 Secondary Objective To become Interstate power import point

c. Review of Baseline Scenario or Existing Performance and Key Observations

i. Voltage Profiles of 110kV Aluva Substation in FY 19

Month Maximum Voltage (kV) Minimum voltage (kV)

110/66kV 11kV level 110/66kV 11kV level

Apr-18 112 11.2 106 10.5

May-18 113 11.3 105 10.5

Jun-18 113 11.1 106 10.4

Jul-18 114 11.3 106 10.5

Aug-18 112 11.2 106 10.4

Sep-18 113 11.3 105 10.6

Oct-18 113 11.3 106 10.5

Nov-18 113 11.2 106 10.4

Dec-18 112 11.2 105 10.4

Jan-19 113 11.3 106 10.5

Feb-19 112 11.2 106 10.4

Mar-19 113 11.2 106 10.4

Source: KSEB SBU-T

ii. Loading Profiles of 110kV Aluva Substation in FY 19

Month Maximum load Minimum load MVA Voltage Current Power

factor Voltage Current Power

factor Maximum Minimum

Apr-18 108 510 0.98 111 190 0.98 95.40 36.53

May-18 109 505 0.98 110 205 0.98 95.34 39.06

Jun-18 108 512 0.98 112 198 0.98 95.77 38.41

Jul-18 108 520 0.98 111 210 0.98 97.27 40.37

Aug-18 107 504 0.98 110 212 0.98 93.40 40.39

Sep-18 108 514 0.98 110 198 0.98 96.15 37.72

Oct-18 108 530 0.98 112 189 0.98 99.14 36.66

Final


PwC 73

Month Maximum load Minimum load MVA Voltage Current Power

factor Voltage Current Power

factor Maximum Minimum

Nov-18 108 502 0.98 111 212 0.98 93.90 40.76

Dec-18 107 522 0.98 111 218 0.98 96.74 41.91

Jan-19 108 520 0.98 110 220 0.98 97.27 41.91

Feb-19 109 510 0.98 112 224 0.98 96.28 43.45

Mar-19 107 535 0.98 111 219 0.98 99.15 42.10 Source: KSEB SBU-T

iii. Key Observations

Observations on Baseline Scenario or Existing Performance

• As per CEA Transmission planning criteria, the maximum voltage limit under the steady-state for 110 kV line is 123 kV, therefor no breach in maximum voltage limit is noted in FY 19.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV, therefore no breach in minimum voltage limit is noted in FY 19.

• The proposed project is for the capacity of 2x200 MVA whereas the maximum demand reached during FY 19 in the existing Aluva sub-station is 99.15 MVA. The proposed capacity is four times higher than the maximum recorded demand in the Sub Station.

• In the absence of the existing capacity of Aluva SS, it is noted from the public domain information that, the prevailing capacity of the substation is 138.5 MVA. In FY 19, the SS is maximum loaded at about 72% (99.15 MVA/138.5 MVA), during the month of March, however, the proposed capacity is 400 MVA which could be due to the requirement of downstream SS which are connected to Aluva. The reason for need of 2x200 MVA at existing 138.5 MVA Aluva SS is not explained in investment proposal other than the reason for being an interstate nodal point, given the maximum recorded demand in FY 19 is 99.15 MVA.

Further to the above observation, clarification was requested from KSEB regarding the quantification to substantiate the growing demand to be handled by the Aluva substation. The response by KSEB conveys that, according to LFS, the voltage profile of the Aluva substation will be poor in the base case scenario without the upgradation. In addition, clarification was requested from KSEB regarding justification for the proposed capacity of 2x200 MVA transformers, which is four times higher than the existing peak load of 99.15 MVA in FY 19. The response from KSEB conveys that, the loading of substation would be 106% when the proposed capacity is 2x100 MVA transformers, whereas the loading would be about 58% when the proposed capacity is 2x200 MVA transformers.

The response provided by KSEB for the requested clarification is given below.

1. “It may please be noted that system studies for strengthening the system as a whole has been conducted in view of the upcoming projects. Load details provided is mainly the load at 66/11 kV side. Studies have been carried over a horizon period by assuming that the system demand will be 4,900 MW in line with the projected demand. Analysis of the system through Load flow studies for the above scenario indicates that the transformers will be loaded up to 58 % each. Further analysis of the base case for the above scenario, without a 220 kV substation in service indicates that the voltage profile will be poor. Accordingly, 220 kV substation is proposed. When upgradation is carried out with 2x100 MVA, 220/110 kV transformers, it is observed that the transformer is loaded up to 106 % which is violating N-1 criteria. Moreover, a reduction of 7.7 MW peak load system loss is observed in EHT with the upgradation of 110 kV substation Aluva to 220 kV with 2x200 MVA 220/110 kV transformers and voltage profile is seen increased in the nearby substations.

2. 2X200 MVA transformers will be working simultaneously to satisfy (N-1) security criteria of CEA and grid code.

3. Aluva substation is directly connected to the ISTS substation at Cochin East(Pallikara) which will facilitate importing of power to the state. The peak demand expected for the year 20-21 in which the substation is expected to materialize is projected to be around 4,900 MW.”

It is observed from the above response that, 2x200 MVA transformers in Aluva project are proposed in view of the demand from upcoming projects.

d. DPR Appraisal Summary

The high-level summary of the capital investment appraisal is shown below and the detailed assessment of this project along with gap analysis and KSEB SBU-T response to the gaps is appended under Appendix – A.6.

Final


PwC 74

S.No Assessment Parameters Observation Maximum

Score Marks Scored

1 Identification of Objective 10 9

Primary Objective - 6 5

Secondary Objective - 4 4

2


2 2

Scheme Type - 0.5 0.5

Scheme Category - 0.5 0.5

Period of Investment Horizon - 1 1


20 12

a


• Prevailing loading of Aluva SS is about 72% with maximum and minimum voltage levels within the CEA prescribed range. But, the 2x200 MVA transformers are proposed citing that, the loading in the future would be about 58%. It is mentioned that, the proposed capacity will act as Interstate Power Import nodal point, however, the justification for the need of 400 MVA in downstream is not described (given the current peak demand of Aluva SS is at 99 MVA in FY 19.)

10 5

Up-gradation and/or Reconductoring in line with

CEA Planning Criteria Not Applicable 10 0

New Substation Not Applicable 10


Not Applicable 10


Not Applicable 10

b Voltage Limits - 3 0

c System Study Analysis Load flow study is undertaken 5 5

d Planning Margin Consideration Utility indicates that it has considered the margin by default. However, the same was not explicitly mentioned in the investment proposal.

1 1

e Voltage Margin Consideration Utility indicates that it has considered the margin by default. However, the same was not explicitly mentioned in the investment proposal.

1 1


Field requirements 3 3

5 Alternatives Assessment • No alternatives considered and analyzed 5 0


25 8

Final


PwC 75


Score Marks Scored

a Quantification of impacted

baseline scenario

• The proposed project is in the view of the upcoming projects. Quantification for the growing demand is not available. • Details not available. However, as per public domain information (KSEB website), Aluva SS is commissioned in 1979 (126 MVA, 110/66 kV) which may be running beyond the normal life period. • Loading details of Aluva SS are available, however, justification for proposed 2x200 MVA is not available in the investment proposal in a quantified manner.

10 3

b

Quantification and justification of envisaged outcome

(performance) of the proposed project addressing the baseline

constraints

Qualitative information is provided in the investment proposal

10 2

c Proactive Proposal Proactive 2 2

d Reactive Proposal 1

e Justification for Investment - 3 1

7 Technical Benefits of the Project

5 3

a Quantification of Project

Technical Benefits - 3 3

b Impact of Project on Quality of

Supply and Consumers - 2 0

8 Timing of Investment • Existing loading details of Aluva SS is not supporting the need for augmentation • To meet the existing and future load growth

5 2


5 4

a Risk analysis and its strength - 2 2

b Risk mitigation plan and its

strength Strengthening of mitigation plan is required 3 2

10 Project Estimates Blended rate 5 3


• IRR and NPV is not within the acceptable range

• Project is pursued for social benefits. 10 5

12 Implementation Plan - 5 5

Total Score 100 56

Prudent/Non-Prudent Non-

Prudent

Final


PwC 76

e. Overview of Project Scoring

Assessment Scores of main parameters - Aluva


Scores under the category "Identification of Objective" - Aluva


Scores under the category "Compliance to CEA guidelines" - Aluva


9

2

12

3

0

8

3

2

4

3

5

5

0 5 10 15 20 25

Identification of Objective

Compliance to Capital Investment Schemes Categories (Asper Annexure IV of Tariff Regulation)

Compliance to CEA Transmission Planning Criteria

Method of Project Identification

Alternatives Assessment

Need for Investment (Baseline & Project Scenario Impact)

Technical Benefits of the Project

Timing of Investment

Project Risk & Mitigation Measures

Project Estimates

Financial Justification and Cost Benefit Analysis

Implementation Plan

Ass

ess

me

t P

ara

me

ters

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5

4

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Primary Objective

Secondary Objective

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Ass

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rs

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Indiv idual Parameter Score

12

5

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Up-gradation and/or Reconductoring in line with CEA PlanningCriteria

Voltage Limits

System Study Analysis

Planning Margin Consideration

Votage Margin Consideration

Score (out of 20)

Ass

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Final


PwC 77

Scores under the category "Need for Investment" - Aluva


f. Conclusion on Prudent Check:

Conclusion Based on the information given in the investment proposal, it was concluded that:

• Aluva project is proposed to meet the growing demand in Aluva region and is to become an Interstate power import point. The quantification for the growing demand is not available in the investment proposal. Hence, the prudency of the Aluva project is ‘Non-deducible’.

• As per CEA Transmission planning criteria, the maximum voltage limit under the steady-state for 110 kV line is 123 kV. Therefore, there is no breach in the maximum voltage limit is noted across months in FY 19.

• Similarly, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. Therefore, there is no breach in the minimum voltage limit is noted across months in FY 19.

• The proposed project is for the capacity of 2x200 MVA whereas the maximum demand reached during FY 19 in the existing Aluva sub-station is 99.15 MVA. The proposed capacity is four times higher than the maximum recorded demand in the Sub Station.

• It is noted from the public domain information (KSEB website) that; the prevailing capacity of the substation is 138.5 MVA. In FY 19, the SS is maximum loaded at about 72% (99.15 MVA/138.5 MVA), during the month of March, however, the proposed capacity is 400 MVA which may be due to the requirement of downstream SS which are connected to Aluva. Further, the demand requirement of the downstream substation is not discussed in the load flow study to support the premise (Aluva substation as interstate import node).

• From the perspective of upcoming projects, the 4x capacity may be considered by the Hon’ble Commission, provided the capacity is utilized within the current control period (FY 19-FY 22), with an increase in the demand. With reference to the LFS, the utility has also an option to consider 2x150 MVA in such loading scenario, instead of 2x200 MVA.


8

3

2

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0

1

0 5 10 15 20 25

Need for Investment (Baseline & Project ScenarioImpact)

Quantification of impacted baseline scenario

Quantification and justification of envisagedoutcome (performance) of proposed project…

Proactive Proposal

Reactive Proposal

Justification for Investment

Score (out of 25)

Ass

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Final


PwC 78

4.6.2 Chalakudy 220kV AIS Substation (AIS Package-1) and North-South Inter Link Package (NSIP Phase 1: Project A)

a. Project Overview

S.No Particulars Details 1 Project Title Chalakudy 220kV AIS Substation(AIS Package-1)

and North-South Inter Link Package (NSIP Phase 1: Project A)

2 Project Description Project A: 220kV AIS Substation, Chalakudy Up-gradation of existing 110kV AIS to 220kV AIS at Chalakudy in Thrissur District with station capacity 2x100 MVA Transformers and 4 x 220 kV feeder bays Project B: Konnakuzhy-Chalakudy 220/100kV MCMV line (NSIP Phase-I) Upgrading existing Poringal-Chalakudy 110kV DC Transmission line to 220/110 kV MCMV Transmission line in Thrissur District (LILO from Madakkathara – Lower Periyar line) from Konnakuzhy to Chalakudy using Twin Panther conductor for 220kV & Single Panther for 110kV – Route Length 11.726 km

3 Project Cost Estimated Project Cost – Project A 30 Crore INR Estimated Project Cost – Project B 33.11 Crore INR Total 63.11 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction Project A 26 months Project B 20 months 5 Financial Returns IRR 10.23% NPV 18.92 Crore INR


S.No Particulars Details 1 Primary

Objective To create backup power source to Thrissur District

2 Secondary Objective

To meet the challenges expected in transferring power to the Northern region and for evacuating power from the proposed high capacity ISTS projects.


i. Voltage Profiles of 110kV Chalakudy Substation in FY 19

Month Maximum Voltage (kV) Minimum voltage (kV) 110/66kV 11kV level 110/66kV 11kV level

Apr-18 117 11.7 103 10.3

May-18 117 11.7 103 10.3

Jun-18 117 11.7 107 10.7

Jul-18 117 11.7 106 10.6

Aug-18 119 11.9 106 10.6

Sep-18 114 11.4 102 10.2

Oct-18 115 11.5 105 10.5

Nov-18 115 11.5 103 10.3

Dec-18 115 11.5 105 10.5

Jan-19 117 11.7 106 10.5

Feb-19 115 11.5 105 10.5

Mar-19 114 11.4 106 10.6

Source: KSEB SBU-T

ii. Loading Profiles of 110kV Chalakudy Substation in FY 19

Final


PwC 79

Month Maximum load Minimum load MVA

Voltage Current Power factor


Maximum Minimum

Apr-18 109 810

112 110

152.92 21.34

May-18 108 890

112 108

166.48 20.95

Jun-18 109 765

114 89

144.42 17.57

Jul-18 108 808

115 60

151.14 11.95

Aug-18 109 837

115 20

158.02 3.98

Sep-18 109 851

114 90

160.66 17.77

Oct-18 108 817

114 57

152.82 11.25

Nov-18 108 708

113 85

132.44 16.64

Dec-18 106 665

112 96

122.09 18.62

Jan-19 107 638

112 140

118.24 27.16

Feb-19 107 793

112 171

146.96 33.17

Mar-19 108 785

112 115

146.84 22.31 Source: KSEB SBU-T



• As per CEA Transmission planning criteria, the maximum voltage limit under the steady-state for 110 kV line is 123 kV. It is noted that the maximum voltage in FY 19 is within the prescribed limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. It is noted that the minimum voltage reached in FY 19 is 107 kV which is within the prescribed limit.

• The proposed project is for the capacity of 200 MVA whereas the maximum demand reached during FY 19 in the existing Chalakudy sub-station is 166 MVA.

• It is noted from the public domain information that, the prevailing capacity of the Chalakudy substation is 157 MVA. In FY 19, the substation is averagely loaded at 92%.


The high-level summary of the capital investment appraisal is shown below and the detailed assessment of this project along with gap analysis and KSEB SBU-T response to the gaps is appended under Appendix –A.6.


Score Marks Scored




2


2 2





20 15

a


• Based on FY 19 information, the existing Chalakudy SS is averagely loaded around 92% against the optimal loading of 75%. • Study is carried out based on EPS

10 8

Up-gradation and/or Reconductoring in line with CEA

Planning Criteria

Scoring related to upgradation of the line is considered under the above augmentation review

10 0

Final


PwC 80


Score Marks Scored



Not Applicable 10


Not Applicable 10


c System Study Analysis Load Flow Study is undertaken 5 5

d Planning Margin Consideration

Utility indicates that it has considered the margin by default. However, the same was not explicitly mentioned in the investment proposal.

1 1

e Voltage Margin Consideration


1 1


Field Requirements 3 3

5 Alternatives Assessment

• Alternatives are not discussed in the DPR, however KSEB informed that various options were considered at the stage of planning • Alternatives are not discussed in the DPR

5 1


25 11

a Quantification of impacted baseline

scenario

• The proposed project is to satisfy the N-1 criteria by connecting with LPHEP - Madakathara 220 kV line. In the baseline scenario, the Chalakudy SS is relying on supply from a single source of power. Details related to interruption (on account of non-availability of supply) are not provided. Hence, the event of the occurrence of non-availability of power from the existing source has not been reviewed. • Information not available • Load details of Chalakudy SS for FY 19 is provided

10 3

b

Quantification and justification of envisaged outcome (performance) of the proposed project addressing

the baseline constraints

The outcome of the project (i.e. improvement in supply constraint) is not quantified or compared with the baseline scenario in the investment proposal other than the load flow study

10 5


d Reactive Proposal Proactive 1 2

e Justification for Investment Justification is provided; however, it is not supported with the quantified information

3 1


5 3


Benefits - 3 3


Supply and Consumers Not Available 2 0

Final


PwC 81


Score Marks Scored


• Quantification in detail is not available to substantiate the justification • Load detail of Chalakudy SS shows the necessity for increasing the substation capacity to operate at optimal loading condition (75%) against the present loading level of 92%

5 3


5 2

a Risk analysis and its strength Detail analysis of risks to be included in the investment proposal

2 1


strength Mitigation plan needs to be strengthened 3 1



IRR and NPV within acceptable range 10 10


Total Score 100 65

Prudent/Non-Prudent Prudent


Assessment Scores of main parameters - Chalakudy

Source: PwC analysis

8

2

15

3

1

11

3

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2

2

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

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Final


PwC 82

Scores under the category "Identification of Objective" - Chalakudy


Scores under the category "Compliance to CEA guidelines" - Chalakudy


Scores under the category "Need for Investment" - Chalakudy


8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

rs



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8

0

0

5

1

1

0 2 4 6 8 10 12 14 16 18 20


Augmentation in-line with CEA Transmission PlanningCriteria

Up-gradation and/or Reconductoring in line with CEAPlanning Criteria

Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs Total Category Score


11

3

5

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0 5 10 15 20 25



Quantification and justification of envisaged outcome(performance) of proposed project addressing the baseline

constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

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ers



Final


PwC 83


Conclusion • Chalakudy project is aimed at creating a backup power source to Thrissur District to satisfy the N-1 criteria by

connecting with LPHEP - Madakathara 220 kV line. • The load detail of Chalakudy SS shows the need for increasing the capacity of the SS to operate at optimal

loading (75%) against the present overloading of about 92%.

• However, quantification for the interruption due to present constraints is not provided. • As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is

123 kV. It is noted that the maximum voltage in FY 19 is within the prescribed limit. • Similarly, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. It is

noted that the minimum voltage reached in FY 19 is 107 kV which is within the prescribed limit.

Final


PwC 84

4.6.3 Kaloor Upgradation Package

a. Project Overview

S.No Particulars Details 1 Project Title Kaloor Upgradation Package

2 Project Description

• Construction of 4.5 Km 220/110 kV MCMV line from Brahmapuram to Thuthiyoor • Laying 7 km of 220 kV Double circuit UG Cable from Thuthiyoor to Kaloor SS • Construction of a cable termination station at Thuthiyoor • Construction of 220 kV GIS at Kaloor and 2 Nos. 220 kV bays at Brahmapuram

3 Project Cost Estimated Project Cost 165.39 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 18 months 5 Financial Returns IRR 10.80% NPV 183.62 Crore INR


S.No Particulars Details 1 Primary Objective • Reduction in line loading of Brahmapuram,

Kalamassery&Kalamassery – Edayar 110 kV lines • Enhancement in voltage profile of Kalamassery, Kaloor, Edappally, Marine drive, Ernakulam North, Perumanoor, Edayar, North Paravoor, Vyttila, Panampilly Nagar, Kadavanthara& Wellington Island. • Reduction in loading of 160 MVA 220/110 kV transformers at Brahmapuram • Reduction in system loss by 10.71 MW • Increase in reliability of supply through 220 kV Kaloor GIS SS [as 220 kV incoming feeders are from Brahmapuram Sub Station and the existing two 110 kV feeders(KLKA, EP-KA) are from Kalamassery Sub Station]

2 Secondary Objective Not Available


i. Voltage Profile of 110kV Kaloor Substation in FY 19

Month Maximum Voltage (kV) Minimum voltage (kV) 110/66kV 11kV level 110/66kV 11kV level

04/18 113 11.3 91 9.4

05/18 112 11.2 104 10.5

06/18 113 11.3 104 10.4

07/18 115 11.3 103 10.4

08/18 116 11.5 103 10.4

09/18 112 11.2 100 10

10/18 114 11.3 102 10.2

11/18 114 11.3 99 10.2

12/18 112 11.2 102 10.5

01/19 113 11.5 104 10.5

02/19 112 11.4 101 10.4

03/19 112 11.3 101 10.3 Source: KSEB SBU-T

Final


PwC 85

ii. Loading profile of 110kV Kaloor Substation in FY 19

Month Maximum load Minimum load

Voltage Current Power factor Voltage Current Power factor

04/18 103 484 0.975 108 100 0.98

05/18 105 343 0.98 110 60 0.97

06/18 106 278 0.975 111 113 0.97

07/18 108 263 0.98 111 88 0.965

08/18 106 389 0.97 112 70 0.98

09/18 107 438 0.97 112 146 0.98

10/18 105 471 0.965 110 126 0.97

11/18 107 474 0.98 109 26 0.98

12/18 102 482 0.97 112 185 0.97

01/19 107 447 0.98 110 156 0.97

02/19 107 503 0.97 108 104 0.975

03/19 101 485 0.97 111 230 0.96 Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance • As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is 123

kV. It is noted that, maximum voltage profile is within the prescribed limit for FY 19. • As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the

minimum voltage of 91kV has been recorded during April which is beyond the prescribed limits. • The proposed project is for the capacity of 360 MVA whereas the current loading details of Kaloor SS is not

provided to assess the need for proposed capacity. • It is noted from the public domain information(KSEB website) that, Kaloor SS has a total capacity of 113.5 MVA

[50 MVA (110/66 kV), 37.5 MVA(110/11), 16 MVA(110/33), 10 MVA (66/11)] and the loading details of 110/66 kV shows that,(assuming that the data is for 50MVA transformer) the transformer is loaded about 44 MVA averagely during FY 19, which is 88% of the transformer capacity.

• The existing source for Kaloor SS is Kalamassery SS which is in turn connected to Brahmapura, and the proposed project is also envisaged to get connected to Brahmapura SS. In such a scenario, the proposed project will satisfy N-1 criteria only when Kalamassery SS is facing outages and supply remains in Brahmapura SS. For the purpose of validation, outage/interruption details of Kalamassery is not available.

Further to the above observation, clarification was requested from KSEB regarding the justification of the proposed 2x160 MVA capacity. The response from KSEB indicates that the demand from the downstream substations will increase and the loading of the Kaloor substation will be 58% according to LFS, in the proposed project scenario. The response from KSEB is shown below.

1. “The proposed capacity of 220/110 kV 2X160 MVA transformers at Kaloor will be catering the load of 110 kV feeders,33 kV feeders and 11 kV feeders emanating from the substation. Moreover, the existing substation is feeding Ernakulam North and Edapally 110 kV substations for which there is a considerable increase in load in the upcoming years. System studies carried out for the horizon period(the substation is expected to be materialized) with a projected demand of 4900 MW has indicated that the transformers will be loaded up to 58 % each which is just sufficient to meet the (N-1) security criteria. Hence 2X160 MVA is required for meeting the expected demand in the area.

2. As per the present load conditions the day-peak load exceeds 60 MW, especially during summer days. KSERC stipulates that if the average load of a Substation exceeds 40 MW, the voltage class shall be 220 kV. This necessitates the strengthening of the existing transmission network.”




Score Marks Scored



Final


PwC 86


Score Marks Scored

Secondary Objective Many objectives were identified and discussed in the investment proposal.

4 3

2


2 2





20 16

a


• Existing loading details of Kaloor SS is not available. It is noted that the prevailing capacity of Kaloor SS is about 113.5 MVA whereas the proposed capacity is 360 MVA. Justification for the capacity is not discussed in detail in the investment proposal. Further, 110/66 kV is overloaded to the maximum during the month of April in FY 19 and on an average basis, 110/66 kV transformer is loaded about 88% in FY 19, which is higher than the optimal operating range of 75%. However, the details of transformer loading at 110/11 kV, 110/33 kV, and 66/11 kV is not discussed in the investment proposal. • As per DPR, proposed capacity is partially based on actual field demand requirements and EPS data

10 6


CEA Planning Criteria

Scoring for upgradation is covered in above augmentation part

10 0



Not Applicable 10


Not Applicable 10




1 1


1 1



5 Alternatives Assessment Single alternative is considered 5 2


25 7

Final


PwC 87


Score Marks Scored


baseline scenario

• The load profile of Kaloor SS is partially available. The load profile details show that 110/66 kV is overloaded during the summer and loading of the transformer is averagely high across the months in FY 19. • Details on the baseline scenario is not available. As per public domain details, Kaloor SS is commissioned in 1993 (completed about 26 years) • Further, details for Brahmapuram, Thuthiyoor is not available. The voltage profile for Kaloor SS is provided whereas the load profile (in MVA) is not provided.

10 3

b



constraints

Partially Quantified: It is indicated that the proposed project will result in a reduction in system loss by 10.71 MW. Further, the quantification for following objectives were not provided • Reduction in line loading of Brahmapuram, Kalamassery&Kalamassery – Edayar 110 kV lines • Enhancement in voltage profile of Kalamassery, Kaloor, Edappally, Marine drive, Ernakulam North, Perumanoor, Edayar, North Paravoor, Vyttila, Panampilly Nagar, Kadavanthara& Wellington Island. • Reduction in loading of 160 MVA 220/110 kV transformers at Brahmapuram • Increase in reliability of supply through 220 kV Kaloor GIS SS

10 2

c Proactive Proposal - 2

d Reactive Proposal Reactive 1 1



5 3




Supply and Consumers Quantification of outcome is not performed 2 0


• Qualitatively mentioned about the project proposal, however quantification for all objectives is not performed in the investment proposal

5 1


5 2

a Risk analysis and its strength Risk profiles has been analyzed 2 1


strength Mitigation plan to be strengthened 3 1



IRR and NPV are within acceptable range 10 10


Total Score 100 62


Final


PwC 88


Assessment Scores of main parameters - Kaloor


Scores under the category "Identification of Objective" - Kaloor


Scores under the category "Compliance to CEA guidelines" - Kaloor


8

2

16

3

2

7

3

1

2

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



16

6

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 89

Scores under the category "Need for Investment" - Kaloor




• Kaloor project is proposed to relieve the overloading and satisfy the N-1 constraint by connecting to a secondary source.

• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is 123 kV. It is noted that, maximum voltage profile is within the prescribed limit.

• In addition, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the minimum voltage has occurred during April with 91 kV, which is beyond the prescribed limits.

• Load profile of Kaloor SS is partially available (i.e. Voltage profile is available but MVA details are not provided). It is noted that the prevailing capacity of Kaloor SS is about 113.5 MVA whereas the proposed capacity is 360 MVA. Justification for the proposed capacity is not discussed in detail in the investment proposal. Further to the clarification sought to KSEB, it is clarified that current peak demand in the region is about 60 MW and in the proposed project scenario, the substation is expected to be loaded at 58% (with a buffer of about 17% to operate at optimal loading of 75%) and accommodate the future growth in power demand. Therefore, during the approval of the project, the Hon’ble Commission may consider approving the project capacity, provided the surplus capacity is utilized through the anticipated additional demand to prevent the sub-optimal operation of the asset.

• The loading of the transformer is averagely high across the months in FY 19. • It is also seen that quantification for the proposed project to meet the objectives is not completely

connected (The envisaged objectives such as the reduction in the line loading and improvement in the voltage profiles of the concerned substations).

7

3

2

0

1

1

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

men

t P

ara

met

ers



Final


PwC 90

4.6.4 Kothamangalam and Chithirapuram Package

a. Project Overview

S.No Particulars Details 1 Project Title Kothamangalam and Chithirapuram Package


Construction of (a) 220kV substation at Kothamangalam (b) 220kV Substation at Chithirapuram (c) Upgradation of 66kV Pallivasal Aluva line to 220/110kV MCMV line (d) Construction of 220/110kV MCMV line from Karukadom to Kothamangalam



S.No Particulars Details 1 Primary Objective To provide a secure and reliable transmission system for evacuating

power of about 500MW from the under-construction / planned projects in the Idukki belt in an economical manner

2 Secondary Objective -


i. Voltage Profile of 66kV Kothamangalam Substation



Apr-18 68.6 11.6 56 9.7

May-18 67.9 11.4 61.7 10

Jun-18 67.9 11.4 62.4 10.4

Jul-18 69.2 11.7 62 10.3

Aug-18 69.4 11.7 62 10.4

Sep-18 67.6 11.3 60.2 10

Oct-18 68.1 11.3 59.4 9.8

Nov-18 69 11.7 56.3 9.4

Dec-18 67.4 11.4 60 10

Jan-19 67.6 11.3 60.6 10

Feb-19 67.3 11.2 59 9.7

Mar-19 67.2 11.2 60.3 10

Source: KSEB SBU-T

Final


PwC 91

ii. Loading Profile of 66kV Kothamangalam Substation




Maximum Minimum

Apr-18 68.6 186 0.97 56 5 0.94 22.10 0.48

May-18 67.9 180 0.97 61.7 12 0.94 21.17 1.28

Jun-18 67.9 174 0.98 62.4 12 0.94 20.46 1.30

Jul-18 69.2 158 0.98 62 25 0.94 18.94 2.68

Aug-18 69.4 156 0.98 62 22 0.94 18.75 2.36

Sep-18 67.6 148 0.97 60.2 25 0.94 17.33 2.61

Oct-18 68.1 159 0.97 59.4 32 0.94 18.75 3.29

Nov-18 69 166 0.97 56.3 3 0.94 19.84 0.29

Dec-18 67.4 217 0.97 60 5 0.94 25.33 0.52

Jan-19 67.6 182 0.98 60.6 55 0.94 21.31 5.77

Feb-19 67.3 172 0.98 59 52 0.94 20.05 5.31

Mar-19 67.2 185 0.98 60.3 82 0.94 21.53 8.56

Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance • As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 66 kV line is 72.5

kV, whereas the maximum voltage in FY 19 for Kothamangalam SS is 69.4 kV which is within the CEA prescribed limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. It is noted that the minimum voltage for FY 19 is 56 kV which breaches the prescribed limit particularly during summer and onset of winter.

• The proposed project is for the capacity of 200 MVA (220 kV/110 kV) + 80 MVA (stepping down 110kV/66 kV) at Kothamangalam and switching station at Chitharapuram for 50 MVA (220 kV/66 kV), however the prevailing load at Kothamangalam is 25.33 MVA only for FY 19. It is also noted from the investment proposal that, the proposed substation at Kothamangalam and Chitharapuram would facilitate evacuation of power from proposed nearby 500 MW generation capacities.

• It is noted that the Kothamangalam SS is loaded for 84% in FY 19, which is more than the optimal loading of 75%

• It is noted that the proposed project (Kothamangalam & Chitharapuram) is necessary to evacuate 500 MW from the proposed generation capacities, however, the quantum of capacity (out of proposed 500 MW) to be evacuated from Kothamangalam SS is not mentioned explicitly in the investment proposal.

Further to the above observation on proposed capacity and the evacuation capacity from 500 MW generation plants, clarifications were requested from KSEB regarding the justification of 2x100 MVA, which is 8 times higher than the peak load i.e. 25.33 MVA. The response from KSEB indicates that, the load of the substation would increase to 125 MVA, once the system is upgraded, as it would be connected to 110 kV downstream substation as proposed. The response from KSEB is as below.

• “In this context, it may please be noted that the capacity of 25.33 MVA indicated in the reference is only the load at 11 kV level and that too for the year 2019. Once the system is upgraded to 220 kV, it will be catering to the load of substation connected to it at 110 kV level also, in addition to the load at 11 kV level. The overall loading of the system under the horizon period (the substation is expected to be materialized) is expected to be around 125 MVA which calls for 2X100 MVA to satisfy (N-1) criteria.

• The quantum of power to be evacuated through Kothamangalam substation out of 500 MW generation proposed in the Muthirapuzha belt can be determined only after the finalization of project proposals.”




Score Marks Scored

1 Identification of Objective

10 7

Final


PwC 92


Score Marks Scored


Secondary Objective Objectives are not explicitly mentioned; however, the intention is to remove overloading condition and to evacuate proposed 500 MW generation capacity

4 2

2


2 2



Period of Investment

Horizon - 1 1


20 18

a

Augmentation in-line with CEA Transmission Planning

Criteria

• Kothamangalam SS is loaded about 84% in FY 19 which is above the optimum loading of 75%. The proposed project is for the capacity of 200 MVA (220 kV/110 kV) + 80 MVA (stepping down 110kV/66 kV) at Kothamangalam and switching station at Chitharapuram for 50 MVA (220 kV/66 kV), however the prevailing load at Kothamangalam is 25.33 MVA for FY 19. It is also noted from the investment proposal that, the proposed substation at Kothamangalam and Chitharapuram would facilitate evacuation of power from proposed nearby 500 MW generation capacities. However, the quantum of capacity( out of proposed 500 MW) to be evacuated from Kothamangalam SS is not mentioned explicitly in the investment proposal. As per SBU-T's response to requested clarification, the quantum of power to be evacuated can be determined only after the finalization of project proposals. • Further, the proposed augmentation is partly due to the overloading of Kothamangalam SS and partly due to the evacuation of the proposed 500 MW generation capacities.

10 8



Scoring of upgradations is covered in above augmentation part

10 0

New Substation Chitharapuram SS is proposed as switching substation and it’s not envisaged as a result of capacity exhaust at prevailing substation

10


Not Applicable 10


Not Applicable 10



d Planning Margin

Consideration


1 1

e Voltage Margin

Consideration


1 1



Final


PwC 93


Score Marks Scored

5 Alternatives Assessment • No alternatives considered 5 0


25 16


baseline scenario

• Voltage profile of Kothamangalam SS has breached the lower voltage limit prescribed by CEA • No information available, however, Kothamangalam SS is installed in the year 1940 • Load profile and voltage profile of Kothamangalam SS are provided for FY 19

10 8

b

Quantification and justification of envisaged

outcome (performance) of the proposed project

addressing the baseline constraints

Envisaged outcome in-terms of improvement in voltage profile and evacuation of capacities from proposed generation units, however, quantification of same is not explicitly discussed in the investment proposal

10 5



e Justification for Investment

Justification for overloading is supported with actual loading information, however, quantification of exact capacities to be evacuated from 500 MW generation units is not clear (as existing loading of Kothamangalam SS is 25 MVA whereas the proposed capacity is 200 MVA)

3 2


5 3



b Impact of Project on Quality

of Supply and Consumers Not quantified 2 0


• Due to the overloading of existing Kothamangalam SS, however proposed capacity is about 8 times higher than the prevailing peak load. The project is also envisaged to evacuate capacities from proposed 500 MW generation capacities, however the exact capacity to be evacuated through proposed SS is not quantified. As per SBU-T's response to requested clarification, the quantum of power to be evacuated can be determined only after the finalization of project proposals. • Due to demand as well as generation capacity

5 4


5 2

a Risk analysis and its strength Risk assessment needs strengthening 2 1


strength Risk mitigation needs strengthening 3 1

10 Project Estimates Blended rates 5 3


IRR and NPV is within acceptable range 10 10


Total Score 100 73



Assessment Scores of main parameters - Kothamangalam

Final


PwC 94


Scores under the category "Identification of Objective" - Kothamangalam


Scores under the category "Compliance to CEA guidelines" - Kothamangalam


7

2

18

3

0

16

3

4

2

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

7

5

2

0 1 2 3 4 5 6 7 8


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

eter



18

8

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 95

Scores under the category "Need for Investment" - Kothamangalam




• Kothamangalam SS is loaded about 84% in FY 19, which is above the optimum loading of 75%. The proposed project is for a capacity of 200 MVA (220 kV/110 kV) + 80 MVA (stepping down 110kV/66 kV) at Kothamangalam and switching station at Chitharapuram for 50 MVA (220 kV/66 kV), however the prevailing load at Kothamangalam is 25.33 MVA for FY 19.

• The existing capacity of Kothamangalam Substation is 3x10 MVA (66/11kV) and there is no additional voltage level other than 66/11kV being observed from the Power System Statistics FY 17. As per KSEB, the utility expects a short-term anticipated demand of 125 MVA which is about 5 times the existing peak load in FY 19 (i.e. 25.33 MVA). With the anticipated demand, the proposed capacity may be within the acceptable range, however, the utility shall ensure that the proposed capacity can meet the growing demand in the immediate future (i.e. within FY 19 and FY 22) to avoid sub-optimal operation of the asset.

• It is also noted from the proposal that, project (Kothamangalam & Chitharapuram) is necessary to evacuate 500 MW from the proposed generation capacities, however, the quantum of capacity (out of proposed 500 MW) to be evacuated from Kothamangalam SS is not mentioned explicitly in the investment proposal.

• Further, as per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. It is noted that the minimum voltage for FY 19 is 56 kV which breaches the prescribed limit particularly during summer and onset of winter.

• In addition, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 66 kV line is 72.5 kV, whereas the maximum voltage in FY 19 for Kothamangalam SS is 69.4 kV which is within the CEA prescribed limit.

16

8

5

0

1

2

0 5 10 15 20 25



Quantification and justification of envisagedoutcome (performance) of proposed project


Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 96

4.6.5 Kottayam Upgradation Package

a. Project Overview

S.No Particulars Details 1 Project Title Kottayam Upgradation Package


Construction of I.Substation a. 400 kV GIS substation at Kottayam b. 220 kV GIS substation at Ettumanoor c.220 kV AIS at Thuravoor II.Lines a. 27.6 km 220/110 kV MCMV line from Kottayam to Thuravoor b. 6.5 km 220/110 kV MCMV line from Kottayam to Ettumanoor c. 3.8 km 220kV double circuit LILO from Pallom-Ambalamugal to Kottayam Substation d. 4.8 km 110kV DC line in Kuravilangad – Vaikom – Ettumanoor line route



S.No Particulars Details 1 Primary Objective 1. To increase Kerala’s transfer capability and import power from

Power Grid Corporation of India (PGCIL) 400kV grid 2. To strengthen the power evacuation from the existing network of Kottayam & Alappuzha region with Ettumanoor in Kottayam and Thuravur in Alappuzha as load anchors

2 Secondary Objective Addressing N-1 constraint in Ettumanoor SS and Thravur SS


i. Voltage Profiles of 66kV Kottayam Substation


66kV 11kV level 66kV 11kV level

Apr-18 70.2 11.5 56 9.8

May-18 70.2 11.5 63.4 10.1

Jun-18 70.6 11.5 64.7 10.2

Jul-18 71.6 11.6 62.6 9.9

Aug-18 71.3 11.5 62.2 9.9

Sep-18 68.9 11.2 63.2 9.6

Oct-18 69.9 11.3 62.7 9.9

Nov-18 70.3 11.5 63.5 10

Dec-18 70.2 11.5 60.1 10.3

Jan-19 70.3 11.4 63.6 10.3

Feb-19 69.7 11.3 61.7 9.9

Mar-19 67.7 11.2 61.5 10

Source: KSEB SBU-T

Final


PwC 97

ii. Loading Profiles of 66 kV Kottayam Substation




Maximum Minimum

Apr-18 65.5 184 0.95 63.2 12 0.98 20.87 1.31

May-18 65.2 151 0.97 67.8 52 0.96 17.05 6.11

Jun-18 64.7 140 0.97 65.3 29 0.94 15.69 3.28

Jul-18 67 139 0.97 69.7 49 0.92 16.13 5.92

Aug-18 66.9 118 0.97 67.7 26 0.94 13.67 3.05

Sep-18 65 146 0.95 67.5 57 0.96 16.44 6.66

Oct-18 65 125 0.94 66.6 39 0.95 14.07 4.50

Nov-18 67.8 128 0.93 64.6 42 0.95 15.03 4.70

Dec-18 65.4 120 0.98 67.4 46 0.96 13.59 5.37

Jan-19 66 132 0.95 69.1 43 0.93 15.09 5.15

Feb-19 66 136 0.96 50 67.8 0.95 15.55 5.87

Mar-19 66.3 145 0.97 67 27 0.95 16.65 3.13 Source: KSEB SBU-T



• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 66 kV line is 72.5 kV. The maximum voltage recorded by Kottayam SS is 71.6 kV during the month of July 18 in FY 19. Hence, there is no breach in the maximum voltage limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. The minimum voltage recorded during FY 19 is 64.7 kV which is also within the prescribed limits.

• In order to increase Kerala’s transfer capability and import power from Power Grid Corporation of India (PGCIL) 400kV grid, the proposed capacity for the project is 3x315 MVA. Also, the project is envisaged to remove N-1 constraint by connecting at additional sources.

• Due to proposed augmented load at Ettunamanur SS and Thuravur SS, the anticipated load at Kottayam SS is about 300 MVA whereas the prevailing load at the existing Kottayam SS is about 20.87 MVA. This project is envisaged to evacuate power from PGCIL grid and to remove N-1 constraint.




Score Marks Scored




2


2 2





20 13

Final


PwC 98


Score Marks Scored

a


• Loading details of Kottayam and Ettamanoor SS is provided whereas the loading details of Thuravur SS is not provided for validation. Justification for need of augmentation in Thuravur and Ettamanur SS is not traceable from the proposal. Also, the interruption details to verify the prevailing N-1 constraint in Thuravur and Ettamanur is not available. But, N-1 constraint is qualitatively mentioned. In addition, loading details of Ettumanoor is within the CEA prescribed limit for FY 19 which does not indicate the need for the augmentation of Ettamanur SS. • Augmentation is due to an increase in demand (as per EPS data), however, prevailing load profile of Kottayam SS shows insignificant load in the Kottayam SS

10 6



Scoring for line upgradation is covered under above augmentation part

10 0



Not Applicable 10


Not Applicable 10




1 1


1 1



5 Alternatives Assessment 5 2


25 12


baseline scenario

• Interruption and other details for Ettamanur and Thurayur SS is not provided for validation • Not Applicable, however, Kottayam SS is commissioned in the year 1975 • Only Kottayam and Ettamanur SS detail is provided, and details for Thurayur is not available.

10 4

b



constraints

Qualitatively mentioned 10 5





5 3

Final


PwC 99


Score Marks Scored





8 Timing of Investment To cater the envisaged increase in demand 5 2


5 4



strength - 3 2





Total Score 100 68



Assessment Scores of main parameters - Kottayam


9

2

13

3

2

12

3

2

4

3

10

5

0 5 10 15 20 25


Compliance to Capital Investment SchemesCategories (As per Annexure IV of Tariff Regulation)








Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

Final


PwC 100

Scores under the category "Identification of Objective" - Kottayam


Scores under the category "Compliance to CEA guidelines" - Kottayam


Scores under the category "Need for Investment" - Kottayam



9

6

3

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



13

6

0

0

5

1

1

0 2 4 6 8 10 12 14 16 18 20


Augmentation in-line with CEA TransmissionPlanning Criteria

Up-gradation and/or Reconductoring in line withCEA Planning Criteria

Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



12

4

5

2

0

1

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 101

Conclusion • The project is aimed at removing the N-1 constraint by connecting to additional sources. • The existing capacity is 30 MVA, whereas the maximum load in the Kottayam substation is 20.87 MVA. This

accounts for 69.5% loading (20.87/30 MVA). • Further, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 66 kV

line is 72.5 kV. The maximum voltage reached by Kottayam SS is 71.6 kV during the month of July 18 in FY 19. Hence, there is no breach in the maximum voltage limit noted in FY 19.

• Similarly, as per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. The minimum voltage reached during FY 19 is 64.7 kV which is within the prescribed limits.

• Though the details for N-1 constraint are not available in a quantified manner, however, projected demand scenario for Ettamanur, Thurayur and Kottam is described in the investment proposal in a qualitative manner.

4.6.6 Kunnamangalam - 220 kV GIS

a. Project Overview

Final


PwC 102

S.No Particulars Details

1 Project Title

220 kV GIS Kunnamangalam in Kozhikode District and Construction of 7.66 km 220/110 kV MCMV Line from Areekode-Kaniyambette Tap Point to Kunnamangalam Substation (NMLP Phase 1 B)


Project A: Upgradation of 110kV Substation Kunnamangalam to 220kV GIS Substation with Transformer capacity 2x100MVA. Project B: Construction of 7.66kM 220/110kV MCMV line from Areekode-Kaniyambetta tap point (near Malayamma) to Kunnamangalam substation through existing Agasthiyamuzhi 110 kV line route



S.No Particulars Details 1 Primary Objective Relieve transmission congestion of Kunnamangalam town in

particular and Kozhikode district in general. 2 Secondary Objective Make the system more stable and secure


i. Voltage Profiles of 110kV Kunnamangalam Substation in FY 19



Apr-18 114.45 11.5 99.06 9.9

May-18 115.98 11.6 103 10.4

Jun-18 117.41 11.8 105.92 10.5

Jul-18 114.2 11.6 103.5 10.7

Aug-18 114.5 11.6 103.98 10.6

Sep-18 114.8 11.5 103.32 10.1

Oct-18 115.3 11.7 101.4 10.1

Nov-18 115.5 11.6 102.9 10.5

Dec-18 114.45 11.5 100.28 10.2

Jan-19 115.12 11.5 102.38 10.2

Feb-19 114.58 11.6 104.2 10

Mar-19 114.2 11.5 100.3 10

Source: KSEB SBU-T

ii. Loading Profile of 110kV Kunnamangalam Substation in FY 19


Final


PwC 103



Maximum Minimum

Apr-18 108 164 0.92 109 44 0.96 30.68 8.31

May-18 109 180 0.94 108 20 0.92 33.98 3.74

Jun-18 109 128 0.97 100 26 0.94 24.16 4.50

Jul-18 109 150 0.97 108 20 0.92 28.32 3.74

Aug-18 109 130 0.96 110 34 0.94 24.54 6.48

Sep-18 108 130 0.93 111 32 0.93 24.32 6.15

Oct-18 108 134 0.97 111 35 0.93 25.07 6.73

Nov-18 109 128 0.94 111 36 0.92 24.16 6.92

Dec-18 108 132 0.96 110 32 0.92 24.69 6.10

Jan-19 107 130 0.94 111 34 0.92 24.09 6.54

Feb-19 108 134 0.93 110 28 0.93 25.07 5.33

Mar-19 107 140 0.93 110 30 0.93 25.95 5.72

Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance • As per CEA Transmission planning criteria, the maximum voltage limit under the steady-state for 110 kV line is

123 kV. The maximum voltage reached by Kunnamkulam SS is 117 kV during the month of June 18 in FY 19. Hence, there is no breach in the maximum voltage limit noted.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. During the month of summer (i.e. April 18), the minimum voltage has reached 99.06 kV which slightly higher than the limit prescribed by the CEA.

• The proposed project is for the capacity of 2x100 MVA whereas the maximum demand recorded during FY 19 in the existing Kunnamangalam sub-station is 80 MVA only. The proposed capacity is higher than the maximum recorded demand in the Sub Station whereas the existing loading of SS is 42% in FY 19.

• In the absence of existing capacity of Kunnamangalam SS, it is noted from the public domain information (KSEB website) that, the prevailing capacity of the substation is 80 MVA (110/66 kV) and 20 MVA (66/11 kV), whereas, in FY 19, the SS is maximum loaded at 42% (33.98 MVA/80 MVA), during the month of May. However, the proposed capacity under the project is 200 MVA, which is 2.5 times the existing capacity. The proposed capacity could be due to the requirement of downstream SS that are connected to Kunnamangalam SS to serve the Kunnamangalam town and Kozhikode district.

• Therefore, the justification for the need of 2x100 MVA at existing 80 MVA Kunnamangalam SS is not explained in the investment proposal, given the maximum recorded demand in FY 19 is 33.98 MVA only.

Further to the above observation on proposed capacity, clarification was requested from KSEB regarding the justification for the proposed 2x100 MVA capacity, whereas the existing peak load in 33.98 MVA only. The response from SBU-T indicates that the loading of the substation would increase to 80 MVA after upgradation which is 40% loading of the proposed capacity. The response from KSEB is as below.

1. “The proposed capacity of 220/110 kV 2X100 MVA transformers at Kunnamangalam will be catering to the load of 110 kV feeders emanating from the substation. Studies have been carried over a horizon period by assuming that the system demand will be 4,900 MW in line with the projected demand. Analysis of the system through Load flow studies for the above scenario indicates that the transformers will be loaded to about 40 % each. Further analysis of the base case for the above scenario, without a 220 kV substation in service indicates that the voltage profile will be poor. Upgradation of 110kV substation, Kunnamangalam to 220kV GIS Substation is proposed for improving the reliability and quality of transmission system, to meet the extra load demand at Kunnamangalam area, for the evacuation of power from various SHEPs existing in this area and from various proposed SHEPs to the grid and to function as an alternative feeding source to Kozhikode town and other areas during the shutdown work or emergency situation if any at 220 kV Substation, Nallalam

2. 2x100 MVA transformers will be working simultaneously to satisfy (N-1) security criteria of CEA and Indian Electricity Grid Code.”



Final


PwC 104


Score Marks Scored




2


2 2





20 15

a


• Prevailing loading of Kunnamangalam SS in FY 19 is 42% only, however the minimum voltage level during the summer is breaching the CEA limit. Also, the proposed capacity of 200 MVA appears to be on the higher side, as it might be to cater to the demand of downstream SS which is not mentioned in the investment proposal. As per the response from SBU-T regarding the clarification requested, the loading of the substation would increase to 80 MVA after upgradation which is 40% loading of the proposed capacity. • EPS data is considered for the investment proposal, however the actual loading detail of Kunnamangalam SS is not sufficiently loaded

10 5



Scoring for upgradation of line is taken under above augmentation part

10 0



Not Applicable 10


Not Applicable 10




1 1


1 1


Filed requirements 3 3

5 Alternatives Assessment • No alternatives evaluated 5 0


25 14

Final


PwC 105


Score Marks Scored


baseline scenario

• The minimum voltage limit is marginally breaching the CEA prescribed limit during the summer (April 18) for FY 19. This indicates the need for augmentation of capacity, however, the proposed capacity of 200 MVA appeared to be higher, given the maximum loading is at 42% (for FY 19). • Information not available in the DPR. It is noted from the public domain (KSEB website) information that, the Kunnamangalam SS [80 MVA (110/66 kV)] is established in the year 2000. Hence, remaining lifetime might be about 16 years • Load profile of Kunnamangalam SS is provided

10 8

b



constraints

Qualitative description available. The project is envisaged to relieve the transmission congestion of Kunnamangalam town and Kozhikode district. In addition, the proposed project is also aiming to make the system more stable and secure by connecting at Areekode and Kaniyambetta line.

10 2


d Reactive Proposal 1 -



5 3






• Justification is not available in a quantified manner • As per the investment proposal, the proposed project is to have redundancy in the system/Kunnamangalam SS for grid operation stability and to address the growing demand in the Kozhikode district.

5 2


5 2

a Risk analysis and its strength Risk analysis performed, however not in a quantified manner

2 1


strength Mitigation plan needs strengthening 3 1



IRR and NPV is within the acceptable range 10 10


Total Score 100 68



Assessment Scores of main parameters - Kunnamangalam

Final


PwC 106


Scores under the category "Identification of Objective" - Kunnamangalam


Scores under the category "Compliance to CEA guidelines" - Kunnamangalam


Scores under the category "Need for Investment" - Kunnamangalam

8

2

15

3

0

14

3

2

2

4

10

5

0 5 10 15 20 25


Compliance to Capital Investment Schemes Categories (As perAnnexure IV of Tariff Regulation)








Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



15

5

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 107




• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. During the month of summer (i.e. April 18), the minimum voltage has reached 99.06 kV which is slightly higher than the limits prescribed by the CEA.

• As per the ‘Power System Statistics FY 17, the prevailing capacity of the substation is 80 MVA (110/66 kV) and 20 MVA (66/11 kV). In FY 19, the SS is maximum loaded at 42% (33.98 MVA/80 MVA), during the month of May, however, the proposed capacity is 200 MVA (which is 2.5 times of that of the existing capacity), which might be due to requirement of downstream SS which are connected to Kunnamangalam to serve Kunnamangalam town and Kozhikode district. The reason for the need of 2x100 MVA at existing 80 MVA Kunnamangalam SS is not explained in the investment proposal; given the maximum recorded demand in FY 19 is 33.98 MVA only.

• As per response from SBU-T regarding the requested clarification, the utility expects the near future loading of about 40% of the proposed capacity (i.e. 80 MVA [ 40% of 200 MVA]). The existing demand is about 34 MVA in FY 19 and the anticipated near-term load is about 80 MVA, whereas the proposed capacity is 200 MVA. Therefore, the utility shall ensure that the proposed capacity would be utilized with the growing power demand, to prevent any sub-optimal operation of the asset.

14

8

2

2

0

2

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 108

4.6.7 Kunnamkulam 220/110 kV GIS

a. Project Overview


1 Project Title Kunnamkulam 220/110 kV GIS Substation and Wadakkanchery- Kunnamkulam 220kV DC line


Project A: 220kV GIS Substation, Kunnamkulam: Up-gradation of existing 110kV AIS to 220kV GIS at Kunnamkulam in Thrissur District with station capacity 2x100 MVA Transformers and 2 x 220 kV feeder bays Project B: Wadakkanchery Kunnamkulam 220kV DC line (TLSP Phase-I) Upgrading existing Wadakkanchery - Kunnamkulam 66kV SC Transmission line to 220kV DC Transmission line in Thrissur District (LILO from Madakkathara - Malaparamba/Nallalam) using HTLS Drake equivalent conductor – Route Length 22.8 km

3 Project Cost Estimated Project Cost – Project A 51.85 Crore INR Estimated Project Cost – Project B 66.13 Crore INR Total Cost 117.98 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 22 months 5 Financial Returns IRR 6.94% NPV -51.12 Crore INR


S.No Particulars Details 1 Primary Objective To fulfill the present and future demand of the western region of

Thrissur District 2 Secondary Objective To reduce dependency on Madakathara 400 kV SS which is presently

the only source that caters the demand of the region


i. Voltage Profile of 110kV Kunnamkulam Substation



04/18 120 11.4 104 10.2

05/18 118 11.6 106 10.4

06/18 116 11.6 106 10.6

07/18 118 11.6 108 10.4

08/18 118 11.6 106 10.2

09/18 114 11.4 102 10

10/18 116 11.4 106 10.2

11/18 116 11.4 106 10.4

12/18 116 11.4 106 10.2

01/19 118 11.6 106 10.4

02/19 116 11.4 106 10.2

03/19 116 11.4 104 10.4 Source: KSEB SBU-T

Final


PwC 109

ii. Loading Profiles of 110kV Kunnamkulam Substation




Maximum Minimum

04/18 120 152 0.97 104 32.5 0.94 31.59 5.85

05/18 118 155 0.97 106 30 0.94 31.68 5.51

06/18 116 134 0.97 106 30 0.94 26.92 5.51

07/18 118 127.5 0.97 108 38.5 0.94 26.06 7.20

08/18 118 110 0.97 106 42.5 0.94 22.48 7.80

09/18 114 127.5 0.97 102 42.5 0.94 25.17 7.51

10/18 116 120.5 0.97 106 44.5 0.94 24.21 8.17

11/18 116 132.5 0.97 106 45 0.94 26.62 8.26

12/18 116 144.5 0.97 106 46 0.94 29.03 8.45

01/19 118 140.5 0.97 106 45 0.94 28.71 8.26

02/19 116 149 0.97 106 45 0.94 29.94 8.26

03/19 116 154 0.97 104 79 0.94 30.94 14.23 Source: KSEB SBU-T



123 kV. It is noted that, during the month of April, the maximum voltage limit of Kunnamkulam SS is 120 kV, which is nearer to the limit, and for the rest of the months, the maximum voltages are within the prescribed maximum limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the minimum voltage was reached during Sep with 102 kV which is still within the prescribed limits.

• The proposed project is for the capacity of 2x100 MVA, whereas the maximum demand reached during FY 19 in the existing sub-station is 31.68 MVA only. Hence, the proposed capacity is 6 times higher than the maximum recorded demand in the Sub Station.

• In the absence of existing capacity details for Kunnamkulam SS, it is noted from the public domain information that, the prevailing capacity of the substation is 1x 16 MVA (110 kV/33kV) & 2x12.5 MVA (110 kV/11 kV) totaling 41 MVA. During FY 19, the SS is maximum loaded at about 31.68 MVA, in the month of May (31.68/41 MVA = 77% loading)

Further to the above observation, clarification was requested from KSEB regarding the justification for the proposed 2x100 MVA capacity whereas the existing peak load in FY 19 is 31.68 MVA only. The response from KSEB indicates that, the demand is expected to grow by another 35 MVA (total 66 MVA), after upgradation to 220 kV. The response received from KSEB is as below.

1. “In this context, it may please be noted that 77 % loading of the transformers indicated in the letter is only the load at 11kV level and that too for the year 2019. Once the system is upgraded to 220 kV, it will be catering to the load of substation connected to it at 110 kV level also, in addition to the load at 11 kV level. The overall loading of the system under the horizon period (the substation is expected to be materialized)is expected to be around 66 MVA which calls for 2X100 MVA to satisfy (N-1) criteria.

2. 2X200 MVA transformers will be working simultaneously to satisfy (N-1) security criteria of CEA and grid code.”




Score Marks Scored


Primary Objective Objective is identified, however primary objective is not explicitly mentioned

6 5

Secondary Objective Objective is identified, however secondary objective is not explicitly mentioned

4 3

Final


PwC 110


Score Marks Scored

2


2 2





20 13

a


• KSEB SBU-T has submitted the load profile of the substation; however, the proposed capacity of the substation is 6 times higher than the prevailing maximum demand in the Kunnamkulam SS. The projection of demand to cater to the proposed capacity i.e. 2x100 MVA is not substantiated in the investment proposal. In the response provided by SBU-T for the clarification requested, it is given that the future demand 66 MVA in total. This expected demand is about only 33% of the proposed capacity of 200 MVA. • FY 19 demand profile shows the maximum load of 31.68 MVA which is not substantiating the proposed capacity. In the response provided by SBU-T for the clarification requested, it is given that the future demand 66 MVA in total. This expected demand is about only 33% of the proposed capacity of 200 MVA. The proposed capacity may be considered on the basis of the downstream load requirement or the future demand growth. However, the quantification for adequate utilization of the proposed 200 MVA capacity is not available.

10 5



Scoring related to upgradation of the line is considered in above augmentation review

10 0



Not Applicable 10


Not Applicable 10


c System Study Analysis Load Flow Study is undertaken by the utility. 5 5



1 1



1 1



5 Alternatives Assessment • Field Requirements 5 1


25 12

Final


PwC 111


Score Marks Scored


baseline scenario

• Prevailing load profile of Kunnamkulam SS for FY 19 is relatively overloaded (31.68/ 41 MVA = 77% loading) • Existing Kunnamkulam SS has served for 15 years and the transformers are having remaining lifetime (~ more than 10 years)

10 8

b



constraints

Improvement in performance (tail end voltage, removal of constraint, etc.) is not quantified

10 0

c Proactive Proposal Reactive due to prevailing low voltage profile, however, the proposed capacity is proactive to cater to future demand.

2 1



The proposed line seems to be sourcing power from Madakathara SS. Hence any blackout in Madakathara SS will result in an N-1 constraint in both the baseline scenario as well as the project scenario. However, the project aims to remove only the line capacity constraint through upgradation.

3 3


5 3




Supply and Consumers Improvement in voltage profile is not quantified.

2 0


• Though the lines are periodically overloaded, the maximum demand for the Kunnamkulam SS is about 31 MVA (loaded about 77%), however the proposed augmentation capacity is 2x100 MVA which is 6 times the prevailing load. As per the response from SBU-T, the future expected demand is 66 MVA is only 33% of the proposed 200 MVA capacity. It indicates that the load of the region has to grow about 100% on an annual basis to reach the proposed capacity from the existing load. However, the proposed capacity may be considered taking into account future demand growth or downstream requirements which is not clearly mentioned in the investment proposal. • The proposed project is to cater to the increased load, however proposed capacity appears to be on the higher side.

5 4


5 3



strength - 3 1

10 Project Estimates Blended Rate 5 3


Cost-benefit analysis is performed for the line package only. No analysis is performed for transformer augmentation. Moreover, IRR is less than the acceptable range.

10 0


Total Score 100 57

Prudent/Non-Prudent Non-

Prudent

Final


PwC 112


Assessment Scores of main parameters - Kunnamkulam


Scores under the category "Identification of Objective" - Kunnamkulam


Scores under the category "Compliance to CEA guidelines" - Kunnamkulam


8

2

13

3

1

12

3

4

3

3

0

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



13

5

0

1

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

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rs



Final


PwC 113

Scores under the category "Need for Investment" - Kunnamkulam



Conclusion Based on the information given in the investment proposal and the clarification provided by KSEB, it was concluded that:

• The proposed project was envisaged to satisfy the N-1 criteria, however, the proposed capacity for the sub-station (i.e. 2x100 MVA) is higher than the prevailing load of the existing Kunnamkulam substation. The justification for the proposed capacity i.e. 2x100 MVA SS is not clear in the investment proposal. Further to the clarification sought to KSEB, it is informed by the SBU-T that, the demand is expected to grow by another 35 MVA (total 66 MVA), after upgradation to 220 kV. Therefore, it is inferred that ▪ the N-1 criteria would be satisfied by the line upgradation. However, the quantification for the improvement

in performance is not traceable. Hence the prudency of Kunnamkulam project is ‘Non-deducible’ ▪ the proposed 2x100 MVA transformers will be working in parallel whereas the expected demand in the

immediate future (as anticipated by the utility) is about 66 MVA. It is noted that the anticipated demand (i.e. 66 MVA) and the proposed capacity (i.e. 200 MVA) is having a wider gap in term s of capacity. Therefore, during the approval of the project, the Hon’ble Commission may consider the performance improvement due to the proposed project and the utilization of the proposed capacity through envisaged additional demand to prevent sub-optimal operation of the asset.

• The proposed upgradation of the Kunnamkulam-Wadakkanchery line from 66kV to 220kV may result in the improvement of voltage profile in the region being served by Kunnamkulam SS.

• Further, the maximum and minimum voltage of existing substation is within the limit

12

8

0

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 114

4.6.8 Thalassery 220/110 kV GIS

a. Project Overview

S.No Particulars Details 1 Project Title Thalassery 220/110 kV GIS Project


Project A: Construction of 220kV/110 GIS in Thalassery Project B: Construction / Up-gradation of 66kV SC line to 220/110kV DC line using narrow base MCMV Towers from Mundayad to Thalassery.

3 Project Cost Estimated Project Cost – Project A 67.2 Crore INR Estimated Project Cost – Project B 66.28 Crore INR Total Cost 133.48 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 24 months 5 Financial Returns IRR 8.50% NPV -30.11 Crore INR


S.No Particulars Details 1 Primary Objective To meet the incident demand, to reduce the system losses and to keep

the Transmission system reliable and secure at par with the international standards, transmission network in Kannur Kasaragod area. To satisfy N-1 criteria to have system stability in the region.

2 Secondary Objective To facilitate the industrial development and meet future demand in Thalassery town in particular and southern part of Kannur district in general. This will improve the availability and reliability of supply in the region. Reduction in transmission losses and system stability in the region helps to generate more revenue from additional Sale of energy


i. Voltage profile of 110kV Substation Thalassery



04/18 118 11.35 93 9.35

05/18 117 11.64 101 10.02

06/18 115 11.4 101 9.89

07/18 113 11.3 101 10.05

08/18 115 11.38 100 9.79

09/18 115 11.41 97 9.47

10/18 114 11.38 98 9.54

11/18 114 11.3 99 9.9

12/18 114 11.32 97 10.01

01/19 114 11.42 101 10.3

02/19 114 11.31 95 9.19

03/19 115 11.35 95 10.12

Source: KSEB SBU-T

Final


PwC 115

ii. Loading profile of 110kV Substation Thalassery




Maximum Minimum

04/18 96 138 0.97 112 6 0.99 22.95 1.16

05/18 105 107 0.98 116 3 0.96 19.46 0.60

06/18 106 85 0.98 113 13 0.97 15.61 2.54

07/18 106 72 0.98 110 8 0.96 13.22 1.52

08/18 110 80 0.98 113 5 0.97 15.24 0.98

09/18 111 78 0.97 110 40 0.97 15.00 7.62

10/18 107 101 0.95 113 17 0.97 18.72 3.33

11/18 109 91 0.93 110 40 0.97 17.18 7.62

12/18 111 82 0.97 110 47 0.97 15.76 8.95

01/19 108 82 0.98 111 28 0.97 15.34 5.38

02/19 107 81 0.98 110 17 0.97 15.01 3.24

03/19 109 78 0.96 108 35 0.97 14.73 6.55 Source: KSEB SBU-T



kV. It is noted that, during the month of April, voltage has approached nearer the limit and for the rest of the months, the maximum voltages are within the prescribed maximum limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. During the month of April, the substation has breached the lower voltage limit with 93 kV.

• The proposed project is for the capacity of 240 MVA whereas the maximum demand reached during FY 19 in the existing Thalassery sub-station is 22.95 MVA (i.e. proposed capacity is about 10 times the maximum demand).

• The proposed capacity is also to evacuate power from Kakayam HEP (225 MW). However, it is also mentioned in another TRANSGRID 2.0 project (i.e. NRHTLS) that the power generated from Kakayam HEP will be evacuated through Kakayam-Kuttiyadi-Kanhirode line and Kakayam-Koduvali-Chevaiyoor-Nallalam Line.

• Further, it is noted that the proposed project will strengthen the link between Thalassery SS and Mundayad SS which is already connected with Kanhirode SS (where power from Kakayam HEP will be evacuated). In addition, Kanhirode SS is connected to other demand centers or substations where the generation from Kakayam HEP can be absorbed.

• Hence, considering the above, the proposed capacity for Thalassery SS appears to be on the higher side.

• It is noted from the public domain (KSEB website) information that, the prevailing capacity of the Thalassery substation is 35 MVA whereas, in FY 19, the SS is maximum loaded at 66% during the month of April.

Further to the above observation on proposed capacity, clarification was requested from KSEB regarding the justification for the proposed 240 MVA capacity, whereas the existing peak load is 22.95 MVA only. The response from KSEB indicates that there would be an increase in load up to 50 MVA in the proposed scenario. The response received from KSEB is as below.

1. “It may please be noted that the maximum demand of 22.95 MVA indicated in the reference is only the load at 11kV level and that too for the year 2019. Once the system is upgraded to 220 kV, it will be catering to the load of substation connected to it at 110 kV level also, in addition to the load at 11 kV level. The overall loading of the system under the horizon period (the substation is expected to be materialized)is expected to be around 50 MVA which calls for 2X100 MVA to satisfy (N-1) criteria. Moreover, Thalassery is a fast-developing township with the majority of Commercial malls/multiplex, colleges, hospitals, Courts, etc., with substantial benefits to the nearby industrial areas also. Existing 110kV Substation at Thalassery receives power from 220kV substation, Orkattery and 110 kV substation Mundayad via Pinarai. 220kV substation, Orkattery is fed from 220kV substation at Areacode. Any interruption at 220kV Orkattery substation may lead to power system instability in this region. Hence a 220kV Substation is proposed nearby existing 110kV substation Thalassery

2. 2X100 MVA transformers will be working simultaneously to satisfy (N-1) security criteria of CEA and Indian Electricity Grid Code.”


Final


PwC 116



Score Marks Scored



6 5


4 3

2


2 2





20 16

a


• KSEB SBU-T has submitted the load profile of the substation; however, the proposed capacity of the substation is 10 times higher than the prevailing maximum demand in the Thalassery SS. Further, the plan to evacuate power from Kakayam HEP is contradicting with NRHTLS proposal under TRANSGRID 2.0. The projection of demand to cater to the proposed capacity i.e. 2x100 MVA is also not substantiated in the investment proposal. As per response by SBU-T for the requested clarification, there would be an increase in load up to 50 MVA in the proposed scenario • The proposed project is envisaged to strengthen the link between Thalassery SS and Mundayad SS. Hence, any interruption at 220 kV Orkattery SS will be compensated by supply from Mundayad SS. However, interruptions due to supply constraint from Orkattery SS is not discussed in the investment proposal.

10 6



Scoring related to upgradation of the line is considered under the above augmentation review

10 0



Not Applicable 10


Not Applicable 10


c System Study Analysis Load Flow Study is undertaken by the utility 5 5


1 1

Final


PwC 117


Score Marks Scored


1 1





25 13


baseline scenario

• No interruption detail is discussed in the investment proposal to assess the supply constraint from existing source i.e. Orkkateri SS • Existing system has a balance life of 6 years • Load profile of Thalassery SS is provided by SBU-T for FY 19

10 4

b



constraints

The proposed project will have an additional supply sources from Mundayad SS in addition to the existing supply from Orkkateri SS. However, the quantification of improvement in supply by compliance to N-1 is not mentioned in the investment proposal.

10 5



e Justification for Investment Justification not backed by quantified information in most places

3 2


5 3




Supply and Consumers No details on improvement in interruption is provided in the DPR

2 0


• The proposed project is to satisfy the N-1 requirement, however the supply interruption from the existing source is not quantified in the investment proposal. • Due to demand as well as generation (Kakayam HEP)

5 4


5 2

a Risk analysis and its strength Major risk is not identified 2 1





Cost-benefit analysis is performed for the line package only. IRR and NPV are not within an acceptable range. And, no financial analysis is performed for transformer augmentation.

10 5


Total Score 100 67


Final


PwC 118


Assessment Scores of main parameters - Thalassery


Scores under the category "Identification of Objective" - Thalassery


Scores under the category "Compliance to CEA guidelines" - Thalassery

8

2

16

3

3

13

3

4

2

3

5

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



16

6

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 119


Scores under the category "Need for Investment" - Thalassery




• The proposed project is to satisfy the N-1 requirement, however the supply interruption from the existing source is not quantified in the investment proposal.

• The maximum voltage of the existing substation is within the limit; however, the minimum voltage has breached the limit across 6 months in FY 19.

• The proposed project was envisaged to satisfy the N-1 criteria, by strengthening the link between Thalassery SS and Mundayad SS. However, the justification for the proposed transformer capacity to evacuate the power from Kakayam HEP in the future is contradicting with the proposal of NRHTLS under TRANSGRID 2.0.

• Further to the clarification sought on the proposed capacity, KSEB informed that there would be an increase in the load up to 50 MVA only in the proposed scenario. The existing demand is about 22 MVA in FY 19 and the anticipated near-term load is about 50 MVA, whereas the proposed capacity is 200 MVA. Therefore, the utility shall ensure that the proposed capacity would be utilized with the growing power demand, to prevent any sub-optimal operation of the asset.

13

4

5

2

0

2

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 120

4.6.9 Manjeri 220kV AIS

a. Project Overview


1 Project Title Manjeri 220kV AIS Project and associated LILO lines


Construction of a new 220/110kV AIS in Elamkur in Manjeri, with 2-220kV Line Bays, 2-220kV Transformer Bays, 4-110kV Transformer Bays, 4-110kV Feeder bays, 1-110kV Bus coupler and 220kV LILO line ( 50m)



S.No Particulars Details 1 Primary Objective To bring down the loading of the Mallapuram - Nilambur lines to

normal levels To improve the reliability of the system

2 Secondary Objective To have proper load sharing of the Madakkathara - Areacode line


i. Voltage Profile of 110kV Manjeri Substation



Apr-18 115.5 11.5 96.6 9.3

May-18 119.6 11.6 103 10.2

Jun-18 119 11.5 106.3 10

Jul-18 117.6 11.5 100.8 9.5

Aug-18 119.8 11.5 104.4 10.3

Sep-18 117 11.4 96.2 9.2

Oct-18 116 11.5 97 9.2

Nov-18 116 11.6 99 9.2

Dec-18 119.9 11.4 98.9 10

Jan-19 117.3 11.4 103 10.1

Feb-19 115 11.3 94.9 9.4

Mar-19 115.4 11.6 92.9 9.8

Source: KSEB SBU-T

ii. Loading Profile of 110kV Manjeri Substation

Month Maximum load(TR NO. 1) Minimum load(TR NO. 1) Maximum load (TR NO.2) Minimum load (TR NO.2)





Apr-18 106.2 104 0.98 112.4 2 0.96 - - - - - -

May-18 106.9 96 0.98 116.9 9 0.96 - - - - - -

Jun-18 110 82 0.98 118.6 5 0.96 - - - - - -

Jul-18 109.7 77 0.98 117.9 10 0.96 112.4 51 0.98 115.23 2 0.96

Aug-18 112.7 56 0.97 114.7 2 0.96 110 42 0.98 116 6 0.96

Sep-18 107.9 50 0.97 113.2 11 0.96 112.7 68 0.98 115 10 0.96

Final


PwC 121

Month Maximum load(TR NO. 1) Minimum load(TR NO. 1) Maximum load (TR NO.2) Minimum load (TR NO.2)





Oct-18 103.7 45 0.97 113.2 10 0.96 101.4 78 0.98 110.3 7 0.96

Nov-18 111.2 58 0.97 109.1 11 0.96 113.2 74 0.98 108.5 7 0.96

Dec-18 106 48 0.97 110 13 0.96 110.5 76 0.98 111.2 14 0.96

Jan-19 110 74 0.98 111.9 9 0.96 111.9 69 0.98 115.9 9 0.96

Feb-19 105.5 72 0.98 111.4 20 0.97 105.2 72 0.98 114.9 17 0.96

Mar-19 99.5 56 0.98 99.9 4 0.96 97.2 60 0.98 107.4 10 0.96

Source: KSEB SBU-T

iii. Load details of Malapuram – Manjeri line

Month Maximum load (1MLMJ) Minimum load (1MLMJ)

Voltage Current Power factor Voltage Current Power factor

Apr-18 - - - - - -

May-18 - - - - - -

Jun-18 - - - - - -

Jul-18 - - - - - -

Aug-18 - - - - - -

Sep-18 100 94 0.98 111.9 32 0.97

Oct-18 111.9 90 0.98 112.1 16 0.97

Nov-18 108.5 89 0.98 116.2 24 0.97

Dec-18 103.5 89 0.98 112.9 42 0.97

Jan-19 104.5 91 0.98 113.6 27 0.97

Feb-19 106.7 99 0.98 111.4 44 0.97

Mar-19 97.2 113 0.98 99.9 29 0.97

Source: KSEB SBU-T

iv. Key Observations


kV, whereas the maximum voltage for MLMJ line in FY 19 is 116.2 kV (based on given seven months data, during least load condition) which is within the prescribed limit.

• As per CEA Transmission planning criteria, the minimum voltage limit in MLMJ line for 110 kV line is 99 kV. It is noted that the minimum voltage for FY 19 is 97.2 kV (during high load condition) which breaches the prescribed limit.

• The proposed project is for the capacity of 200 MVA (220 kV/110 kV) + 25 MVA (stepping down 110kV/11kV), whereas the loading details of the Manjeri SS (in MVA) is not provided to assess the need of proposed capacity.

• The proposed capacity may be due to the downstream requirement. However, the loading details of downstream substations are not discussed in the investment proposal.

Further to the clarification sought above observation, clarification was requested from KSEB regarding justification for the proposed 2x100 MVA capacity. The response from KSEB indicates that the expected loading would be around 97 MVA, by the time the project is implemented. The response from KSEB is given below.

• “Majority areas of Malappuram District, especially the eastern part is experiencing severe power supply problems due to the overloading of the transmission lines. Currently, Manjeri, Nilambur and Edakara substations are being fed from the Malappuram substation. The load growth statistics of the 66 kV Malappuram- Manjeri and 66 kV Manjeri-Nilambur feeders for the past few years reveals the fact that these feeders will be terribly overloaded in near future and will result in failure of the feeder and supply interruption in areas fed from Manjeri, Nilambur, Edakkara and Pookkottumpadam substations. Since the demand in the substations is increasing drastically every year, the line is getting overloaded and load restrictions are being introduced especially during the summer season. Being a single circuit line, in case of breakdown of the line, there are no alternative arrangements available to cater to the demand of the above substations. This reduces the reliability of the system and hence needs the upgradation of Manjeri to 220 kV with 200 MVA transformers. Once the system is upgraded to 220 kV, it will be catering to the load of substation connected to it at 110 kV level also, in addition to the load at 11 kV level. The overall loading of the system under the horizon period (the substation is expected to be materialized) is expected to be around 97 MVA which necessitates for 2X100 MVA to satisfy (N-1) criteria”

Final


PwC 122




Score Marks Scored




2


2 2





20 15

a


• Project is envisaged by considering the overloading of MLMJ line. Based on seven-month data of MLMJ line loading (in FY 19), it is noted that MLMJ line is breaching the low voltage limits during the month of March. From this, it is inferred that there is scope for improvement in the existing system.

10 5


CEA Planning Criteria - 10

New Substation

The scoring part is covered under the above augmentation review section. New substation is proposed to decongest the overloaded MLMJ line and other downstream systems

10


Not Applicable 10


Not Applicable 10




1 1


1 1





25 18

Final


PwC 123


Score Marks Scored


baseline scenario

• Line loading details of MLMJ is provided and as per the given information the line is overloaded during summer month in FY 19. • Lifetime of MLMJ line is not available. Manjeri SS is established in 1991 and Malappuram SS is established in 1976. Assuming 1991 as the year of establishment of the MLMJ line, the line might have already completed 28 years. • Load details of MLMJ line and Manjeri SS is provided

10 9

b



constraints

Quantification of improvement in loading of line is not explicitly discussed in the investment proposal other than Load Flow Study

10 5

c Proactive Proposal 2


e Justification for Investment Justification is provided with actual load details of the MLMJ line, and the given information is substantiating the prevailing overloading of line.

3 3


5 4




Supply and Consumers

Quantification of supply quality in terms of improvement in voltage profile is not discussed in the proposal, however, potential line loss reduction is arrived using load flow study.

2 1

8 Timing of Investment • Due to increased loading of line. 5 5


5 3

a Risk analysis and its strength Risk assessment is performed 2 2



10 Project Estimates Blended rates 5 3




Total Score 100 80



Final


PwC 124

Assessment Scores of main parameters - Manjeri


Scores under the category "Identification of Objective" - Manjeri


Scores under the category "Compliance to CEA guidelines" - Manjeri


8

2

15

3

4

18

4

5

3

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



15

5

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

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Final


PwC 125

Scores under the category "Need for Investment" - Manjeri




• Project is envisaged by considering the overloading of MLMJ line. Based on seven-month data of MLMJ line loading (in FY 19), it is noted that MLMJ line is breaching the low voltage limits during the month of March.

• Further, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. It is noted that the minimum voltage for FY 19 is 97.2 kV (during high load condition) which is has breached the prescribed limit.

• However, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 110 kV line is 123 kV, whereas the maximum voltage in FY 19 for MLMJ line is 116.2 kV (based on given seven months data, during least load condition) which is within the prescribed limit.

• Additionally, quantification of improvement in loading of line in the project scenario is not explicitly discussed in the investment proposal other than the Load Flow Study.

• The proposed capacity under this project is 2x100 MVA and the justification for the proposed capacity is not discussed in the investment proposal. Further to the clarification sought for the proposed capacity, KSEB informed that there would an increase in loading of the substation (which is 97 MVA), due to the proposed scenario.

• With anticipated near-future demand of 97 MVA, the proposed capacity of 2x100 MVA may be considered by the Hon’ble Commission, provided, it is ensured that the proposed capacity would be utilized with the growing power demand, to prevent any sub-optimal operation of the asset.

18

9

5

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

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Final


PwC 126

4.6.10 Kolathunadu Line Strengthening Package

a. Project Overview

S.No Particulars Details 1 Project Title Kolathunadu Line Strengthening Package

2 Project Description Construction / Upgradation of 110 kV SC line to 220/110 kV DC line using narrow base MCMV Towers from Kanhirode to Mylatty.



S.No Particulars Details 1 Primary Objective • To import power from Solar power station at Ambalathara

• To provide alternate 220kV corridor between Kannur and Kasargod Districts • To improve power system stability within Kannur and Kasargod districts • To meet the incident demand and to reduce the system losses so as to keep the transmission system reliable and secure at par with the international standards, 220/110 kV Multi-Circuit Multi-Voltage system is needed from Mylatty to Kanhirode



i. Voltage Profile of 220kV Mylatty Substation

Month Maximum Voltage (kV) Minimum Voltage (kV)

220kV Level 11kV level 220kV Level 11kV level

Apr-18 223 11.4 194 10.1

May-18 222 11.3 201 10

Jun-18 224 11.4 208 10.3

Jul-18 224 11.5 207 10.3

Aug-18 223 11.5 202 10.4

Sep-18 224 11.4 201 10.2

Oct-18 224 11.5 198 10

Nov-18 223 11.4 208 10.1

Dec-18 226 11.5 203 10.2

Jan-19 225 11.3 194 9.4

Feb-19 223 11.2 199 9.7

Mar-19 220 11 198 9.5

Source: KSEB SBU-T

Final


PwC 127

ii. Load Profile of 220kV Mylatty Substation

Month Maximum load(A) Minimum load(A) MVA

220kV Level 11kV level Power factor

220kV Level 11kV level Power factor

Maximum Minimum

Apr-18 290 1050 0.99 170 770 0.96 112.01 57.12

May-18 293 1200 0.99 155 920 0.95 112.66 53.96

Jun-18 296 910 0.99 120 830 0.97 114.84 43.23

Jul-18 195 850 0.99 85 560 0.95 75.65 30.47

Aug-18 100 820 0.99 77 550 0.96 38.62 26.94

Sep-18 110 830 0.99 80 555 0.95 42.68 27.85

Oct-18 260 860 0.99 175 600 0.96 100.87 60.01

Nov-18 265 865 0.99 172 550 0.95 102.35 61.96

Dec-18 235 920 0.99 125 540 0.97 91.99 43.95

Jan-19 190 960 0.99 110 500 0.97 74.04 36.96

Feb-19 201 970 0.99 120 520 0.95 77.63 41.36

Mar-19 222 980 0.99 125 510 0.96 84.59 42.87 Source: KSEB SBU-T



245 kV. The maximum voltage reached by Mylatty SS is 226 kV during the month of Dec 18 in FY 19. Hence, there is no breach in the maximum voltage limit noted in FY 19.

• As per CEA Transmission planning criteria, the minimum voltage limit for the 220 kV line is 198 kV. In FY 19, the minimum voltage has breached during the month of July, Aug, Sep and Jan. From this, it is inferred that there is scope for improvement in the existing system.

• Currently, the Mylatty SS is loaded at 57% (i.e. in FY 19) however, the peak demand in monsoon and winter results in a drop in voltage beyond the permissible limit.




Score Marks Scored



Secondary Objective Additional objectives were identified in the proposal

4 4

2


2 2





20 19

a Augmentation in-line with CEA Transmission Planning Criteria

• Interruption and loading details for Kanhirode SS, Mandayad SS and Mylatty SS is not available for validation. However, loading details of Mylatty SS shows that, the minimum voltage has breached the CEA prescribed limits and indicates the need for additional load

10 9

Final


PwC 128


Score Marks Scored

supply. • Proposed upgradation is based on prevailing load condition in Kannur and Kasargode, and also based on EPS information.



Scoring for upgradation is covered in above augmentation section

10 0



Not Applicable 10


Not Applicable 10


c System Study Analysis Load flow study undertaken 5 5



1 1



1 1





25 13


baseline scenario

• Load details of Mylatty SS shows the breach in minimum voltage level • As per public domain information (KSEB website), Mylatty SS is commissioned in 1998. • Load profile of Mylatty SS is provided

10 7

b



constraints

Qualitatively mentioned about improvement in loading of Kannur and Kasargod area

10 2



e Justification for Investment Mylatty SS voltage profile shows the need for additional supply

3 3


5 3





8 Timing of Investment • Low voltage profile in Mylatty SS (in Kasargod area). • To cater to the increased demand

5 5


5 4



strength - 3 2

Final


PwC 129


Score Marks Scored





Total Score 100 75



Assessment Scores of main parameters - Kolathanadu


Scores under the category "Identification of Objective" - Kolathanadu


9

2

19

3

0

13

3

5

4

2

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

9

5

4

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

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r



Final


PwC 130

Scores under the category "Compliance to CEA guidelines" - Kolathanadu


Scores under the category "Need for Investment" - Kolathanadu



Conclusion • As per CEA Transmission planning criteria, the minimum voltage limit for the 220 kV line is 198 kV. In FY 19,

the minimum voltage has breached during the month of July, Aug, Sep and Jan. From this, it is inferred that there is scope for improvement in the existing system.

• Further, the loading details for Kanhirode and Mundayad were not available to validate the prevailing system performance at Kannur and Kasargod districts.

19

9

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



13

7

2

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

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rs



Final


PwC 131

4.6.11 NRHTLS

a. Project Overview


1 Project Title Uprating and upgrading of transmission lines using HTLS technology to relieve transmission congestion


Project A: Up-rating Kakkayam - Nallalam 110kV line (45km). Project B: Up-grading Nallalam – Chevayur - Westhill – Koyilandy - Mepayur 110kV Single Circuit line into Double Circuit line (32km).

3 Project Cost Estimated Project Cost – Project A 43.34 Crore INR Estimated Project Cost – Project B 45.78 Crore INR Total Cost 89.12 Crore INR Grant Details 66.85 4 Estimated Period of Construction 28 months 5 Financial Returns IRR 78.42% NPV 260.89 Crore INR


S.No Particulars Details 1 Primary Objective To ensure the establishment of a full evacuation scheme for

Kakkayam HEP with mandatory security level 2 Secondary Objective -


i. Stranded Generation at Kakkayam - Typical power flows under peak conditions

S.No. Feeders Load

1 Kakkayam – Chakkittapara- Kanjirode 50 MW

2 Kakkayam-Kuttiyadi-Kanjirode 45 MW

3 Kakkayam-Chevayur-Nallalam 20 MW

4 Kakkayam-Kunnamangalam-Nallalam 30 MW

Total 145 MW

Source: KSEB SBU-T

Total Power injection at Kakkayam Bus = 228.75 MW

Stranded capacity 228.75-145 = 83.75 MW

ii. Key Observations

Observations on Baseline Scenario or Existing Performance 83 MW evacuation from Kakayam HEP is impacted due to power evacuation constraint in the lines




Score Marks Scored


Primary Objective Objective is explicitly mentioned 6 6

Final


PwC 132


Score Marks Scored

Secondary Objective No secondary objective identified 4 0

2


2 2





20 17

a


• Not Applicable • Not Applicable • This project is envisaged to strengthen the existing line to evacuate full power from Kakayam HEP (228 MW) project. It is noted in the investment proposal that, the existing 4 feeders which evacuate power from Kakayam HEP is capable of evacuating 145 MW only. Hence, there is a constraint in evacuating the balance 83 MW.

10 10



Scoring related to upgradation is covered in above augmentation part

10 0



Not Applicable 10


Not Applicable 10





1 1



1 1



5 Alternatives Assessment • Field requirements 5 0


25 15


baseline scenario

• 83 MW evacuation from Kakayam HEP is impacted due to power evacuation constraint in the lines

10 6

b



constraints

Quantification of proposed line capacity of is not mentioned in the investment proposal

10 5

Final


PwC 133


Score Marks Scored



e Justification for Investment Justification is provided with quantified information

3 3


5 3





Impact in-terms of additional energy availability, voltage profile improvement, and others are not quantified in the investment proposal

2 0

8 Timing of Investment • Constraint in power evacuation • For evacuating generation capacity from Kakayam HEP

5 5


5 2

a Risk analysis and its strength Risks identification needs strengthening 2 1







Total Score 100 72



Assessment Scores of main parameters - NRHTLS


6

2

17

3

0

15

3

5

2

4

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

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rs

Final


PwC 134

Scores under the category "Identification of Objective" - NRHTLS


Scores under the category "Compliance to CEA guidelines" - NRHTLS


Scores under the category "Need for Investment" - NRHTLS



Conclusion • This project is envisaged to strengthen the existing line to evacuate full power from Kakayam HEP (228 MW)

project. It is noted in the investment proposal that, the existing 4 feeders which evacuate power from Kakayam HEP is capable of evacuating 145 MW only. Hence, there is a constraint in evacuating the balance 83 MW.

• However, impact in-terms of additional energy availability, voltage profile improvement and others are not quantified in the investment proposal.

6

6

0

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

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r



17

10

0

0

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



15

6

5

0

1

3

0 5 10 15 20 25



Quantification and justification of envisaged outcome (performance)of proposed project addressing the baseline constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

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rs



Final


PwC 135

4.6.12 Ernad Lines Package

a. Project Overview


1 Project Title Ernad Lines Package under TRANSGRID 2.0 Project Phase-I


Construction of lines: a. 400/200 kV MCMV transmission lines between Madakkathara and Areekode and b. 220/110 kV MCMV lines between Kizhissery and Nallalam

3 Project Cost Estimated Project Cost 551.67 Crore INR Grant Details 333.93 Crore INR 4 Estimated Period of Construction 30 months 5 Financial Returns IRR 17.72% NPV 259.79 Crore INR


S.No Particulars Details 1 Primary Objective • Provides a robust power highway at 400 kV from North to South of

Kerala facilitating bulk power transfer either way. • Mitigates the possible congestion in the 400kV ISTS Mysore to Areacode tie-line that could be caused by future demand. • Provides Power evacuation capability power from 2000MW HVDC Station at Thrissur to the Northern part of Kerala. • Additional transmission capacity with improved reliability to Nallalam to meet the growing demand in Kozhikode City and surrounding area • Peak loss reduction by 23.3MW that corresponds to an average annual energy savings of about 112.9MU

2 Secondary Objective Addressing low voltage profile in North Kerala region


i. Bus Voltage profile of Kaniyampetta SS during July, Aug and Sep 2019

S.No. Date Maximum Load (in kV) Minimum Load (in kV) 1 8-July-19 233 212 2 14-Aug-19 232 215 3 5-Sep-19 232 219

Source: (http://www.sldckerala.com/index.php)

ii. Bus Voltage profile of substations in Northern Kerala region during summer months

Substation Date and time Max voltage Min Voltage

Areakode 02.04.2019 214 194

Mylatty 22.05.2019 206 196

Thaliparamba 09.05.2019 209 206

Kanjirode 04.03.2019 221 196

Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance (based on DPR) • Information about low voltage was not provided in the investment proposal. However, based on the select

reading of the last three-months voltage profile available in the Kerala SLDC portal, it is noted that Kaniyampetta 220kV SS in northern Kerala has maximum and minimum voltage within the CEA prescribed limit. Further data points to substantiate the low voltage profile in the Northern region of Kerala is additionally sought to justify the investment case.

http://www.sldckerala.com/index.php

Final


PwC 136

• Select data reviewed from SLDC portal for Kaniyampetta SS (http://www.sldckerala.com/index.php): o 8 July 2019: Max -233, Min - 212 o 14 Aug 2019: Max- 232, Min - 215 o 5 Sep 2019: Max - 232, Min - 219

Further to the above observation, clarification was requested from KSEB regarding the justification of the low voltage profile in Northern Kerala. The response by KSEB indicates that during the months of March, April and May 2019, the minimum voltage of Areakode, Mylatty and Kanhirode substations, breaches the CEA prescribed limits.

In addition, clarification was requested regarding justification whether the project can able to meet the envisaged growth in the demand (of about 1130 MW) during the control period FY 19 to FY 22, given that the power transmission capacity during the 5th year of operation is 972 MW only (as per Annexure-5A of DPR). The response from KSEB indicates that the project will be able to meet the envisaged growth in demand because the peak demand of 1130 MW is met combinedly from 315 MW generation and import through Kadakola and Areakode substation.


1. “Most of the generation assets in the State are located in South / Central Kerala. At present there is only one major interconnector at 220kV level viz; 220kV Lower Periyar – Madakathara D/c line connecting 400kV Substation Madakathara, a major connection point of North Kerala, with generation points in South Kerala. Transmission constraints are experienced in several parts of the state, mainly northern parts which include Palakkad, Malappuram, Kannur Districts, certain parts of Idukki and Thrissur districts and in the state capital as well. The situation is still more adverse in the Northernmost part of Kerala comprising the districts of Kannur and Kasargode, without any local generation resources, wherein the demand is showing an increasing trend. At present the area demand is about 350-380MW. The power supply to the area is mainly catered to by four 220kV substations viz; Orkattery, Kanhirode, Thaliparamba and Mylatty along with a 110kV Single Circuit feeder connecting 110kV Substation Manjeswaram to Konaje in Karnataka. The single 220kV D/c corridor from 220kV Substation Areekode to 220kV nodes in this region is a weak link for the energy security of the area. This 220kV D/c feeder having an available transfer capacity of about 145MVA (considering [N-1] security criteria) is at present loaded to about 290 MVA under peak load conditions, which is violating the mandatory contingency criteria laid down in the Grid Code and CEA Planning guidelines. The 110kV inter-state single circuit feeder could be loaded to about 25MW only due to upstream constraints in the Karnataka area. The balance requirement is met through the 110kV transmission system in the area. Loss of any one circuit of the above 220kV feeder will result in a blackout of the region. Further, the extreme-low voltage profile existing in the area can create constraints for the transfer of power to this part on account of high reactive demand and sparse generation addition in this region. A 2000 MW HVDC link was sanctioned in the 37th Standing Committee meeting, to the state for facilitating trouble-free import of power in the context of India becoming a unified grid. The HVDC station and line was entrusted with PGCIL. The work of HVDC terminal at Thrissur and cable laying is proposed to be completed by PGCIL in 2019-2020. For evacuating the power from 2000 MW HVDC link, Areacode- Madakathara 400 kV link is very much essential and expected to be functional by the time the HVDC link is commissioned. The HVDC system was sanctioned by CEA to Kerala on the assurance that the 400kV Madakathara –Arecode and Edamon Kochi will be completed in sync with the HVDC as mentioned in the letter, 220 kV substation, Kaniyampetta is showing high voltage in July, September month is due to unscheduled outages of the feeder (tripping). Severe voltage issues are facing in the summer season especially in April & May months in the northern area and are provided below.

Substation Date and

time

Max voltage Min Voltage

Areakode 02.04.2019 214 194

Mylatty 22.05.2019 206 196

Thaliparamba 09.05.2019 209 206

Kanjirode 04.03.2019 221 196

2. The peak demand of 1130 MW is met by 315 MW generation and import through Kadakola and Areakode.

The power flow from Madakathara to Areakode will be to evacuate the power from HVDC/Udumalpett in the event of non-availability/insufficiency of power from the above-mentioned sources. The corridor is having a load transmission capacity of 2500 MW(with 1500 MW under N-1 conditions). Accordingly, the project will be able to meet the envisaged growth in demand”.

Final


PwC 137

The revised observations based on the KSEB response is as follows.


245 kV. It is noted that there is no breach in maximum voltage for Areacode, Mylatty, Thalaparamba and Kanjirode substation during the summer months in FY 19.

• As per CEA Transmission planning criteria, the minimum voltage limit for the 220 kV line is 198 kV. In FY 19, the minimum voltage has breached during the summer months of FY 19 in Areacode, Mylatty and Kanhirode substations.




Score Marks Scored


Primary Objective Objective is defined, but not explicitly mentioned

6 5

Secondary Objective Objective is defined, but not explicitly mentioned

4 4

2


2 2





20 12

a


- 10 0


CEA Planning Criteria - 10 2



Not Applicable 10


Not Applicable 10

b Voltage Limits

Information about low voltage is not provided in the investment proposal. However, based on the select reading of the last three-month voltage profile available in the Kerala SLDC portal, it is noted that Kaniyampetta 220kV SS in northern Kerala has maximum and minimum voltage within the CEA prescribed limit. Further data points to substantiate the low voltage profile in the Northern region of Kerala is required to justify the investment case.

3 3

Final


PwC 138


Score Marks Scored

Further to the above observation, clarification was requested from KSEB regarding the justification of the low voltage profile in Northern Kerala. The response by KSEB indicates that during the month of April & May the minimum voltage of Areakode, Mylatty and Kanhirode substations in summer months of FY 19 breaches the CEA prescribed limits.



1 1


1 1



5 Alternatives Assessment • Alternatives considered and analyzed, however, it is partially analyzed in a detailed manner

5 4


25 9


baseline scenario

• The breach in the minimum voltage of some substation in Northern Kerala during summer months of FY 19 indicates the negative impact in the electricity supply • There is a deficit of about 160 MW in the transmission line to cater to the peak load, however the prevailing voltage profile of the region is not available to substantiate the premise mentioned in the investment proposal. Further to the above observation, clarification was requested from KSEB regarding the justification of the low voltage profile in Northern Kerala. The response by KSEB indicates that during the month of April & May the minimum voltage of Areakode, Mylatty and Kanhirode substations in summer months of FY 19 breaches the CEA prescribed limits.

10 5

b


(performance) of proposed project addressing the baseline

constraints

Quantified information is not available 10 0




Quantified information was not available in the investment proposal. Further to the above observation, clarification was requested from KSEB regarding the justification of the low voltage profile in Northern Kerala. The response by KSEB indicates that during the month of April & May the minimum voltage of Areakode, Mylatty and Kanhirode substations in summer months of FY 19 breaches the CEA prescribed limits.

3 3


5 2

Final


PwC 139


Score Marks Scored


Technical Benefits

Quantification is performed, however the methodology for quantification is not available in the investment proposal

3 2



No analysis in-terms of improvement in voltage, improvement in interruptions and others is discussed in the investment proposal other than load flow study

2 0


• Annexure 5A says that the transmission capacity of about 1130 MW is getting reached only after the 8th year of the project whereas the existing peak demand in the region is already about 1130 MW. The proposed project is to cater to the increased demand in the region. Projected demand for the region is provided in the investment proposal, however the data to substantiate insufficient transmission capacity in the region is not sufficiently discussed.

• Further to the above observation, clarification was requested from KSEB regarding justification whether the project can able to meet the envisaged growth in the demand during the control period FY 19 to FY 22. The response from KSEB indicates that the project will be able to meet the envisaged growth in demand because the peak demand of 1130 MW is met by 315 MW generation and import through Kadakola and Areakode.

• Proposed project to cater to the increased demand in the region. Projected demand for the region is provided in the investment proposal, however the data to substantiate insufficient transmission capacity in the region is not sufficiently discussed.

5 3


5 2

a Risk analysis and its strength Risk analysis needs strengthening 2 1


strength Risk mitigation plan needs strengthening 3 1



IRR and NPV is within acceptable limit 10 10


Total Score 100 64



Final


PwC 140

Assessment Scores of main parameters - Ernad


Scores under the category "Identification of Objective" - Ernad


Scores under the category "Compliance to CEA guidelines" - Ernad


9

2

12

3

4

9

2

3

2

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

9

5

4

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



12

0

2

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 141



Conclusion (as per information in DPR) In the existing scenario, there is an upstream constraint in power evacuation from Karnataka through Areacode SS, to northern Kerala. Hence, the project is proposed to connect the Northern region with the southern region to improve the voltage profile in northern Kerala. The breach in the minimum voltage in Areacode, Mylatty and Kanhirode substations during the summer months of FY 19 shows the overloading condition in Northern Kerala. This justifies the requirement of the Ernad project.

9

5

0

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs

Scores under the category "Need for Investment" - Ernad



Final


PwC 142

4.7 Appraisal of New Capital Works of SBU-T Expenditure Program

4.7.1 Chemperi, 110kV Substation

a. Project Overview

S.No Particulars Details 1 Project Title Construction of 110kV Substation, Chemperi


• Construction of 9.61km DC line from Sreekandapuram to Chemperi by tapping existing 110kV DC line from Sreekandapuram to Mattannur • Construction of a new 110kV Substation with - 2Nos of 110kV Feeder bays, - 2Nos of Transformer Bays with - 2 Nos 12.5MVA transformers, - 1No of 110kV Bus coupler, - 6Nos of 11kV Outgoing feeders.



S.No Particulars Details 1 Primary Objective To reduce the supply interruptions in Chemperi and Sreekandapuram

regions. 2 Secondary Objective -


i. Voltage Profile of feeders and lines of Sreekandapuram Substation

S.No. Line Maximum Voltage Minimum Voltage

1 110kV line 119kV 99kV

2 11kV line 11.8kV 9.9kV

Source: KSEB SBU-T

ii. Voltage Profile of 66kV transformers of Sreekandapuram Substation

S.No. Particulars Peak Voltage

1 Annual Peak 70kV

2 Winter Peak 70kV

3 Summer Peak 68kV

4 Monsoon Peak 70kV

Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance • The interruption in Chemperi region is 7015 minutes in FY 19-20. • The peak load of Sreekantapuram SS is 8.4 MVA (as given in KSEB's response) and the capacity of existing

Sreekantapuram SS in 20 MVA (66/11kV) (as per public domain information). FY 19 loading data indicates that the maximum loading of Sreekantapuram SS is about 42% (8.4/20 MVA) only.

Final


PwC 143

Observations on Baseline Scenario or Existing Performance • As per CEA Transmission guidelines, the minimum voltage for 110kV Substation is 99kV. The minimum voltage

of Sreekandapuram SS is 99kV (for 110kV line), which reaches the CEA prescribed low voltage limits. • The 11kV feeder voltage details show a 23% deviation in minimum voltage.


The high-level summary of the capital investment appraisal is shown below and the detailed assessment of this project along with gap analysis and SBU-T response to the gaps is appended under Appendix –A.6.


Score Marks Scored



Secondary Objective Secondary objective mentioned, but not explicitly mentioned

4 3

2


2 2





20 20

a


• The proposed project is for the construction of a new 110 kV substation in Chemperi in Kannur district. The 11kV feeders from Sreekandapuram to Chemperi area are overloaded for FY 19, which can be seen from the minimum voltage profile of Sreekandapuram provided in KSEB response. The interruption in Chemperi region is about 7015 minutes in FY19-20. • Existing 11kV feeders to Chemperi area are overloaded

10 10


Planning Criteria - 10



Not Applicable 10


Not Applicable 10


c System Study Analysis LFS undertaken. But report not attached in DPR 5 5


1 1


1 1

Final


PwC 144


Score Marks Scored




• KSEB clarified that alternatives were considered during the conceptualization of the project; however, the details are not mentioned in the investment proposal.

5 1


25 17


baseline scenario

• Existing 11kV feeders to Chemperi area from Sreekandapuram SS are overloaded • Sreekandapuram SS was constructed in 1997 • Existing 11kV feeders to Chemperi area from Sreekandapuram SS are overloaded

10 8

b



constraints

Quantification for the present constraints in the Chemperi region is clearly observed from the 11kV feeder voltage details and interruption details. However, the quantification for the improvement in the constraints due to the proposed project is not provided.

10 5





5 3






• The present constraints in the Chemperi region is clearly observed from the 11kV feeder voltage details (23% deviation in minimum voltage) and interruption details. • Proposed project is also envisaged to cater to the increased demand in Chemperi region

5 5


5 3



strength - 3 1



IRR and NPV are below the acceptable range 10 0

12 Implementation Plan Timeline of scheduled activities provided in DPR. However, detailed implementation plans not provided.

5 5

Total Score 100 72



Final


PwC 145

Assessment Scores of main parameters - Chemperi


Scores under the category "Identification of Objective" - Chemperi


Scores under the category "Compliance to CEA guidelines" - Chemperi


Scores under the category "Need for Investment" - Chemperi

9

2

20

3

1

17

3

5

3

4

0

2

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

t P

ara

me

ters

9

6

3

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

rs



20

10

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 146



Conclusion • The proposed project is for the construction of new substations in Chemperi in Kannur district. • The 11kV feeders from Sreekandapuram to Chemperi area are overloaded, which can be seen from the minimum

voltage profile of Sreekandapuram as well as its outgoing 11kV feeders to Chemperi region (provided in KSEB response).

• The maximum loading of Sreekantapuram SS is 42% (8.4/20 MVA), whereas, the optimal loading is about 75%. Though, the SS is loaded only 42% it is noted that the Sreekandapuram SS is about 8.8km away from the Chemperi region.

17

8

5

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 147

4.7.2 Kollam-Kottiyam Interlinking

a. Project Overview


1 Project Title Interlinking 110kV GIS Substation, Kollam and 110kV Kottiyam Substation


• Interlinking 110kV GIS Substation and 110kV Kottiyam Substation using 11 km 110kV UG cable • Construction of one number of 110kV feeder bay at 110kV Substation Kottiyam

3 Project Cost Estimated Project Cost 54.37 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 14 months 5 Financial Returns IRR 4.20% NPV -26.61 Crore INR


S.No Particulars Details 1 Primary Objective To achieve N-1 Security criteria for Kollam SS 2 Secondary Objective To improve voltage profile in Kollam region


i. Loading Profile of Kollam SS in FY 19

S.No Particulars Load (in MVA) Load (in MVAr) Voltage (kV)

1 Peak Load Condition 17.115 5 102

2 Off-peak load 2.32 0.46 105

Source: KSEB SBU-T

ii. Loading Profile of Kottiyam SS in FY 19

S.No Particulars Load (in MVA) Load (in MVAr) Voltage (kV)

1 Peak Load Condition 16 8 110

2 Off-peak load 8 2 110

Source: KSEB SBU-T



• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is 123 kV. The maximum voltage recorded in Kollam SS is 117 kV (in FY 19), hence there is no breach in maximum voltage limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. The minimum voltage recorded in Kollam SS is 110 kV (in FY 19), hence there is no breach in minimum voltage limit.




Score Marks Scored



Final


PwC 148


Score Marks Scored


2


2 2





20 15

a


10 0


Planning Criteria - 10 8



Not Applicable 10


Not Applicable 10




1 1


1 1





25 13


baseline scenario

• Substation loading profile and interruption details are provided • Substation loading profile and interruption details are provided

10 9

b



constraints

- 10 2





5 4



Final


PwC 149


Score Marks Scored



8 Timing of Investment • Not Applicable 5 3


5 5



strength - 3 3



IRR and NPV is not within the acceptable range 10 10


Total Score 100 74



Assessment Scores of main parameters - Kollam - Kottiyam


9

2

15

3

2

13

4

3

5

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

Final


PwC 150

Scores under the category "Identification of Objective" - Kollam - Kottiyam


Scores under the category "Compliance to CEA guidelines" - Kollam - Kottiyam


Scores under the category "Need for Investment" - Kollam - Kottiyam


9

5

4

0 1 2 3 4 5 6 7 8 9 10


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

rs



15

0

8

0

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



13

9

2

0

1

1

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 151


Conclusion • Kollam SS is proposed to be connected with Kottiyam SS for satisfying N-1 constraint. However, it is noted that

the voltage profile of Kollam SS is within the prescribed limit. • Interruption detail of Kollam SS shows that, the substation had minimal interruptions in FY 19 [i.e. 6 no’s and

350 Minutes] whereas the interruption details of Kottiyam SS is about 69 Nos for 261 Hrs during FY 19. It is to note that, the Interruptions in Kottiyam SS is far higher than Kollam SS.

• Though the project is envisaged to satisfy the N-1 constraint, the objective of satisfying N-1 criteria may be defied as Kottiyam SS has a greater number of interruptions than Kollam SS.

Final


PwC 152

4.7.3 Mylatty – Vidhyanagar line upgradation

a. Project Overview


1 Project Title Upgradation of 110 kV SC /DC line From Mylatty S/s to Vidyanagar S/s to 220/110kV MC/MV Line


• Upgradation of 11.853 km 110 kV SC /DC line to 220/110kV MC/MV line from Mylatty S/s to Vidyanagar S/s • Upgradation Of 19.67 km 110 kV SC Line to DC Line From Vidyanagar To Attegoli (Tapping Point To Kubanoor S/S) • Construction of two no. of new 110 kV feeder bays at Vidyanagar substation. • Upgradation of 7.3 km 110 kV SC line to DC Line from Attegoli ( Tapping Point To Kubanoor S/S) to Morthana (tapping point to Manjeshwar S/S) • Upgradation of 4.1 km 110 kV SC line to DC Line from Morthana (Tapping point to Manjeshwar S/S) to Thoudugoli (Kerala - Karnataka Border) • Construction of 3.3 km 110 kV Multi-Circuit Towers from Morthana (Tapping Point To Manjeshwar S/S) to Manjeshwar S/S • Construction of two no. of new 110 kV feeder bay at Manjeshwaram Substation • Construction of one no. of new 110 kV feeder bay at Mylatty Substation.

3 Project Cost Estimated Project Cost 47 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 24 months 5 Financial Returns

IRR 5.50% NPV -7.21 Crore INR


S.No Particulars Details 1 Primary Objective To evacuate increased capacity from Mylatty SS to Vidyanagar SS 2 Secondary Objective -


i. Line was constructed years back in the 1960s and is in dilapidated condition. The line has already completed its life, hence new line is required to evacuate power from proposed 80 MW solar plant.




Score Marks Scored




2


2 2

Final


PwC 153


Score Marks Scored





20 15

a


• To evacuate 80 MW Solar Capacity. No quantitative information in the DPR • To evacuate 80 MW Solar Capacity

10 9





Not Applicable 10


Not Applicable 10


c System Study Analysis LFS carried out 5 5

d Planning Margin Consideration Within the CEA limits 1 1

e Voltage Margin Consideration Beyond CEA limits 1 0



5 Alternatives Assessment Not Considered 5 0


25 13


baseline scenario

• Line constructed years back in the 1960s and is in dilapidated condition. The line has already completed its life. • • To evacuate 80 MW proposed solar project

10 6

Final


PwC 154


Score Marks Scored

b



constraints

- 10 5





5 4




Supply and Consumers To evacuate 80 MW solar power 2 1

8 Timing of Investment • No balance lifetime • New Generation Capacity

5 5


5 4



strength - 3 2

10 Project Estimates About 2% variation 5 5


10 0


Total Score 100 61


Final


PwC 155


Assessment Scores of main parameters - Mylatty - Vidhyanagar


Scores under the category "Identification of Objective" - Mylatty - Vidhyanagar


5

2

15

3

0

13

4

5

4

5

0

5

0 5 10 15 20 25


Compliance to Capital Investment Schemes Categories(As per Annexure IV of Tariff Regulation)








Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

5

5

0

0 1 2 3 4 5 6


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



Final


PwC 156

Scores under the category "Compliance to CEA guidelines" - Mylatty - Vidhyanagar


Scores under the category "Need for Investment" - Mylatty - Vidhyanagar



Conclusion • Project is proposed to evacuate proposed 80 MW solar power and the existing line has already completed its

lifetime

15

9

0

0

5

1

0

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



13

6

5

0

1

1

0 5 10 15 20 25



Quantification and justification of envisaged outcome(performance) of proposed project addressing the


Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 157

4.7.4 Pallom - Ettumanoor 110kV Upgradation

a. Project Overview


1 Project Title Upgradation of 66kV Pallom-Ettumanoor feeder and associated substations to 110kV.


Upgradation of 66kV Substations Kottayam and Gandhinagar to 110kV by installing 2x20MVA Transformers and Upgradation of 20 km Pallom-Gandhinagar-Ettumanoor and 17.16 km Pallom-Kottayam -Ettumanoor feeders LILO arrangement in Kottayam Substation



S.No Particulars Details 1 Primary Objective To improve the transmission system in and around Kottayam 2 Secondary Objective To facilitate the industrial development and meet future electricity

demand in Kottayam District and improve the quality and reliability of supply to about 35000 consumers under Electrical sections KottayamEast, Puthuppally, Manarcaud, Nattakom, Gandhinagar, Athirampuzha, Ettumanoor & Aymanam


i. Loading Profile of Concerned substation in FY 19

S.No. Substation Summer peak load (MW) Winter peak load (MW) Monsoon peak load (MW)

1 Kottayam 15.4 14.6 12

2 Gandhinagar 10.14 9.1 8.08

Source: KSEB SBU-T


Observations on Baseline Scenario or Existing Performance • According to the load details given in the KSEB response, the peak load of Kottayam SS is 15.4 MW, whereas the

capacity of SS is 30 MVA (only 50% loaded) • Similarly, the peak load of Gandhinagar SS is 10.14 MW, whereas the capacity of SS is 30 MVA (only around

30% loaded) • As per CEA Transmission Criteria, the minimum voltage for 66kV is 60 kV. The minimum voltage of Pallom SS

is 68kV which is within the prescribed limits • As per CEA Transmission Criteria, the maximum voltage for 66kV is 72.5 kV. The maximum voltage of Pallom

SS is 70kV which is within the prescribed limits. • However, the project is proposed due to the upgradation of the source substation.



Final


PwC 158


Score Marks Scored




2


2 2





20 15

a


• In the DPR, it is mentioned that the Kottayam SS is 80% loaded and Gandhinagar is 70% loaded. But, according to the load details given in the KSEB response, the peak load of Kottayam SS is 15.4 MW, whereas the capacity of SS is 30 MVA (only 50% loaded). Similarly, the peak load of Gandhinagar SS is 10.14 MW, whereas the capacity of SS is 30 MVA (only around 30% loaded) • Upgradation of SS proposed due to the upgradation of the source substation

10 7





Not Applicable 10


Not Applicable 10


c System Study Analysis LFS study is provided 5 5


1 1


1 1




• KSEB clarified that alternatives were considered during the conceptualization of the project; however, the details are not mentioned in the investment proposal.

5 1


25 14


baseline scenario

• Existing quantification of the details does not indicate negative impacts on the quality of supply • Remaining lifetime is provided as approx. 5 years

10 5

Final


PwC 159


Score Marks Scored

• Quantification of the existing scenario is provided.

b



constraints

Envisaged outcome is partially quantified. However, the improvement in the voltage profile is minimum.

10 5



e Justification for Investment Justification for need of investment with quantification provided

3 3


5 3






• The proposed upgradation of Kottayam and Gandhinagar SS is due to the upgradation of the source substation in Ettumannoor. According to KSEB SBU-T response, the upgradation of Ettumannor SS has been initiated and in progress (5 % completed) • The proposed upgradation also caters to the increasing demand

5 5


5 3



strength - 3 1



IRR and NPV are less than the acceptable range and justification regarding the less IRR is not provided. However, the justification is provided (source substation is upgraded)

10 3

12 Implementation Plan Project implementation details provided. However, work schedule-timeline is not provided

5 2

Total Score 100 64



Assessment Scores of main parameters - Pallom - Ettumanoor

Final


PwC 160


Scores under the category "Identification of Objective" - Pallom - Ettumanoor


Scores under the category "Compliance to CEA guidelines" - Pallom - Ettumanoor


Scores under the category "Need for Investment" - Pallom - Ettumanoor

10

2

15

3

1

14

3

5

3

3

3

2

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

10

6

4

0 2 4 6 8 10 12


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



15

7

0

1

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete



Final


PwC 161



Conclusion The proposed project is due to the upgradation of the source substation. However, the review of existing substations shows that the loading of the existing substation is within the limits.

14

5

5

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

ram

ete

rs



Final


PwC 162

4.7.5 Panthalacode 110kV Switching cum Substation

a. Project Overview


1 Project Title 110kV Switching Cum Substation at PANTHALACODE


Construction of 110kV switching cum substation at Panthalacode with 8 feeder bays and 2 transformer bays 2x12.5MVA, 110/11kV transformers with double bus arrangement.

3 Project Cost Estimated Project Cost 22.18 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 24 months 5 Financial Returns IRR <1% NPV -20.05 Crore INR


S.No Particulars Details 1 Primary Objective To meet more flexibility in the EHV feeding of Thiruvananthapuram

city and suburban areas and also the low voltage problem and high interruption rates of the area which is fed by 11kV feeders from 110kV substation Paruthippara and 220kV substation Pothencode

2 Secondary Objective To improve the transmission system in and around Thiruvananthapuram district


i. Bus Voltages of concerned substation (Source: LFS report)

Source: KSEB SBU-T



• Presently the Paruthippara substation is feeding a major portion of Trivandrum city supply through 66 kV GIS LA, GIS Power House, Vattiyoorkavu and Balaramapuram in addition to 15 kV feeders originating from Paruthippara SS. In case any failure in Pothencode Paruthippara DC lines, we can feed the above said loads by taking supply from Pothencode through the existing Pothencode- new Kattakkada 110 kV Dc lines by switching at Panthalacode station (though EMPP and KIPP lines)

• The proposed projects appear to be satisfying N-1 criteria, However, the substantiating data to validate the prevailing N-1 constraint and interruptions in the region is not available for review.




Score Marks Scored



6 5

Final


PwC 163


Score Marks Scored


4 3

2


2 2





20 16

a

Augmentation in-line with CEA Transmission Planning

Criteria

• LFS provides the load details of the concerned substations and feeder lines. It is observed that the line loading will significantly reduce if the proposed switching cum substation is constructed. However, as per the load flow study, there is no significant change in the voltage profiles of the incoming lines and feeders in the concerned substation, despite change inline loading. However, the proposed project is to connect to a secondary source for satisfying the N-1 constraint. • Increase in power demand not qualitatively referred • The proposed project is to connect to a secondary source for satisfying N-1 constraint. New switching cum substation in Panthalacode is required to connect EM-PP DC line to the PC-AV and PC-KK lines to curb the disruption of power in Thiruvananthapuram district. • New SS to connect existing transmission lines

10 8





Not Applicable 10


Not Applicable 10


c System Study Analysis

LFS study is undertaken. However, the LFS study has been conducted in July 2012, which is 7 years ago. KSEB has clarified that the LFS is valid at present

5 5

d Planning Margin

Consideration


1 1



1 1



Final


PwC 164


Score Marks Scored


• KSEB clarified that alternatives were considered during the conceptualization of the project; however the details are not mentioned in the investment proposal.

5 1


25 13


baseline scenario

• The proposed project is to connect to a secondary source for satisfying N-1 constraint. However, substantiating data for improvement in interruptions after the construction of the proposed project is not available. • New Substation • The proposed project is for improving the interruption. However, substantiating data for improvement in interruptions after the construction of the proposed project is not available.

10 6

b

Quantification and justification of envisaged

outcome (performance) of proposed project addressing

the baseline constraints

LFS provides the load details of the concerned substations and feeder lines. It is observed that the line loading is significantly reduced if the proposed switching cum substation is constructed. Whereas, there is insignificant improvement observed in the voltage profiles of the incoming lines and feeders in the concerned substation.

10 5



e Justification for Investment LFS study partially indicates the need for the investment proposal

3 1


5 4





Qualitative justification is provided. However, no details on improvement in interruption is provided in the DPR

2 1


• The proposed project is to connect to a secondary source for satisfying N-1 constraint by connecting two transmission lines so as to prevent disruption of power in Thiruvananthapuram district. From the LFS study, it is observed that the 11kV feeder lines are overloaded. The justification for immediate implementation is partially identified in the LFS report. • Proposed project is to improve downtime

5 3


5 2

a Risk analysis and its strength Major risk is not identified 2 1





IRR and NPV are less than the accepted range and no justification provided

10 0

12 Implementation Plan - 5 5 Total Score 100 61



Final


PwC 165

Assessment Scores of main parameters - Panthalacode


Scores under the category "Identification of Objective" - Panthalacode


8

2

16

3

1

13

4

3

2

4

0

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



Final


PwC 166

Scores under the category "Compliance to CEA guidelines" - Panthalacode


Scores under the category "Need for Investment" - Panthalacode



Conclusion The proposed project is envisaged to satisfy N-1 criteria; however, the interruption details are not available to substantiate the prevailing N-1 constraint.

16

8

0

1

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

men

t P

ara

met

ers



13

6

5

0

1

1

0 5 10 15 20 25



Quantification and justification of envisagedoutcome (performance) of proposed project


Proactive Proposal

Reactive Proposal


Score (out of 25)

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Final


PwC 167

4.7.6 Seethangoli 110kV Substation

a. Project Overview

S.No Particulars Details 1 Project Title Construction of 110 kV substation Seethangoli

2 Project Description Construction of a new 110kV Substation with two 110kV FEEDER BAYS, 2 Transformer Bays, six 11 kV feeders in an 11 kV 10 panel (Indoor) set

3 Project Cost Estimated Project Cost 10 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 24 months 5 Financial Returns IRR 29% NPV 20.38 Crore INR


S.No Particulars Details 1 Primary Objective To meet the demand of Cherkala areas to boost industry 2 Secondary Objective -


i. Voltage Profile of Vidyanagar substation for FY 19

S.No. Particulars Value (in kV)

1 Annual Maximum Voltage 112

2 Annual Minimum Voltage 95

3 Summer - Minimum Voltage 99

4 Summer - Maximum Voltage 112

5 Winter and Monsoon Average Voltage 106

Source: KSEB SBU-T

ii. Additional details (for FY 19)

S.No. Particulars Value

1 Vidyanagar to Cherkala - Feeder Voltage 9.1 kV

2 Vidyanagar to Cherkala - Feeder Load 3.5 MW

3 Vidyanagar to Badiadka - Feeder Voltage 9.1kV

4 Vidyanagar to Badiadka - Feeder Load 2.2 MW Source: KSEB SBU-T



• As per CEA transmission guidelines, the minimum voltage of Vidyanagar SS is 95 kV, which breaches the CEA prescribed limit of 99 kV.

• Further, the peak demand in Cherkala region is 55 MVA whereas the current serving SS i.e. Vidyanagar SS capacity is 40 MVA

Final


PwC 168




Score Marks Scored




2


2 2





20 16

a


10 0



New Substation - 10


Not Applicable 10


Not Applicable 10


c System Study Analysis Power flow study is undertaken 5 5

d Planning Margin Consideration Margin is within the CEA prescribed range 1 1

e Voltage Margin Consideration Margin is within the CEA prescribed range 1 1


Field requirement 3 3



25 15


baseline scenario

• Voltage profile of Vidyanagar SS is provided and it is overloaded • Not available • Peak demand in the Cherkala region is 55 MVA whereas the current serving SS i.e. Vidyanagar SS capacity is 40 MVA (as given in the investment proposal). From the load data, it is seen that the prevailing demand is higher than the capacity of the substation.

10 8

b



constraints

- 10 2


Final


PwC 169


Score Marks Scored




5 4


Technical Benefits Envisaged technical benefit is very low 3 3



8 Timing of Investment To meet industrial demand 5 2


5 2

a Risk analysis and its strength Risk analysis has been carried out 2 2


strength Not mitigation plan 3 0





Total Score 100 68



Assessment Scores of main parameters - Seethangoli


5

2

16

3

2

14

4

2

2

3

10

5

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

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Final


PwC 170

Scores under the category "Identification of Objective" - Seethangoli


Scores under the category "Compliance to CEA guidelines" - Seethangoli


Scores under the category "Need for Investment" - Seethangoli



Conclusion The minimum voltage of Vidyanagar SS breaches the CEA prescribed limit of 99kV and the demand of the Cherkala region is more than the capacity of the present serving substation.

5

5

0

0 1 2 3 4 5 6


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

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16

0

6

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20



Up-gradation and/or Reconductoring in line with CEA PlanningCriteria

Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

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14

8

2

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

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Final


PwC 171

4.7.7 Thambalamanna 110kV Substation

a. Project Overview


1 Project Title Upgradation of 33kV Substation, Thambalamanna to 110kV


Upgradation of 33kV Substation, Thambalamanna to 110kV by installing • 16 MVA 110/33 kV transformers - 2 Nos • 110 kV feeder bays – 2 Nos (1 no. at Thambalamanna and 1no. at Agasthiamuzhi) • laying of 110 kV SC single-core 630mm² XLPE UG cable from Thambalamanna to 110 kV Substation, Agasthiamuzhi

3 Project Cost Estimated Project Cost 33.25 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 21 months 5 Financial Returns IRR 0.50% NPV -23.5 Crore INR


S.No Particulars Details 1 Primary Objective To evacuate power from Small Hydro projects and improve line loss

by having 110 kV line 2 Secondary Objective -


i. Voltage profile of 33kV Thambalamana Substation in FY 19


33/11kv 11kV level 33/11kv 11kV level

04/18 34.4 11.6 29.4 9.7

05/18 33.6 11.4 29.7 10.3

06/18 34 11.5 29.6 10.1

07/18 34.4 11.6 29.9 10.2

08/18 31.7 11.5 30.5 10.3

09/18 33 11.4 28.8 10.3

10/18 33.4 11.4 27.8 10.1

11/18 33.7 11.2 30 10.1

12/18 33.2 11.3 29.8 10.2

01/19 33.1 11.3 31.8 10.5

02/19 33.7 11.2 27.4 9.9

03/19 33.4 11.2 28.8 9.8

Source: KSEB SBU-T

ii. Loading profile of 33kV Thambalamana Substation in FY 19




Maximum Minimum

04/18 10.5 240 0.98 11.2 3 0.98 4.36 0.06

05/18 10.5 180 0.98 11 3 0.98 3.27 0.06

Final


PwC 172




Maximum Minimum

06/18 10.3 186 0.98 11.1 3 0.98 3.32 0.06

07/18 10.7 168 0.98 11 3 0.98 3.11 0.06

08/18 11.2 138 0.98 11 3 0.98 2.68 0.06

09/18 10.8 147 0.98 10.8 3 0.98 2.75 0.06

10/18 10.9 153 0.98 11.1 3 0.98 2.89 0.06

11/18 10.6 180 0.98 10.6 3 0.98 3.30 0.06

12/18 10.9 126 0.98 10.6 3 0.98 2.38 0.06

01/19 10.5 135 0.98 11.1 3 0.98 2.46 0.06

02/19 10.4 168 0.98 10.8 3 0.98 3.03 0.06

03/19 10.6 189 0.98 10.9 6 0.98 3.47 0.11

Source: KSEB SBU-T



• As per CEA Transmission guidelines, 2010, the maximum voltage limit under steady-state for 33kV line is 36kV. It is noted that the maximum voltage level reached during July 2018 in Thambalamanna SS is 34.4 kV, which is within the prescribed voltage limit.

• As per CEA Transmission guidelines, 2010, the minimum voltage limit under steady-state for 33kV line is 30kV. It is noted that the minimum voltage level reached during February 2019 in Thambalamanna SS is 27.4 kV, which breaches the CEA prescribed limits. Further, the minimum voltage limit is breached during 9 out of 12 months in FY 19.

• The present 33 kV capacity of the Thambalamanna Substation is 10 MVA. The maximum load for FY 19 is observed during April 18 which is 4.36 MVA (43.6% loading= 4.36/10 MVA). The present loading is 43.6% whereas, the optimal loading is 75%.


The high-level summary of the capital investment appraisal is shown below and the detailed assessment of this project along with gap analysis and KSEB SBU-T response to the gaps is appended under A.6.


Score Marks Scored


Primary Objective Objective not specifically mentioned 6 4

Secondary Objective Secondary objectives identified, but not specifically mentioned

4 3

2


2 2





20 20

Final


PwC 173


Score Marks Scored

a


• The minimum voltage of Thambalamanna SS is 27.4 kV, breaches the minimum voltage as per CEA guidelines. • Other operational constraints are: 1. To evacuate power from Small Hydro projects and improve line loss by having 110 kV line 2. Choice of 110 kV is due to policy decision of KSEB to eliminate 66 kV line from the system

10 10


Planning Criteria - 10



Not Applicable 10


Not Applicable 10


c System Study Analysis LFS study undertaken 5 5


1 1


1 1




• KSEB clarified that alternatives were considered during the conceptualization of the project, however, the details are not mentioned in the investment proposal.

5 1


25 17


baseline scenario

• The minimum voltage of Thambalamanna SS is 27.4 kV, breaches the minimum voltage as per CEA guidelines. • Remaining lifetime is 25 yrs. • LFS and voltage profile details provided

10 8

b



constraints

LFS study indicates the improvement in loading of the concerned transmission lines after the construction of the envisaged project. Further, the minimum voltage of Thambalamanna SS is 27.4 kV, breaches the minimum voltage as per CEA guidelines. However, the loading of the existing substation is around only 43.6%.

10 5




Justification provided are: 1. To evacuate power from Small Hydro projects and improve line loss by having 110 kV line 2. Choice of 110 kV is due to policy decision of KSEB to eliminate 66 kV line from the system

3 3


5 4



Final


PwC 174


Score Marks Scored


Supply and Consumers LFS study partially indicates improvement in the

loading of the concerned transmission lines 2 1

8 Timing of Investment • Proposed project is also to evacuate power from Small Hydro projects and improve line loss by having 110 kV line

5 5


5 3



strength - 3 1



IRR is only 0.5 % and NPV is -23.5 which are below acceptable ranges

10 0


5 5

Total Score 100 70



Assessment Scores of main parameters - Thambalamanna


Scores under the category "Identification of Objective" - Thambalamanna

7

2

20

3

1

17

4

5

3

3

0

2

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

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Final


PwC 175


Scores under the category "Compliance to CEA guidelines" - Thambalamanna


Scores under the category "Need for Investment" - Thambalamanna



Conclusion • The envisaged project is to evacuate power from the nearby small hydro plants. • The minimum voltage of Thambalamanna SS is 27.4 kV, breaches the minimum voltage as per CEA guidelines.

• KSEB has decided to phase out the 66kV line which also supports the proposed project under Government directives.

7

4

3

0 1 2 3 4 5 6 7 8


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



20

10

0

3

5

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



17

8

5

0

1

3

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

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Final


PwC 176

4.7.8 Vennakkara 110 kV GIS

a. Project Overview

S.No Particulars Details 1 Project Title 110 kV GIS Project Vennakkara


Construction of a new 110kV GIS with 4 Transformer Bays, 9 Feeder bays, 1 Bus coupler,1 Capacitor Bays in the existing Substation, Vennakkara

3 Project Cost Estimated Project Cost 39.5 Crore INR Grant Details Not Applicable 4 Estimated Period of Construction 24 months 5 Financial Returns IRR <0% NPV -47.62 Crore INR


S.No Particulars Details 1 Primary Objective To facilitate the industrial development and meet future demand in

Palakkad town and improve the quality and reliability of supply to about 7.5 Lakh customers in the Town and 4 Lakh consumers in Nenmara and Kunnampully substation supply area.



i. Voltage Profile of 110kV Vennakkara Substation

Month Maximum Voltage Minimum voltage


04/18 110/66 11.2 101/59 10.6

05/18 111/67 11.3 103/61 10.7

06/18 111/67 11.2 102/62 10.7

07/18 111/67 11.3 101/60 10.8

08/18 110/66 11.2 103/63 10.7

09/18 110/66 11.2 103/62 10.8

10/18 111/67 11.2 104/64 10.8

11/18 111/67 11.3 102/61 10.8

12/18 111/67 11.3 101/60 10.7

01/19 111/67 11.3 102/61 10.7

02/19 110/66 11.3 99/58 10.7

03/19 110/66 11.3 100/60 10.6 Source: KSEB SBU-T

ii. Loading Profile of 110kV Vennakkara Substation




Maximum Minimum

04/18 104 317 0.9 104 105 0.9 57.10 18.91

05/18 106 267 0.9 106 116 0.9 49.02 21.30

06/18 107 254 0.9 109 97 0.9 47.07 18.31

07/18 102 252 0.9 111 73 0.9 44.52 14.03

08/18 104 229 0.9 111 47 0.9 41.25 9.04

09/18 107 317 0.9 110 100 0.9 58.75 19.05

10/18 106 265 0.9 109 155 0.9 48.65 29.26

11/18 106 230 0.9 109 100 0.9 42.23 18.88

Final


PwC 177




Maximum Minimum

12/18 107 267 0.9 105 95 0.9 49.48 17.28

01/19 102 272 0.9 110 91 0.9 48.05 17.34

02/19 103 311 0.9 103 142 0.9 55.48 25.33

03/19 108 332 0.9 104 162 0.9 62.10 29.18 Source: KSEB SBU-T



• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 110 kV line is 123 kV. It is noted that the maximum voltage level is 110kV which is within the prescribed voltage limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the minimum voltage limit was reached during February with 99 kV which reaches the lower prescribed limits.

• The present 110 kV capacity of the Vennakkara Substation is 81 MVA. The maximum load for FY 19 is observed during March 19 which is 62.10 MVA (76% loading= 62.10/81 MVA). The present loading is 76%, whereas, the optimal loading is about 75%.

• It is noted from the response of KSEB that the lifetime of the existing substation has reached its maximum period, which necessitates the need for a new substation. However, the loading of the existing substation is within the limit, other than the breach of minimum voltage in February 2019.




Score Marks Scored



Secondary Objective Secondary Objective is identified, but not mentioned specifically

4 3

2


2 2





20 13

a


• The present 110 kV capacity of the Vennakkara Substation is 81 MVA. The maximum load for FY 19 is observed during March 19 which is 62.10 MVA (76% loading= 62.10/81 MVA). • Upgradation to 110kV GIS proposed to relieve the N-1 constraint and to reduce overloading

10 9





Not Applicable 10

Final


PwC 178


Score Marks Scored


Not Applicable 10


c System Study Analysis LFS not done since 110kV AIS is converted to 110 kV GIS(Technology conversion only)

5 0


1 1


1 1




• KSEB clarified that alternatives were considered during the conceptualization of the project, however the details are not mentioned in the investment proposal.

5 1


25 13


baseline scenario

• The prevailing load profile in Vennakkara is near to optimal loading. • Existing Vennakkara substation was last upgraded in 1976 • Load profile and voltage profile of Vennakkara SS are provided, however, interruption details are not provided.

10 10

b



constraints

Envisaged outcome (performance) of the proposed project is not quantified because the LFS study is not carried out. KSEB has clarified that LFS not done since 110kV AIS is converted to 110 kV GIS(Technology conversion only)

10 0




It is noted from the response of KSEB that the lifetime of the existing substation has reached its maximum period, which necessitates the need for a new substation. However, the loading of the existing substation is within the limit, other than the breach of minimum voltage in February 2019.

3 2


5 3


Technical Benefits

Quantification of the technical benefits is provided. However, the annual peak loss savings is just 0.58 MU which seems to be insignificant

3 3



Envisaged outcome (performance) of the proposed project is not quantified because the LFS study is not carried out. KSEB has clarified that 'LFS not done since 110kV AIS is converted to 110 kV GIS(Technology conversion only)'

2 0


• It is noted from the response of KSEB that the lifetime of the existing substation has reached its maximum period, which necessitated the need for a new substation. However, the loading of the existing substation is within the limit, other than the breach of minimum voltage in February 2019. • Proposed project is to cater the increased demand

5 5

Final


PwC 179


Score Marks Scored


5 3



strength - 3 1



IRR and NPV calculation as well as its calculation not provided in the DPR

10 0


5 3

Total Score 100 60


Final


PwC 180


Assessment Scores of main parameters - Vennakkara


Scores under the category "Identification of Objective" - Vennakkara


8

2

13

3

1

13

3

5

3

4

0

2

0 5 10 15 20 25










Project Estimates


Implementation Plan

Ass

ess

me

nt

Pa

ram

ete

rs

8

5

3

0 1 2 3 4 5 6 7 8 9


Primary Objective

Secondary Objective

Score (out of 10)

Ass

ess

me

nt

Pa

ram

ete

r



Final


PwC 181

Scores under the category "Compliance to CEA guidelines" - Vennakkara


Scores under the category "Need for Investment" - Vennakkara



Conclusion

• Upgradation to 110kV GIS proposed to relieve the N-1 constraint and to reduce overloading • The lifetime of the existing substation has reached its maximum period, which necessitates the need for a new

substation.

13

9

0

2

0

1

1

0 2 4 6 8 10 12 14 16 18 20




Voltage Limits




Score (out of 20)

Ass

ess

me

nt

Pa

ram

ete

rs



13

10

0

0

1

2

0 5 10 15 20 25




constraints

Proactive Proposal

Reactive Proposal


Score (out of 25)

Ass

ess

me

nt

Pa

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Final


PwC 182

5. Estimate Review and Commercial Impact of the Capital Investment Proposals

5.1 Preamble

In this section, the estimated costs for 12 projects under TRANSGRID 2.0 program and 8 projects under New Capital Works program are appraised for its relevance with respect to relevant SOR and present market value.

TRANSGRID 2.0 program has been developed in the state of Kerala to relieve the electrical transmission system of its present constraints, building sufficient import capability for the future, facilitate complete power evacuation from generating stations within the state and to reduce losses to the possible maximum while meeting power demand of the state. The program requires a total investment of 6,375 Crore INR between FY 19-FY 22. In this section, the cost estimates of 12 projects under TRANSGRID 2.0 program with a total investment plan of 2,527.55 Crore INR have been analyzed and discussed in detail.

The New Capital Works program by KSEB SBU-T comprises of 40 projects with a total investment plan of 1,153.44 Crore INR. In this section, the cost estimates of 8 projects under New Capital Works program with a total investment plan of 293.35 Crore INR have been analyzed and discussed in detail.

In the cost estimates, the overall cost as well as the main components, which are given below, have been reviewed and discussed.

Figure 45: Main Components of Cost Estimates

1. Material Costs

2. Cost of Civil & Electrical Works

3. Labour Costs

4. Tree Cutting Compensation

5. RoW Compensation

6. Land purchase

7. Taxes

8. Statutory approvals

9. Miscellaneous Costs

Final


PwC 183

5.2 Objective of the estimate review

In the investment proposal of the Transmission projects, the project cost is estimated using the data from various sources such as KSEB Transmission Cost data, other states SOR, market rates and past tender rates (as mentioned by KSEB). The main objectives of the cost estimate appraisal are:

• To check whether the KSEB cost estimates provided in the investment proposal are on par with the market price i.e. latest SOR price (the list of Schedule of Rates used for the cost estimate and its rationale is explained in the subsequent sub-section).

• To compute and analyze any deviation in the estimated price as compared to the price in the relevant SOR.

5.3 Methodology for cost estimate review

Cost estimates provided in the investment proposals, are based on the below-mentioned sources: Figure 46: Sources for estimates considered in the investment proposal

The above cost estimates of the transmission projects are appraised in this section using the below-mentioned references:

Figure 47: References used for appraising the investment proposal

Note:

i. The cost estimate provided in the investment proposal by KSEB SBU-T, is referred to as ‘Estimated’ cost in the further sub-sections.

ii. The envisaged change in KSEB cost estimate is referred to as ‘Anticipated’ cost in the further sub-sections.

The methodology adopted for review of Material costs, Labour Costs, Taxes and other costs are discussed below.

5.3.1 Methodology for review of Material Costs

For the review of the Materials Cost estimates, the list of SORs and rationale for its consideration are listed below (in the same order of preference):

Material Costs (Relevant SOR)

•KSEB Transmission Cost Data

•JUSNL SOR•Market Rates•Budgetary Offers

Labour, Civil and Erection Costs

•DSR 2016 (adjusted with KPWD index)

•Market Rates

Tax

•Applicable Tax rates as on date of estimate

Compensation (Land, RoW and others)

•Applicable rates as on date of estimate

Material Costs (Relevant SOR)

•KSEB Transmission Cost Data

•KPTCL SOR - 2019•JUSNL SOR - 2018

Labour, Civil and Erection Costs

•DSR 2018 (adjusted with KPWD index) - latest available SOR

Tax

• 18% GST for Labour, Civil and Erection costs

Final


PwC 184

Figure 48: List of SORs and rationale for its consideration

Methodology adopted for the review of Material Costs:

• Estimated material cost from the investment proposal has been compared with the reference SOR and the deviation has been computed.

After computation of cost deviation, three scenarios were observed regarding the deviation, which are mentioned below:

Figure 49: Scenarios regarding cost deviation

Further to our analysis of the above scenarios, it was observed that the net impact of these 3 scenarios on the material cost of the project got nullified, i.e. there is no significant change in the project cost on a net basis9. In such a case, the anticipated change in material cost is computed by applying WPI inflation rates to the FY 17 cost estimates, in order to infer the cost in FY 20.10

5.3.2 Methodology for review of Labour, Civil and Erection Costs

In the investment proposal, the labour, civil and erection costs were estimated by KSEB based on DSR 2016 (Delhi Schedule of Rates) adjusted with the KPWD index 2017 (Kerala Public Works Department) for the respective districts in Kerala.

For the purpose of review of the labour, civil and erection costs, the latest DSR 2018 data has been used and adjusted with the KPWD index 2017 for the respective districts in Kerala.

The methodology followed for the review of Labour, Civil and Erection Costs are:

• Estimated labour cost from the investment proposal has been compared with DSR 2018 rates (adjusted with the latest available KPWD 2017 index) and the deviation has been computed.

9 About 30% of material items were reviewed in TRANSGRID 2.0 which resulted in net increase of about 7% in the cost, however, t he extrapolation of 7% to remaining 70% items would not be rational without reviewing in actuals. Hence, material cost is escalated only as per WPI inflation.

10 FY 18 & FY 19 inflation rates are considered because, the cost estimates were proposed in FY 17 and the projects are expected to be

implemented from FY 20 onwards. Annual rate of WPI inflation for March-19 was 3.18% and for that of March -18 was 2.47%. Source: ‘Ministry of Commerce & Industry’

•Updated Cost data of transmission materials for the second half year 2018-19•Rationale - The above recent version has been considered over the previous version that

was referred by KSEB SBU-T in its investment proposals

1. KSEB Transmission Cost Data

•Karnataka Power Transmission Corporation Limited SOR w.e.f. 1st Jun 2019•Rationale - SOR of Karnataka is selected, considering the utility is in southern grid and

having part of terrain similar to Kerala

2. KPTCL SOR

•Jharkhand Urja Sancharan Nigam Limited SOR 2018•Rationale - JUSNL SOR is considered, as it was already referred by SBU-T in its material

cost estimate

3. JUSNL SOR

•Estimated cost in the investment proposal > Reference SOR CostScenario 1: Cost Over-estimation

•Estimated cost in the investment proposal < Reference SOR CostScenario 2: Cost Under-estimation

•Estimated cost in the investment proposal = Reference SOR CostScenario 3: No deviation

Final


PwC 185

• While reviewing the labour, civil and erection cost estimates, it is noted that all the line items were not able to be reviewed and therefore, the deviation is calculated only for reviewable items. The deviation percentage is calculated for these items and extrapolated to the remaining line items, to compute the overall deviation in the cost.

5.3.3 Methodology for review of Tax estimates

In the investment proposal, the tax was estimated by KSEB SBU-T in the following manner:

i. For the material costs, the tax component is already part of the item cost in SOR. Therefore, separate tax component for material cost is not considered.

ii. For Labour, Civil and Erection costs, the corresponding tax is estimated based on the applicable tax rates at the time of estimate (VAT has been considered in some of the investment proposals). It is not explicitly mentioned in the investment proposals, about the calculation of ‘Tax’ items indicated in the estimate summary. Therefore, it is assumed that this ‘Tax’ component is pertaining to that of Labour, Civil and Erection Cost.

For the purpose of computing the anticipated tax, the following methodology is used:

i. For Materials, the unit price is assumed as inclusive of all taxes. It is observed that most of the material items fall under the GST slab of 18%. Further, the anticipated material cost along with its associated tax is calculated using the method mentioned in the subsection 5.3.1. Hence, the anticipated tax pertaining to material cost is not analyzed separately in the estimate review.

ii. For Labour, Civil and Erection works, the tax is computed as 18% of the respective cost. This tax amount is represented separately under the ‘tax’ component in the anticipated cost.

iii. For other costs, the unit price is assumed as inclusive of all taxes. And, the anticipated other cost along with its associated tax is calculated using the method mentioned in subsection 5.3.4. Hence, the anticipated tax pertaining to other costs is not represented separately under the ‘Tax’ component in the estimate review.

5.3.4 Methodology for review of Other costs

Other cost components include Tree cutting compensation, RoW compensation, Land Purchase, Statutory approvals, and other miscellaneous expenditure. For computing the anticipated cost, the cost components mentioned above are considered as such without any changes because of the following reasons:

• ‘Other cost’ component is only a small portion (about 11%) of the total project cost for TRANSGRID 2.0 projects

• The time difference between the year of cost estimate FY 17, and the year of estimate review FY 19, is only about 2 years, and hence it is envisaged that there would not be any significant changes in the price of other cost items

• There is no reference cost in the Schedule of Rates for ‘Other Cost’ components

5.4 Detailed appraisal of cost estimate for TRANSGRID 2.0 and New Capital Works program

5.4.1 TRANSGRID 2.0 Projects

In this section, the appraisal of the total project cost estimate11, and the estimates of individual cost components such as material cost, labour, civil and erection costs and other costs, for TRANSGRID 2.0 projects are discussed in detail. Project wise appraisal of cost estimate is discussed in Appendix-A.9.

11 Total project cost including PSDF grant (for NRHTLS and Ernad projects) has been considered for the purpose of cost estimate review and analysis.

Final


PwC 186

5.4.1.1 Appraisal of KSEB estimated Total Project Cost and anticipated change in Total Project Cost

5.4.1.1.1 Appraisal of KSEB estimated Total Project Cost

The 12 TRANSGRID 2.0 projects under review amounts to an estimated total project cost of 2,527.55 Crore INR. According to the nature of the projects, there are 2 categories of projects as under:

Figure 50: Categories of projects under TRANSGRID 2.0 program

The list of 12 TRANSGRID 2.0 projects and its total project cost estimate, as given in the investment proposal are tabulated below:

Table 24: KSEB Estimated Total Project Costs of TRANSGRID 2.0

S.No. Project Name Units Total Project Cost

1 Aluva Crore INR 168.00

2 Chalakudy Crore INR 63.11

3 Kaloor Crore INR 165.39

4 Kothamangalam Crore INR 370.90

5 Kottayam Crore INR 501.40

6 Kunnamangalam Crore INR 82.19

7 Kunnamkulam Crore INR 117.98

8 Thalassery Crore INR 133.48

9 Manjeri Crore INR 44.51

10 Kolathanadu Crore INR 239.77

11 NRHTLS Crore INR 89.13

12 Ernad Crore INR 551.67

Total Crore INR 2,527.55 Source: SBU-T Investment Proposal

Out of the 12 TRANSGRID 2.0 projects, Ernad, Kottayam and Kothamangalam are high-value projects, with a combined value of 1,423.97 Crore INR, which constitutes about 56% of the overall cost of 12 projects. Ernad, Kothamangalam and Kottayam constitutes about 22%, 20% and 15% respectively of the overall cost of 12 projects. The individual share of 12 TRANSGRID 2.0 projects are shown in the pie chart below.

1. Construction/ Upgradation of Substation and Transmission Line

•Projects under this category are:•Aluva•Chalakudy•Kaloor•Kothamangalam•Kottayam•Kunnamangalam•Kunnamkulam•Thalassery•Manjeri

2. Construction/Upgradation of only Transmission Line

•Projects under this category are:•Kolathanadu•NRHTLS•Ernad

Final


PwC 187

Figure 51: KSEB Estimated Total Project cost of TRANSGRID 2.0 (Project-wise)

Source: Investment Proposal/ SBU-T DPR

Out of the overall cost of 12 projects, the material cost component and labour cost components account for 1,374.28 Crore INR (54%) and 605.87 Crore INR (24%) respectively. The further cost component breakup of each project is tabulated below.

Table 25: Component-wise KSEB Estimated Project cost of TRANSGRID 2.0

S.No.

Project Name

Units Total

Material Cost

Labour, Civil &

Erection

Cost

Taxes Compensation (Tree Cutting

& RoW)

Other Costs

Total Project

Cost

1 Aluva Crore INR 84.75 45.75 18.72 0.30 18.48 168.00

2 Chalakudy Crore INR 27.32 29.00 3.01 2.85 0.93 63.11

3 Kaloor Crore INR 104.18 26.54 7.11 2.05 25.51 165.39

4 Kothamangalam Crore INR 132.00 119.87 12.54 61.61 44.88 370.90

5 Kottayam Crore INR 353.77 68.03 12.69 15.94 50.98 501.40

6 Kunnamangalam Crore INR 57.86 21.23 1.31 1.69 0.10 82.19

7 Kunnamkulam Crore INR 84.35 27.68 2.54 3.26 0.15 117.98

8 Thalassery Crore INR 82.30 30.91 3.87 15.79 0.62 133.49

9 Manjeri Crore INR 23.63 8.74 1.57 0.00 10.57 44.51

10 Kolathanadu Crore INR 82.71 123.33 12.59 21.14 0.00 239.77

11 NRHTLS Crore INR 72.63 10.77 1.37 0.00 4.36 89.13

12 Ernad Crore INR 262.37 101.29 38.04 33.72 116.25 551.67

Total Crore INR

1367.88 613.12 115.3

6 158.35 272.83 2527.55


Aluva7% Chalakudy

2%Kaloor

7%

Kothamangalam15%

Kottayam20%

Kunnamangalam3%

Kunnamkulam5%

Thalassery5%

Manjeri2%

Kolathanadu9%

NRHTLS3%

Ernad22%

Final


PwC 188

The component-wise share of cost for each project shows that there is a significant variation across the projects. For e.g. the material cost of the NRHTLS project is 81% of its project cost, whereas, the material cost of Kothamangalam is 36% of its project cost. Similarly, the share of labour, civil and erections cost component varies from 12% to 51%. The stacked chart below represents the component-wise share of cost for the 12 TRANSGRID 2.0 projects.

Figure 52: Component-wise Cost Break-up as % of the respective project cost

Source: Investment Proposal / SBU- T DPR

It is observed that the percentage share of each cost component with respect to the total project cost across projects is not uniform. This could be due to the variables such as:

• Type of project (Construction/upgradation of only Transmission line or Construction/Upgradation of Substation and Transmission line);

• Capacity of the project (in terms of MVA for the case of substation and in terms of length of the proposed line for the case of transmission line);

• Voltage ratings (400kV/220kV/110kV);

• Terrain conditions (City/Town/Forest Areas/Hilly Areas);

• Type of lines, towers and other materials used;

• Land or RoW requirements; and

• Other factors.

50%43%

63%

36%

71% 70% 71%

62%

53%

34%

81%

48%54%

27%46%

16%

32%

14%

26% 23%

23%

20%51%

12%

18%

24%

11%

5%

4%

3%

3%

2% 2%

3%

4%

5%

2%

7%

5%

5%

1%

17%

3%

2% 3%

12%9%

6%

6%

11%

1%

15%12% 10%

24%

5%

21%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Material Cost as % of Total Project Cost Labour, Civil & Erection Cost as % of Total Project Cost

Tax as % of Total Project Cost Compensation as a % of Total Project Cost

Other Costs % of Total Project Cost

Final


PwC 189

It is anticipated that the total project cost may vary at the time of execution as compared to the cost estimates provided in the investment proposal, due to the following reasons:

i. The investment proposal was prepared in the year 2017 and the start of the project work is envisaged in FY 19, and hence, there is a normal escalation in the price of the goods and services due to inflation factor; and

ii. Price variation due to market conditions (i.e. latest Schedule of Rates (SOR) price) and change in tax (migration from VAT and service charges to GST).

As a result, the total project cost is anticipated to vary from the estimated cost mentioned in the investment proposals.

5.4.1.1.2 Anticipated Change in Total Project Cost

Due to the above factors, the total project cost is anticipated to increase from 2,527.55 Crore INR to 2,899.16 Crore INR, which is around 14.7% higher than that of the KSEB estimated project cost. The estimated project cost of individual projects and its anticipated project cost are shown below:

Table 26: TRANSGRID 2.0 – KSEB Estimated Total Project Cost vs. Anticipated Total Project Cost

S.No. Project Name Units KSEB Estimated

Project Cost

Anticipated Total Project

Cost

% of deviation in Total Cost

1 Aluva Crore INR 168.00 188.20 12%

2 Chalakudy Crore INR 63.11 81.66 29%

3 Kaloor Crore INR 165.39 181.31 10%

4 Kothamangalam Crore INR 370.90 442.68 19%

5 Kottayam Crore INR 501.40 553.85 10%

6 Kunnamangalam Crore INR 82.19 96.75 18%

7 Kunnamkulam Crore INR 117.98 139.77 18%

8 Thalassery Crore INR 133.49 153.42 15%

9 Manjeri Crore INR 44.51 49.64 12%

10 Kolathanadu Crore INR 239.77 317.38 32%

11 NRHTLS Crore INR 89.13 99.03 11%

12 Ernad Crore INR 551.67 595.47 8%

Total Crore INR 2,527.55 2,899.16 14.70%

Source: Investment Proposal / SBU-T DPR

The total impact of this anticipated cost is an increase of about 371 Crore INR from the KSEB estimated project cost.

Figure 53: TRANSGRID 2.0 – Total KSEB Estimated Project Cost vs Increase in the Total Project Cost

Source: Investment Proposal / SBU- T DPR, KSEB SOR, KPTCL SOR, JUSNL SOR, DSR 2018

14% increase from the Estimated Project Cost

Final


PwC 190

The above-mentioned increase of 371.61 Crore INR from the KSEB estimated project cost is majorly due to:

i. 78.38 Crore INR increase in the material cost, from 1,367 Crore INR which leads to 1,446 Crore INR

ii. 252.74 Crore INR increase in the labour, civil and erection cost, from 613 Crore INR which leads to 865 Crore INR.

Figure 54: TRANSGRID 2.0 – Total KSEB Estimated Material Cost vs Increase in Total Material Cost

Source: Investment Proposal / SBU- T DPR, KSEB SOR, KPTCL SOR, JUSNL SOR

78.38 Crore INR increase in the material cost amounts to a 5.73% increase from the KSEB material cost.

Figure 55: TRANSGRID 2.0 – Total KSEB Estimated Labour, Civil and Erection Costs

Source: Investment Proposal, DSR 2018

252.74 Crore INR Increase in the labour, civil and erection cost amounts to a 41% increase in the labour, civil and erection cost. The anticipated deviation in the individual cost components, viz. material costs, labour, civil and erection costs, and other components are discussed in the further sub-sections.

5.4.1.2 Project-wise material cost and anticipated change in the expenditure

In this section, the estimated material cost as given in the investment proposal is reviewed and its observations are presented. Further, using the methodology mentioned in Section 5.3.1, the anticipated material cost is computed.

5.73% increase from the Estimated Material Cost

41% increase from the estimated Labour Cost

Final


PwC 191

5.4.1.2.1 Appraisal of KSEB estimated material cost in the investment proposal

KSEB estimated material costs of the 12 TRANSGRID 2.0 projects amounts to 1,367.88 Crore INR, which is 54% of the overall cost. Among the projects, there is a significant variation in the share of material cost with respect to the total project cost. The material cost details (for substation as well as transmission line) for the TRANSGRID 2.0 projects are tabulated below:

Table 27: KSEB estimated Total Material Costs of TRANSGRID 2.0

S.No. Project Name Units Material Cost - Substation

Material Cost - Line

Total Material

Cost

Material Cost as % of Total Project

Cost

1 Aluva Crore INR 73.76 10.99 84.75 50%

2 Chalakudy Crore INR 12.25 15.07 27.32 43%

3 Kaloor Crore INR 61.94 42.24 104.18 63%

4 Kothamangalam Crore INR 48.69 83.30 132.00 36%

5 Kottayam Crore INR 315.97 37.80 353.77 71%

6 Kunnamangalam Crore INR 48.27 9.6 64.66 79%

7 Kunnamkulam Crore INR 52.59 31.77 84.35 71%

8 Thalassery Crore INR 57.15 25.15 82.30 62%

9 Manjeri Crore INR 23.24 0.4 23.63 53%

10 Kolathanadu Crore INR 0.00 82.71 82.71 34%

11 NRHTLS Crore INR 0.00 72.63 72.63 81%

12 Ernad Crore INR 0.00 262.37 262.37 48%

Total Crore INR 693.86 674.03 1,367.88 54%


It is observed that, percentage share of material cost varies from 13% to 50% (for substation) and from 8% to 81% (for transmission line). The below chart shows the share of material costs of 12 TRANSGRID 2.0 projects.

Figure 56: KSEB Estimated Material Costs as % of total project cost (for Substation and line)


44%

19%

37%

13%

63% 59%

45% 43%52%

7%

24%

26%

22%

8% 12%27%

19% 1%

34%

81%

48%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

Material cost of Transmission Line as a % of Total Project Cost

Material cost of Substation as a % of Total Project Cost

Final


PwC 192

The above variation in the share of material cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). Therefore, to compare the material cost across the projects, the material cost per capacity (in INR/MVA for substation and in INR/Ckt-km for transmission line respectively) is computed below.

Table 28: KSEB Estimated Total Material Cost per capacity for TRANSGRID 2.0

S.

No.

Project Name

Transformer

Capacity

Addition

(MVA)

Transmission

line addition (Ckt-km)

Material

Cost –

Substation

(Crore INR)

Substation

Material

Cost per MVA (Crore

INR/MVA)

Material Cost -

Line (Crore INR)

Transmission

line -

Material Cost

per km

(Crore

INR/Ckt- km)

Total

Material

Cost (Crore

INR)

1 Aluva 400 11.1 73.76 0.18 10.99 0.99 84.75

2 Chalakudy 200 11.726 12.25 0.06 15.07 1.29 27.32

3 Kaloor 320 11.5 61.94 0.19 42.24 3.67 104.18

4 Kothamangala

m 330 86.6 48.69 0.15 83.30 0.96 132.00

5 Kottayam 1135 42.7 315.97 0.28 37.80 0.89 353.77

6 Kunnamangal

am 220 7.66 48.27 0.22 9.60 1.25 57.86

7 Kunnamkulam

200 22.8 52.59 0.26 31.77 1.39 84.35

8 Thalassery 240 22.236 57.15 0.24 25.15 1.13 82.30

9 Manjeri 225 0.5 23.24 0.10 0.39 0.78 23.63

10

Kolathanadu - 90.05 - - 82.71 0.92 82.71

11 NRHTLS - 77 - - 72.63 0.94 72.63

12

Ernad - 119 - - 262.37 2.20 262.37

Total 3270 502.87 693.86 0.21

(Weighted Average)

674.03 1.34

(Weighted Average)

1,367.88


It is observed that the weighted average material cost per unit of MVA is 0.21 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents substation material cost per MVA.

Note: The substation material cost of Kolathanadu, NRHTLS and Ernad are Zero, as these projects involve only the construction/upgradation of the Transmission line, and no substation is part of the proposal.

Figure 57: Substation Material Cost per MVA TRANSGRID 2.0


0.18

0.06

0.19

0.15

0.28

0.22

0.260.24

0.10

0.00 0.00 0.00

0.21

0.00

0.05

0.10

0.15

0.20

0.25

0.30

in C

rore

IN

R/

MV

A Internal Benchmark value: 0.21 Crore INR/MVA

Final


PwC 193

The cost per MVA for the projects Chalakudy, Kothamangalam and Manjeri are lesser (huge variation) than the benchmark value and it may be due to the reason that Chalakudy, Kothamangalam and Manjeri projects involves AIS instead of GIS. Amongst these 3 AIS projects, Kothamangalam is having, 0.15 Crore INR/MVA, which is higher than the other two AIS projects. This may be due to the reason that the capacity of the Kothamangalam project is 330 MVA whereas the capacities of the other two projects are around 200 MVA. Further, the cost per MVA of Kottayam is the highest among the TRANSGRID projects. The reason for the high value may be that the capacity of the Kottayam project is 1,135 MVA (in total), which is the highest among the TRANSGRID projects.

It is also observed that the cost per MVA for the projects such as Kunnamangalam, Kunnamkulam and Thalassery are almost similar (in the range of 0.22 – 0.26 Crore INR/MVA), which is due to similar capacities (in the range of 200-240 MVA).

Further, it is observed that the cost per MVA for the projects such as Aluva and Kaloor are similar (0.18 & 0.19 Crore INR/MVA respectively), which is again due to similar capacities (in the range of 320-400 MVA).

Further to the above observation, clarification was requested from KSEB regarding the variations in the cost/MVA of the projects. The KSEB response indicates that, Kottayam project involves 400kV voltage level, which is unlike other projects. In the case of Thalassery & Kunnamkulam, the high cost is due to longer Gas Insulated Bus (GIB) which is not the case with other projects.

The response by KSEB is given below.

1. “Average cost cannot be generalized in the case of analysis for estimate preparation of substation and lines. The estimate may vary depending on site conditions, protection system, number of feeder bays, transformers etc. It is very much clear that, project cost, especially material cost will be on the higher side for the 400kV GIS at Kottayam, apart from other estimates of 220 kV substation.

2. For Thalassery and Kunnamkulam GIS substations, the length of the GIB (Gas Insulated Bus) is longer which may be one reason for cost variation compared to other estimates.”

It is observed from the KSEB response that, the high cost for the Kottayam project (0.28 Crore INR/MVA) is due to the 400kV level transformer, unlike other 220 kV level projects of TRANSGRID 2.0. In addition, the costs of the Kunnamkulam & Thalassery project (0.26 and 0.24 Crore INR/MVA respectively), are higher than the benchmark level, which is due to the longer Gas Insulated Bus as compared to other projects. However, the reason for the cost of the Kunnamangalam project (0.22 Crore INR/MVA), being higher than the benchmark value, is not explained by the KSEB.

Similarly, from the review of material cost per Ckt-km for transmission lines, it is observed that the weighted average material cost per Ckt-km is 1.34 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the substation material cost per Ckt-km.

Figure 58: Transmission Line Material Cost per Ckt-km TRANSGRID 2.0


0.991.29

3.67

0.96 0.89

1.251.39

1.13

0.78 0.92 0.94

2.20

1.34

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

in C

rore

IN

R/

Ck

t-k

m

Internal benchmark = 1.34 INR/Ckt-km

Final


PwC 194

It is seen from the above graph that, the transmission line material cost for the projects Kaloor and Ernad are 3.67 Crore INR/Ckt-km and 2.20 Crore INR/ Ckt-km respectively, which is higher (significant variation) than the internal benchmark value of 1.34 Crore INR/Ckt-km. Further, it is observed that the Kolathanadu project involves 90 km transmission line, yet, the material cost is 0.92 Crore INR/Ckt-km (within the benchmark value), whereas, the transmission line length for Kaloor is only 11 km. Ideally, the Kaloor projects should have the material costs less than that of Kolathanadu, however variabilities like voltage level, terrain, line type, tower type may result in a wide variation of the cost among these projects. Therefore, the factors such as the voltage level, terrain along the transmission line, type of conductor and type of tower are appraised to understand the rationale for cost variation. A comparison of variables among these projects is shown below.

Table 29: Details of the factors of concerned projects

S.No. Project Name Voltage

Level (kV)

Line Length

(km)

Transmission Line between

Terrain Type of

Conductor Type of Tower

1 Kolathanadu (Reference Project)

220/110 kV

90.05 Mylatty - Kanhirode

Township area

ACSR Kundah and Panther

220/110kV Multi-Circuit Multi-Voltage Lattice Type Hot Dip Galvanized Steel Towers and Stub & cleat of various

types ( KLA/B/C/D)

2 Kaloor

220/110 kV MCMV,

220 kV Double circuit

11.5 Brahmapuram

to Kaloor

Township

area ACSR Wolf

220/110kV Multi-Circuit Multi-Voltage Lattice Type Hot Dip Galvanized Steel Towers and Stub & cleat of various types (KLA/B/C/D)

3 Ernad

400 / 220 kV,

220/110 kV

119

Madakathara - Areakode Kizhisery - Nallalam

Madakathara - Areakode- Township Area Kizhisery - Nallalam - Township area (with

20-30% of the line in hilly areas)

a. ACSS Great Hornbill

for 400 kV line b. CCC Eranad for 220 kV line c. WOLF for 110 kV Line d. STACIR

a. MLA, MLB, MLC,MLD,MLS (for 400/220 kV MCMV line) b. KLA,KLB,KLC,KLD (For 220/110kV MCMV line)

c. MA, MB,MC,MD (For 220 kV DC line)


It is noted that, Kolathanadu project involves a 220kV transmission line which passes through the township area. The conductor types are ACSR Kundah & Panther and the type of tower is Multi Voltage Lattice Type Towers.

Ernad project is unique in terms of the voltage level of 400/220kV line and it passes through the hilly region for about 20 to 30% of line length. Therefore, it is considered that this 400kV voltage level and terrain may be the reason for the variation in the material cost per Ckt-km.

Kaloor project involves 220kV voltage level transmission, which passes through the township area. The conductor type used in Kaloor project is ACSR Wolf and tower is Multi Voltage Lattice Type. The main difference between Kaloor and Kolathanadu (reference project) is the type of conductor used in the project.

The price details of the concerned conductors and towers (according to the investment proposal) are listed below.

Final


PwC 195

Table 30: Price details of the conductors and towers

S.No Item Price (INR)

Remarks

Type of Conductor

1 ACSR Panther Conductor 1,98,300 • Price of Kundah and Panther is almost

the same (INR 2 Lakh)

• Price variation between Panther and Wolf is 36% (i.e. difference between 1.98 lakh – 1.25 lakh)

2 ACSR Kundah Conductor 2,00,235

3 ACSR Wolf Conductor 1,25,000

Type of Tower

4

220/110kV Multi-Circuit Multi-Voltage, 220/220kV &110/110kV MC Lattice Type Galvanized Steel Towers and Stub & cleat of various types (MLD for 400/220kV, KLA/B/C/D

71,057

• Type of tower and it cost is same for Kolathanadu, Kaloor and Kunnamangalam


As seen above, the price of wolf conductor is 36% lesser than that of the Panther conductor. Therefore, the material cost per Ckt-km. of Kaloor should be lesser than that of Kolathanadu, as all other factors are similar.

Considering the above scenarios, clarification was sought regarding the variations in the cost per Ckt-km of the above-mentioned projects. The response from KSEB indicates that, Kaloor project involves UG cabling and Ernad involves construction of 400kV voltage, and the work is complex in nature.

The response from KSEB is given below.

1. “Out of the 220 kV DC line from Kaloor to Brahmapuram, only 4.5 km is OH line and the remaining 7km is UG cable, which is a factor for raising the project cost.

2. Ernad project cannot be compared with the above works as the work involved is of a complex nature, which involves the construction of 400/220 kV lines. Also, construction of towers up to order of 70m height, HTLS conductors and different insulator configuration adopted to ensure electrical clearances under all adverse weather conditions enhances the project cost.”

It is observed from the KSEB response that the cost per Ckt-km for Kaloor is higher (3.67 Crore INR/Ckt-km) because, 7km (out of 11.5 km) involves underground cabling. In addition, the Ernad project involves the construction of 400/220kV lines, and the work is complex in nature. Therefore, the cost of Ernad (2.20 Crore INR/Ckt-km) is higher than the benchmark value (1.34 Crore INR/Ckt-km).

5.4.1.2.2 Anticipated change in Material Cost

According to the cost estimate review, the total material cost is anticipated to increase from 1,367.88 Crore INR to 1,446.28 Crore INR, (5.73% increase based on the WPI of FY 18 & FY 19).

The KSEB estimated material cost of individual projects and its anticipated material cost is tabulated below:

Table 31: TRANSGRID 2.0 – KSEB Estimated Material Cost vs. Anticipated Material Cost

S.No. Project Name Units Total Material Cost Anticipated

Material Cost % of deviation in

Material Cost

1 Aluva Crore INR 84.75 89.60 5.73%

2 Chalakudy Crore INR 27.32 28.89 5.73%

3 Kaloor Crore INR 104.18 110.15 5.73%

4 Kothamangalam Crore INR 132.00 139.56 5.73%

5 Kottayam Crore INR 353.77 374.04 5.73%

6 Kunnamangalam Crore INR 57.86 61.18 5.73%

7 Kunnamkulam Crore INR 84.35 89.19 5.73%

8 Thalassery Crore INR 82.30 87.01 5.73%

9 Manjeri Crore INR 23.63 24.98 5.73%

Final


PwC 196

S.No. Project Name Units Total Material Cost Anticipated

Material Cost % of deviation in

Material Cost

10 Kolathanadu Crore INR 82.71 87.45 5.73%

11 NRHTLS Crore INR 72.63 76.80 5.73%

12 Ernad Crore INR 262.37 277.40 5.73%

Total Crore INR 1,367.88 1,446.26 5.73%


5.4.1.3 Project-wise Labour, Civil and Erection Cost and anticipated change in the expenditure

In this section, the KSEB estimated labour, civil and erection cost as given in the investment proposal is reviewed and its observations are presented in this subsection. Further, using the methodology mentioned in Section 5.3.2, the anticipated labour, civil and erection cost is computed.

5.4.1.3.1 Appraisal of KSEB estimated Labour, Civil and Erection Cost in the investment proposal

Total KSEB estimated cost of labour, civil and erection works for the 12 TRANSGRID projects amounts to 613.12 Crore INR. This accounts for 24% of the total project costs. Among the projects, there is a significant variation in the share of labour, civil and erection cost with respect to total project cost. The labour, civil and erection costs for the TRANSGRID projects are tabulated below:

Table 32: TRANSGRID 2.0 – KSEB Estimated Material Cost vs. Anticipated Material Cost

S.No. Project Name Units Estimated Labour, Civil

& Erection Cost

Estimated Labour, Civil & Erection Cost as % of Total Project

Cost

1 Aluva Crore INR 45.75 27%

2 Chalakudy Crore INR 29.00 46%

3 Kaloor Crore INR 26.54 16%

4 Kothamangalam Crore INR 119.87 32%

5 Kottayam Crore INR 68.03 14%

6 Kunnamangalam Crore INR 21.23 26%

7 Kunnamkulam Crore INR 27.68 23%

8 Thalassery Crore INR 30.91 23%

9 Manjeri Crore INR 8.74 20%

10 Kolathanadu Crore INR 123.33 51%

11 NRHTLS Crore INR 10.77 12%

12 Ernad Crore INR 101.29 18%

Total Crore INR 613.12 24%


It is observed that, percentage share of labour cost varies from 12% to 51%. The below chart shows the share of labour, civil and erection costs for the 12 TRANSGRID 2.0 projects.

Final


PwC 197

Figure 59: Labour, Civil and Erection Cost as % of Total Project Cost


The significant variation in the share of labour, civil and erection cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). Therefore, to compare the cost across the projects, the labour, civil and erection cost per capacity is computed and tabulated below (in INR/MVA for substation and in INR/Ckt-km for transmission line respectively). However, unlike the material cost breakup, the separate labour, civil and erection cost breakup for substation and transmission lines are not clearly available in some of the investment proposals. Hence, the labour cost component for substation and labour cost component for the line part is not differentiable. So, the total labour, civil and erection cost for a project is considered for computing the labour cost per capacity for both substation and transmission line.

Table 33: KSEB Estimated Labour, Civil and Erection Cost per capacity for TRANSGRID 2.0

S.No. Project Name

Transformer Capacity Addition

(MVA)

Transmission line addition

(km)

Labour, Civil &

Erection Cost

(Crore INR)

Labour Cost per

MVA (Crore

INR/MVA)

Labour Cost per Ckt-km (Crore

INR/Ckt-km)

1 Aluva 400 11.1 45.75 0.11 4.12

2 Chalakudy 200 11.726 29.00 0.15 2.47

3 Kaloor 320 11.5 26.54 0.08 2.31

4 Kothamangalam 330 86.6 119.87 0.36 1.38

5 Kottayam 1135 42.7 68.03 0.06 1.59

6 Kunnamangalam 220 7.66 21.23 0.10 2.77

7 Kunnamkulam 200 22.8 27.68 0.14 1.21

8 Thalassery 240 22.236 30.91 0.13 1.39

9 Manjeri 225 0.5 8.74 0.04 17.48

10 Kolathanadu - 90.05 123.33 - 1.37

11 NRHTLS - 77 10.77 - 0.14

12 Ernad - 119 101.29 - 0.85

Total 3,270 502.87 613.12 0.19

(Weighted Average)

1.22 (Weighted Average)


27%

46%

16%

32%

14%

26% 23% 23%20%

51%

12%18%

0%

10%

20%

30%

40%

50%

60%

La

bo

ur,

Civ

il a

nd

Ere

ctio

n C

ost

as

% o

f T

ota

l Pro

ject

Co

st

Final


PwC 198

Note: The substation labour cost of Kolathanadu, NRHTLS and Ernad is ‘Zero’ as these projects involve only the construction/upgradation of the Transmission line.

It is observed that the weighted average labour cost per unit of MVA is 0.19 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per MVA.

Figure 60: KSEB Estimated Labour, Civil and Erection Cost per MVA for TRANSGRID 2.0 projects


It is observed that the labour cost per MVA for Kothamangalam is 0.36 Crore INR, which is a significant variation from the benchmark value. It was observed that the Kothamangalam project involves the transmission line from Pallivasal to Aluva, in which 40% of the line is through the hilly area. This could be one of the reasons for the significant variation in the labor cost per MVA and the reasons for the same is not explained by the utility. Further, it is noted that the cost/MVA for Chalakudy and Manjeri are 0.15 and 0.04 Crore INR/MVA respectively. Though, both the projects involve AIS, and similar transformer capacities (220 and 200 MVA), there is a huge variation in labour cost per MVA. The reason for this variation is not deducible with the available information.

It is noted that labour cost per MVA for the Kottayam project is 0.06 Crore INR/MVA, which is lower compared to most of the other TRANSGRID projects. The reason for this lower value may be because the total proposed capacity of Kottayam projects is 1,135 MVA, which is higher among other projects.

Also, it is noted that labour cost/MVA for the projects Kunnamkulam and Thalassery is 0.14 and 0.13 Crore INR/MVA respectively, which is almost equal. This similarity may be due to, similar transformer voltage rating, (220kV), similar capacity (200 and 240 MVA) and similar transmission line length (~22km). It is also seen that the characteristics of the Kunnamangalam project viz, transformer capacity and voltage rating are similar to that of the Kunnamkulam and Thalassery project. However, the labour cost/MVA for the Kunnamangalam project is 0.10 Crore INR/MVA, which is lower compared to that of Kunnamkulam and Thalassery. The reason could be that the line length of Kunnamangalam is 7 km as compared to that of Kunnamkulam and Thalassery (~22km) and the reason for the same is not explained by the utility.

The labour cost/MVA for the projects Aluva and Kaloor is 0.11 and 0.08 Crore INR/MVA respectively. Though, these 2 projects have similar voltage level (220kV) and similar line length (~11 km), the labour cost/MVA for have significant variation which may be due to difference in transformer capacities (Aluva - 400 MVA, Kaloor -325 MVA) and reason for the same is not explained by the utility.

Similarly, from the review of labour costs per unit Ckt-km., it is observed that the weighted average value for all projects is 1.22 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per Ckt-km.

0.110.15

0.08

0.36

0.06

0.10

0.14 0.13

0.04

0.00 0.00 0.00

0.19

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

Cro

re I

NR

/ M

VA

Internal Benchmark value = 0.19 Crore INR/MVA

Final


PwC 199

Figure 61: Estimated Labour, Civil and Erection Cost per Ckt-km. for TRANSGRID 2.0 projects


Note: For the Manjeri project, the labour cost per Ckt-km. is 17.48 Crore INR which is due to the construction of line for an insignificant length of 0.5 km.

Though the NRHTLS project transmission length is 77km (110kV level) and it passes through hilly areas (around 10%), the labour cost/Ckt-km is 0.14 Crore INR/Ckt-km, which is the lowest among TRANSGRID 2.0 projects. The reason for this lowest cost is not deducible with the available information. In the case of projects such as Aluva, Chalakudy and Kaloor, the labour cost/Ckt-km. have significant variation (2.31 – 4.12 Crore INR/Ckt-km), although these projects have similar terrain (township area), similar towers and similar line length (~11km, expect for Kunnamangalam with 7km). Further, all these projects have labour cost/Ckt-km higher than the benchmark value. The reason for these variations is not deducible with the available information.

In this regard, clarification had been requested and KSEB responded that the higher labour cost/Ckt-km of Kaloor project (2.31 Crore INR/Ckt-km) is majorly due to underground cabling, however, the reasons for the higher cost of Aluva and Chalakudy project were not explained by the utility. The response from KSEB is given below.

“Average cost cannot be generalized for lines and cable as Out of the 220 kV DC line from Kaloor to Brahmapuram, only 4.5 km is OH line and remaining 7km is UG cable, which is a factor for raising the project cost.”

5.4.1.3.2 Anticipated change in Labour, Civil and Erection Cost

According to the cost estimate review, the total labour, civil and erection cost is anticipated to increase from 605.87 Crore INR to 856.08 Crore INR, which is 41% higher than that of the KSEB estimated cost. The KSEB estimated labour, civil and erection cost of individual projects and its anticipated cost is tabulated below:

Table 34: TRANSGRID 2.0 – KSEB Estimated Labour, Civil and Erection Cost vs. Anticipated Cost

S.No. Project Name Labour, Civil & Erection Cost (Crore INR)

Anticipated Labour Cost

(Crore INR)

% of deviation in Labour Cost

1 Aluva 45.75 67.64 47.84%

2 Chalakudy 29.00 41.52 43.17%

4.12

2.47 2.311.38 1.59

2.77

1.21 1.39

17.48

1.370.14

0.85 1.22

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

Cro

re I

NR

/ C

kt-

km

Internal Benchmark value: 1.22 Crore INR/Ckt-km

Final


PwC 200

S.No. Project Name Labour, Civil & Erection Cost (Crore INR)

Anticipated Labour Cost

(Crore INR)

% of deviation in Labour Cost

3 Kaloor 26.54 36.95 39.22%

4 Kothamangalam 119.87 166.63 39.01%

5 Kottayam 68.03 95.67 40.64%

6 Kunnamangalam 21.23 28.63 34.88%

7 Kunnamkulam 27.68 39.98 44.47%

8 Thalassery 30.91 42.37 37.08%

9 Manjeri 8.74 11.94 36.66%

10 Kolathanadu 123.33 176.93 43.46%

11 NRHTLS 10.77 15.15 40.64%

12 Ernad 101.29 142.45 40.64%

Total 613.12 865.86 41.22%

Source: Investment Proposal / SBU- T DPR, DSR 2018

5.4.1.4 Project-wise Tax estimates and anticipated change in the Tax

5.4.1.4.1 Appraisal of KSEB estimated tax

In the investment proposal, the tax was estimated in the following manner:

i. For the material costs, the tax was included in the item cost.

ii. For Labour, Material and Erection costs, the corresponding tax was estimated based on the applicable tax rates at the time of the estimation (VAT has been considered in some of the investment proposals and majorly service tax has been applied).

iii. For other costs, the tax was included in the item cost.

Total KSEB estimated tax for the 12 TRANSGRID 2.0 projects amounts to 115 Crore INR. This accounts for 5% of the total project cost. The estimated tax for the TRANSGRID 2.0 projects is tabulated below:

Table 35: KSEB Estimated Tax for TRANSGRID 2.0

S.No. Project Name Units Tax Tax as % of Total

Project Cost















Final


PwC 201

5.4.1.4.2 Anticipated change in the Tax

The anticipated tax for the TRANSGRID 2.0 projects using the methodology mentioned in section 5.3.3 is shown below:

Table 36: TRANSGRID 2.0 - Anticipated Tax

S.No. Project Name Units Anticipated Tax for Labour, Civil and

Erection

1 Aluva Crore INR 12.18

2 Chalakudy Crore INR 7.47

3 Kaloor Crore INR 6.65

4 Kothamangalam Crore INR 29.99

5 Kottayam Crore INR 17.22

6 Kunnamangalam Crore INR 5.15

7 Kunnamkulam Crore INR 7.20

8 Thalassery Crore INR 7.63

9 Manjeri Crore INR 2.15

10 Kolathanadu Crore INR 31.85

11 NRHTLS Crore INR 2.73

12 Ernad Crore INR 25.64

Total Crore INR 155.86

Source: Investment Proposal / SBU- T DPR, GST Rate data

The anticipated tax is computed as 155.86 Crore INR (18% applicable GST for Labour costs) and this is around 40 Crore INR more than the KSEB estimated tax.

It is not explicitly mentioned in the investment proposals, about the calculation of ‘Tax’ items indicated in the estimate summary. Therefore, it is assumed that this ‘Tax’ component is pertaining to that of Labour, Civil and Erection Cost.

5.4.1.5 Project-wise compensation (Land, RoW and Tree cutting)

For computing the anticipated cost, the compensation costs are considered as such without any change. KSEB estimated compensation of the 12 TRANSGRID 2.0 projects under review amounts to 158.35 Crore INR. This accounts for 6% of the total TRANSGRID 2.0 project costs. The compensation for the TRANSGRID 2.0 projects is tabulated below:

Table 37: KSEB Estimated Compensation for TRANSGRID 2.0 Projects

S.No. Project Name Compensation

(Tree Cutting & RoW)

(Crore INR)

Compensation as a % of Total Project Cost

1 Aluva 0.30 0%

2 Chalakudy 2.85 5%

3 Kaloor 2.05 1%

4 Kothamangalam 61.61 17%

5 Kottayam 15.94 3%

6 Kunnamangalam 1.69 2%

7 Kunnamkulam 3.26 3%

8 Thalassery 15.79 12%

9 Manjeri 0.00 0%

10 Kolathanadu 21.14 9%

Final


PwC 202

S.No. Project Name Compensation

(Tree Cutting & RoW) (Crore INR)


11 NRHTLS 0.00 0%

12 Ernad 33.72 6%

Total 158.35 6%


The review of compensation provisions in Kerala and other states are shown below.

S.No. Particulars Kerala Other State

1 Tree Cutting Compensation

Average of the market value of commodities for the previous four quarters, notified by the District Collector for every quarter under the Kerala Land Reforms Act.

Cost of Land Compensation for Tower Base and RoW Corridor in Karnataka is about 15 Lakh INR per acre in Agriculture setting and 25 Lakh INR per acre in

Urban/Semi-Urban areas near Cities/Town.12 in Andhra Pradesh. Compensation is about 5 Lakh INR per acre in northern Karnataka13.

2 Tower Foot Compensation 85% of fair value (According to Ministry of Power)

3 RoW compensation 15% of fair value (According to Ministry of Power)

Source: Ministry of Power, Kerala Land Reforms Act, Power Grid

5.4.1.6 Project-wise - Other Cost Components and anticipated change in expenditure

5.4.1.6.1 Appraisal of KSEB estimated Other Costs

The other cost components such as Land Purchase, Statutory approvals, and other miscellaneous costs are referred to as Other Costs. Other Costs constitutes 273 Crore INR, which accounts for 11% of the total TRANSGRID 2.0 projects costs. The KSEB estimated other costs for the TRANSGRID 2.0 projects are tabulated below:

Table 38: KSEB Estimated ‘Other Costs’ for TRANSGRID 2.0

S.No. Project Name Units Other Costs Other Costs % of Total

Project Cost











12 Source: Power Grid https://apps.powergridindia.com/POWERGRID/docs/Resettlement%20and%20Rehabilitation/CPTD%20for%20Transmission%20System%20assoc iated%20with%20Solar%20Parks%20at%20Tumkur/CPTD%20for%20Tr ansmission%20System%20associated%20with%20Solar%20Parks%20at%20Tumkur.pdf

13 Source: Public Domain Information https://www.deccanherald.com/content/642049/high-tension-line-farmers-get.html

https://apps.powergridindia.com/POWERGRID/docs/Resettlement%20and%20Rehabilitation/CPTD%20for%20Transmission%20System%20associated%20with%20Solar%20Parks%20at%20Tumkur/CPTD%20for%20Transmission%20System%20associated%20with%20Solar%20Parks%20at%20Tumkur.pdf

https://apps.powergridindia.com/POWERGRID/docs/Resettlement%20and%20Rehabilitation/CPTD%20for%20Transmission%20System%20associated%20with%20Solar%20Parks%20at%20Tumkur/CPTD%20for%20Transmission%20System%20associated%20with%20Solar%20Parks%20at%20Tumkur.pdf

https://www.deccanherald.com/content/642049/high-tension-line-farmers-get.html

Final


PwC 203

S.No. Project Name Units Other Costs Other Costs % of Total

Project Cost





Land Purchase

Out of 12 TRANSGRID 2.0 projects, there are 3 projects, which require the purchase of new land for the purpose of construction of a substation, and the details are as below.

Table 39: TRANSGRID – Land Purchase details as per DPR

S.No. Project Name Land Purchase

(Acres) Type of Substation

Transformer Capacity (MVA)

1 Kaloor 0.7 GIS 320

2 Kottayam

15.3 acres for Kottayam 400kV GIS 8.5 acres for Thuravoor 220kV AIS 1.5 acres additional for 220kV Ettumanoor GIS

GIS & AIS 1135

3 Manjeri 6.12 AIS 225


It appears that the land parcel considered under Kottayam and Manjeri projects, is relatively on the higher side and the following points have been clarified by KSEB :

• 15.3 acres of land is required for Kottayam substation to accommodate the new equipment,

• 2 acres (instead of 8.5 acres) of land is required for Thuravoor substation as it is now proposed as GIS, and

• Additional land of 1.5 acres for Ettumanoor is not required now.


“Kottayam substation is proposed as 400 kV GIS with four number of 400kV Feeder bays and 2 number of Interconnecting 400/220kV 3 phase Auto Transformer (ICT’s) of capacity, 315 MVA each. Future 400kV bay is provided for a 3rd ICT. The downstream 220kV yard is again proposed as GIS as 2 bus scheme with 10 bays. For accommodating all these the proposed land is required.

Thuravoor substation is proposed now as GIS (not AIS) and hence a land of 2 acres only required.

Requirement of Land of an additional 1.5 acres for Ettumanoor substation is not needed now as the layout of the GIS substation is revised.”

The above-mentioned change in the land requirement is expected to change the project cost of Kottayam project. Therefore, during the approval of the project, the Hon’ble Commission may consider only the cost of the revised land requirement as mentioned by the utility.

5.4.1.6.2 Anticipated Other Costs

For computing the anticipated cost, the other costs are considered as such without any changes due to the reasons mentioned in Section 5.3.4.

Final


PwC 204


In this section, the appraisal of the total project cost estimate, and the estimates of individual cost components such as material cost, labour, civil and erection costs and other costs, of the overall New Capital Works projects are discussed in detail. Project wise appraisal of cost estimate is discussed in Appendix-A.9.

5.4.2.1 Appraisal of KSEB estimated Total Project Cost and anticipated change in Total Project Cost

5.4.2.1.1 Appraisal of KSEB estimated total project cost

The 8 New Capital Works projects under review amounts to an estimated total project cost of 293.35 Crore INR. According to the nature of the projects, there are 3 categories of projects as under:

Figure 62: Categories of projects under the New Capital Works Program

The list of 8 New Capital Works projects and its total project cost estimate, as given in the investment proposal are tabulated below:

Table 40: KSEB Estimated Total Project Costs of New Capital Works

S.N0. Project Name Units KSEB Estimated

Project Cost

1 Chemperi Crore INR 25.00

2 Seethangoli Crore INR 10.04

3 Thambalamanna Crore INR 33.25

4 Pallom Ettumanoor Crore INR 62.00

5 Kollam - Kottiyam Crore INR 54.37

6 Mylatty - Vidhyanagar Crore INR 47.00

7 Panthalacode Crore INR 22.18

8 Vennakkara Crore INR 39.50


Source: Investment Proposal

Out of the 8 New Capital Works 2.0 projects, Palom – Ettumanoor, Kollam – Kottiyam and Mylatty- Vidhyanagar are high-value projects, with a combined value of 163.37 Crore INR, which constitutes about 56% of the overall cost of 8 projects. Palom – Ettumanoor, Kollam – Kottiyam and Mylatty- Vidhyanagar constitutes about 21%, 18% and 16% respectively of the overall cost of 8 projects. The individual project value share of 8 New Capital Works projects are shown in the pie chart below.

1. Construction/ Upgradation of Substation and Transmission Line

•Schemes under this category are:

•Chemperi•Seethangoli•Thambalamanna•Pallom - Ettumanoor

2. Construction/Upgradation of only Transmission Line


•Kollam - Kottiyam•Mylatty - Vidhyanagar

3. Construction/Upgradation of only Substation


•Panthalacode•Vennakkara

Final


PwC 205

Figure 63: KSEB Estimated Total Project Cost of New Capital Works (Project-wise)


Out of the overall cost of 8 projects, the material cost component and labour cost components accounts to 126 Crore INR and 68 Crore INR respectively. The cost component breakup of each project is tabulated below.

Table 41: Component-wise KSEB Estimated Project cost of New Capital Works

S.N0.

Project Name Units Estimated

Material Cost

Estimated

Labour, Civil &

Erection Cost

Taxes Compensation (Tree Cutting

& RoW)

Other Costs

Estimated Project

Cost

1 Chemperi Crore INR 7.14 6.50 3.49 1.47 6.47 25.00

2 Seethangoli Crore INR 4.43 3.21 0.75 0.00 1.60 10.04

3 Thambalamanna Crore INR 20.16 6.71 1.43 0.00 4.96 33.25

4 Pallom Ettumanoor Crore INR 22.62 24.45 7.19 0.65 7.09 62.00

5 Kollam - Kottiyam Crore INR 27.02 10.87 2.25 0.00 14.24 54.37

6 Mylatty - Vidhyanagar

Crore INR 12.18 7.60 4.65 2.96 19.61 47.00

7 Panthalacode Crore INR 5.35 3.06 2.07 0.00 11.70 22.18

8 Vennakkara Crore INR 26.58 5.88 4.29 0.00 2.75 39.50

Total Crore INR

125.48 68.29 26.11 5.08 68.40 293.35


The component-wise share of cost for each project shows that there is a significant variation across the projects. For e.g. the material cost of the Thambalamanna project is 61% of its project cost, whereas, the material cost of Panthalacode is 24% of its project cost. Similarly, the share of labour, civil and erections cost component varies from 14% to 39%. The chart below represents the component-wise share of cost for the 8 New Capital Works Projects.

Chemperi, 8.52%

Seethangoli, 3.42%

Thambalamanna, 11.33%

Pallom Ettumanoor,

21.14%

Kollam -Kottiyam,

18.54%

Mylatty -Vidhyanagar,

16.02%

Panthalacode, 7.56%

Vennakkara, 13.47%

Final


PwC 206

Figure 64: Component-wise Cost Break-up as % of respective project cost


It is observed that the percentage share of each cost component with respect to the total project cost across projects is not uniform. This could be due to the variables such as:

• Type of projects (Construction/upgradation of only Transmission line or Construction/Upgradation of Substation and Transmission line);


• Voltage ratings (110kV/66kV);




• And other factors.

It is anticipated that the total project cost may vary at the time of execution as compared to the cost estimates provided in the investment proposal, due to the following reasons:

i. The investment proposal was prepared in the year 2017 and the start of the project work is envisaged in FY 19, and hence, there is a normal escalation in the price of the goods and services due to inflation factor, and.

ii. Price variation due to market conditions [i.e. latest Schedule of Rates (SOR) price] and change in tax (migration from VAT and service charges to GST).

As a result, the total project cost is anticipated to vary from the estimated cost mentioned in the investment proposals.

29%44%

61%

36%50%

26% 24%

67%26%

32%

20%

39%20%

16% 14%

15%

14%

7% 4% 12%

4%

10%9%

11%26%16% 15% 11%

26%42%

53%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Other Costs % of Total Project Cost Compensation as a % of Total Project Cost

Tax as % of Total Project Cost Labour, Civil & Erection Cost as % of Total Project Cost

Material Cost as % of Total Project Cost

Final


PwC 207

5.4.2.1.2 Anticipated change in Total Project Cost

Due to the above factors, the cost of 8 projects under review is anticipated to increase from 293.35 Crore INR to 318.5 Crore INR, which is around 8.7% higher than that of the KSEB estimated project cost. On extrapolating the above escalation rate of 8.7% to the all the 39 projects14 in New Capital Works, the KSEB estimated project cost increases from 1,153.44 Crore INR to 1,235.43 Crore INR.

The estimated cost of individual projects and its anticipated project cost are shown below:

Table 42: New Capital Works – KSEB Estimated Total Project Cost vs. Anticipated Total Project Cost

S.N0. Project Name Units Estimated

Project Cost

Anticipated Total Project

Cost

% of deviation in Total Cost

1 Chemperi Crore INR 25.00 26.10 4%

2 Seethangoli Crore INR 10.04 11.62 16%

3 Thambalamanna Crore INR 33.25 37.36 12%

4 Pallom Ettumanoor Crore INR 62.00 72.05 16%

5 Kollam - Kottiyam Crore INR 54.37 60.76 12%

6 Mylatty - Vidhyanagar Crore INR 47.00 48.01 2%

7 Panthalacode Crore INR 22.18 22.42 1%

8 Vennakkara Crore INR 39.50 40.57 3%

Total Crore INR 293.35 318.88 8.7% Source: Investment Proposal / SBU-T DPR

The total impact of this anticipated cost is an increase of about 25.54 Crore INR in the KSEB estimated project cost, as submitted.

Figure 65: New Capital Works – Total KSEB Estimated Project Cost vs Increase in the Total Project Cost


The above-mentioned increase of 25.54 Crore INR in the total estimated project cost is majorly due to:

i. 7.19 Crore INR increase in the material cost from 125 Crore INR, which leads to 133 Crore INR

ii. 27.31 Crore INR increase in the labour, civil and erection cost from 68 Crore INR, which leads to 91 Crore INR.

14 One project among the 40 New Capital Works schemes is communication project whose nature is not similar to remaining substation and line projects/schemes. Hence, the cost of communication scheme is omitted for the projection.

8.7% increase from the Estimated Project Cost

Final


PwC 208

Figure 66: New Capital Works – Total KSEB Estimated Material Cost vs Increase in Total Material Cost


7.19 Crore INR increase in the material cost amounts to a 5.73% increase from the estimated material cost.

Figure 67: New Capital Works – Total KSEB Estimated Labour, Civil and Erection Costs vs Increase in Estimated Costs

Source: Investment Proposal, DSR 2018

27.31 Crore INR Increase in the labour, civil and erection cost amounts to a 40% increase in the labour, civil and erection cost.

The anticipated deviation in the individual cost components, viz. material costs, labour, civil and erection costs and other components are discussed in the further sub-sections.

5.4.2.2 Project-wise Material Cost and anticipated change in the expenditure

In this section, the estimated material cost as given in the investment proposal is reviewed and its observations are presented. Further, using the methodology mentioned in Section 6.3.1, the anticipated material cost is computed.

5.4.2.2.1 Appraisal of KSEB estimated Material Cost in the investment proposal

Estimated material costs of the 8 New Capital Works projects amounts to 125.48 Crore INR, which is 43% of the overall cost. Among the projects, there is a significant variation in the share of material cost with respect to total project cost. The material cost details (for substation as well as transmission line) for the projects are tabulated below.

5.73% increase from the Estimated Material Cost

40% increase from the Estimated Labour cost

Final


PwC 209

Table 43: KSEB Estimated Total Material Costs of New Capital Works

S.N0

. Project Name Units

Material Cost -

Substation

Material Cost - Transmission

Line

Estimated Material

Cost

Material Cost as % of

Total Project Cost

1 Chemperi Crore INR 4.41 2.73 7.14 29%

2 Seethangoli Crore INR 4.23 0.20 4.43 44%

3 Thambalamanna Crore INR 7.66 12.50 20.16 61%

4 Pallom Ettumanoor Crore INR 10.10 12.52 22.62 36%

5 Kollam - Kottiyam Crore INR 0.00 27.02 27.02 50%


Crore INR 0.00 12.18 12.18 26%

7 Panthalacode Crore INR 5.35 0.00 5.35 24%

8 Vennakkara Crore INR 26.58 0.00 26.58 67%

Total Crore INR 58.33 67.15 125.48 43% Source: Investment Proposal / SBU- T DPR

It is observed that, percentage share of material cost varies from 16% to 67% for substation material costs and from 2% to 50% for transmission line material costs. The below chart shows the share of material costs for the New Capital Works projects.

Figure 68: KSEB Estimated Material Costs as a % of the total project cost of New Capital Works (for Substation and Transmission line)


The above variation in the share of material cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). As the component-wise cost varies even within similar projects, material cost is compared on a unit cost basis (i.e. INR/MVA for substation projects and INR/Ckt-km for transmission line projects), and the cost is tabulated below.

18%

42%

23%16%

24%

67%

11%

2%38%

20% 50%

26%

0%

10%

20%

30%

40%

50%

60%

70%

80%

Material Cost of Transmission Line as % of Total Project Cost

Material Cost of Substation as % of Total Project Cost

Final


PwC 210

Table 44: KSEB Estimated Total Material Cost per capacity for New Capital Works

S.N

0

Project Name


(MVA)

Line addition

(km)

Material Cost –

Substation

(Crore INR)

Substation Material Cost per

MVA

(Crore INR/MVA)

Material Cost - Line

(Crore INR)

Line - Material

Cost per km

(Crore INR/km)

Estimated Material

Cost

(Crore INR)

1 Chemperi 25 9.61 4.41 0.18 2.73 0.28 7.14

2 Seethangoli 25 0.6 4.23 0.17 0.20 0.33 4.43

3 Thambalamanna

32 12 7.66 0.24 12.50 1.04 20.16

4 Pallom Ettumanoor

40 37.16 10.10 0.25 12.52 0.34 22.62

5 Kollam - Kottiyam

- 11 - - 27.02 2.46 27.02


- 46.23 - - 12.18 0.26 12.18

7 Panthalacode 25 - 5.35 0.21 - - 5.35

8 Vennakkara 72 - 26.58 0.37 - - 26.58

Total 219 116.6 58.33 0.27

(Weighted Average)

67.15 0.58

(Weighted Average)

125.48


It is observed that the weighted average material cost per MVA is 0.27 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the substation material cost per MVA.

Note: The substation material cost of Kollam – Kottiyam and Mylatty - Vidhyanagar are ‘Zero’ as these projects involve only the construction/upgradation of Transmission line, and no substation is part of the proposal.

Figure 69: KSEB Estimated Substation - Material Cost per MVA for New Capital Works projects


It is observed that the material cost/MVA of Vennakkara project is the highest among the 8 New Capital Works projects under review. This may be because the Vennakkara project involves a transformer capacity of 72 MVA, which is the highest among the 8 projects.

Further, it is observed that the material cost/MVA of Thambalamanna and Pallom-Ettumanoor is 0.24 and 0.25 Crore INR/MVA respectively, which is almost similar due to similar capacities (32 and 40 MVA respectively).

Earlier, the cost per MVA of Chemperi, Seethangoli and Panthalacode were 0.22, 0.16 and 0.21 Crore INR/Ckt-km respectively, which is due to similar capacities (25 MVA). Therefore, clarification was requested and KSEB

0.18 0.17

0.24 0.25

0.00 0.00

0.21

0.37

0.27

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

in C

rore

IN

R/

MV

A


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responded that there is an error in the cost estimate for Seethangoli and Chemperi project because of which the variation was observed. In the case of Panthalacode, the higher cost per MVA is due to the higher number of 110kV feeder bays as compared to other projects.

The response from KSEB is mentioned below.

“On revisiting the estimate while giving clarification to the above-cited letter, certain discrepancies were noticed in the estimates of Seethangoli and Chemperi as follows:

• Seethangoli: Quantity of GI structure Column, Beam, etc was only 20 MT in lieu of 70 MT. On incorporating the above correction, the material cost for s/s portion comes to INR 4.23 crore. The S/s material Cost per MVA capacity comes to 0.17 Cr/MVA. The total estimate amount has not changed since the change adjusted from provision for tax.

• Chemperi: An Error crept in the Provision for disc insulator, which was corrected as 1.15 Lakh. Further, the rate of steel structures has been revised as 0.66 L/MT, as per the prevailing cost data which was earlier taken as 0.90 L/MT. With the above correction, the estimated amount for S/s material portion comes to INR 4.4 Cr and per MVA cost is 0.176 Cr/MVA. The total estimate 25 Cr is kept the same, balance kept as unforeseen

• Panthalakode: S/s Material cost to MVA ratio is high (0.21 Cr/MVA) when compared to that of Seethangoli and Chemperi since there are 8 nos 110kV feeder bays in this case, when compared to the other two substations which are having only two 110kV feeder bays each.”

Due to the error mentioned by KSEB, now the cost per MVA for Seethangoli and Chemperi project would get revised from 0.16 to 0.17 Crore INR/MVA and from 0.22 to o.18 Crore INR/MVA respectively.

In the case of Panthalacode, the cost variation in comparison to Seethangoli and Chemperi projects is majorly due to the increased number of 110kV feeder bays.

Further, from the review of material cost per Ckt-km, it is observed that the weighted average material cost per Ckt-km is 0.58 Crore INR, which has been considered as an internal benchmark for comparison.

The below chart represents the transmission line material cost per Ckt-km.

Figure 70: Transmission Line - Material Cost per Ckt-km for New Capital Works Projects


It is observed from the above graph, that the transmission line material cost for the projects Kollam- Kottiyam and Thambalamanna are 2.46 Crore INR/Ckt-km and 1.04 Crore INR/ Ckt-km respectively, which is higher (significant variation) than the internal benchmark value of 0.58 Crore INR. Further, it is observed that the Pallom-Ettumannoor project involves 37 km transmission line (110kV), yet, the material cost is 0.34 Crore INR/Ckt-km(within the benchmark value), whereas, the transmission line length of Thambalamanna and Kollam-Kottiyam is only 12 km and 11 km respectively. Therefore, the variabilities such as voltage level, terrain along the transmission line, type of conductor type and type of tower type among these projects were reviewed and the comparison is shown below.

0.28 0.33

1.04

0.34

2.46

0.260.00 0.00

0.58

0.00

0.50

1.00

1.50

2.00

2.50

3.00

in C

rore

IN

R/

Ck

t-k

m

Internal Benchmark value = 0.58 Crore INR/Ckt-km

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Table 45: Details of cost variable factors for concerned projects


Level Line

Line Length (km)

Line from and to Terrain Type of

Conductor

1

Pallom-Ettumanoor

(Reference Project)

110kV 37.16 Pallom-

Gandhinagar-Ettumanoor

Township

Area ACSR Wolf

2 Thambalamanna 110kV SC (UG) 12 Thambalamanna to Agasthiamuzhi Township Area

Single-core 630mm² XLPE UG cable

3 Kollam-Kottiyam

110kV (UG) 11 Kollam-Kottiyam Township Area

110kV, 630 mm2 Cable


It is noted that, Pallom – Ettumanoor project involves a 110kV transmission line, which passes through the township area and the conductor type used is ACSR Wolf.

Thambalamanna project involves a 110 kV transmission line, which passes through the township area and it is similar to the Pallom project and the conductor type used in the project is 630mm² XLPE UG cable. Though, the factors of Thambalamanna are similar to that of Pallom-Ettumanoor, the material cost per Ckt-km. is higher.

Further, the Kollam-Kottiyam project involves a 110 kV transmission line, which passes through the township area and it is similar to the Pallom project and the conductor type used is 630mm² XLPE UG cable. Though, the factors of Kollam-Kottiyam are similar to that of Pallom-Ettumanoor, the material cost per Ckt-km. is higher.

Further to the above observation, clarification was requested from KSEB regarding the high cost/Ckt-km of Thambalamanna and Kollam-Kottiyam project. The response from KSEB indicates that, Thambalamanna and Kollam-Kottiyam project involves UG cabling, which is the reason for the higher cost/Ckt-km.

The response from KSEB is gen below.

• Thambalamanna – Agasthiamoozhi 110kV SC line and Kollam - Kottiyam 110kV SC line are of UG cable whereas line to Chemperi is overhead and hence cannot be compared. The 630mm2 UG cable considered for Kollam – Kottiyam and Thambalamanna – Agasthiamoozhi are of different specifications and hence their rates vary. The one considered for Thambalamanna is Aluminum corrugated sheathed cable, the rate for which is taken as INR 25.62 Lakh /km, as per the purchase effected by CE(TN) in 2017 whereas the cable considered for Kollam – Kottiyam is Lead sheathed XLPE UG cable and the rate is taken as INR 68.62 Lakh/km as per the purchase rate for a similar work under Kollam Transmission circle viz. ( Kollam – Ayathil line work). The 110kV XLPE UG cable that was being used in KSEB Ltd is Lead sheathed and it is on an experimental basis, Corrugated Aluminum sheathed cable is proposed in Thambalamanna Project, to reduce the project cost.

It is observed from the KSEB response that, the higher cost of Thambalamanna and Kollam-Kottiyam project (more than benchmark value) is due to the UG cabling involved in these two projects. In addition, the reason for variation in the material cost/Ckt-km is due to the difference in the type of conductor to be used among these two projects.

5.4.2.2.2 Anticipated change in Material Cost

According to the cost estimate review, the total material cost is anticipated to increase from 125.48 Crore INR to 132.67 Crore INR, (5.73% increase based on the WPI of FY 18 & FY 19).

The KSEB estimated cost of individual projects and its anticipated project cost is tabulated below:

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Table 46: KSEB Estimated Project Cost of Individual Projects and its Anticipated Project Cost

S.N0.

Project Name Units Estimated

Material Cost Anticipated

Material Cost

% of deviation in Material

Cost

1 Chemperi Crore INR 7.14 7.55 5.73%

2 Seethangoli Crore INR 4.43 4.68 5.73%

3 Thambalamanna Crore INR 20.16 21.31 5.73%

4 Pallom Ettumanoor Crore INR 22.62 23.92 5.73%

5 Kollam - Kottiyam Crore INR 27.02 28.57 5.73%

6 Mylatty - Vidhyanagar Crore INR 12.18 12.88 5.73%

7 Panthalacode Crore INR 5.35 5.66 5.73%

8 Vennakkara Crore INR 26.58 28.11 5.73%

Total Crore INR 125.48 132.67 5.73% Source: Investment Proposal / SBU- T DPR, KSEB SOR, KPTCL SOR, JUSNL SOR

5.4.2.3 Project-wise Labour, Civil and Erection Cost and anticipated change in the expenditure

In this section, the estimated labour, civil and erection cost as given in the investment proposal is reviewed and its observations are presented in this subsection. Further, using the methodology mentioned in Section 5.3.2, the anticipated labour, civil and erection cost is computed.

5.4.2.3.1 Appraisal of KSEB estimated Labour, Civil and Erection Cost in the investment proposal

The total estimated cost of labour, civil and erection works for the 8 New Capital Works projects amounts to 68.29 Crore INR. This accounts for 23% of the total project costs. Among the projects, there is a significant variation in the share of labour, civil and erection cost with respect to total project cost. The labour, civil and erection costs for the New Capital Works projects are tabulated below:

Table 47: KSEB Estimated Cost of Labour, Civil and Erection works for New Capital Projects

S.N0. Project Name Units Labour, Civil & Erection Cost

Labour, Civil & Erection Cost as %

of Total Project Cost

1 Chemperi Crore INR 6.50 26%

2 Seethangoli Crore INR 3.21 32%

3 Thambalamanna Crore INR 6.71 20%

4 Pallom Ettumanoor Crore INR 24.45 39%

5 Kollam - Kottiyam Crore INR 10.87 20%

6 Mylatty - Vidhyanagar Crore INR 7.60 16%

7 Panthalacode Crore INR 3.06 14%

8 Vennakkara Crore INR 5.88 15%

Total Crore INR 68.29 23% Source: Investment Proposal / SBU- T DPR

It is observed that, percentage share of labour cost varies from 14% to 39%. The below chart shows the share of labour, civil and erection costs for the 8 New Capital Works projects.

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Figure 71: Labour, Civil and Erection Cost as % of Total Project Cost


The significant variation in the share of labour, civil and erection cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). Therefore, to compare the cost across the projects, the labour, civil and erection cost per capacity is computed and tabulated below (in INR/MVA for substation and in INR/Ckt-km for transmission line respectively). However, unlike the material cost breakup, the separate labour, civil and erection cost breakup for substation and transmission lines are not clearly available in some of the investment proposals. Hence, the labour cost component for substation and labour cost component for the line part is not differentiable. So, the total labour, civil and erection cost for a project is considered for computing the labour cost per unit of capacity for both substation and transmission line.

Table 48: KSEB Estimated Labour, Civil and Erection Cost per capacity for New Capital Works

S.N0.

Project Name


(MVA)


(km)

Estimated Labour, Civil &

Erection Cost

(Crore INR)

Labour Cost per MVA

(Crore INR/MVA)

Labour Cost per Ckt-km

(Crore

INR/Ckt-km)

1 Chemperi 25 9.61 6.50 0.26 0.68

2 Seethangoli 25 0.6 3.21 0.13 5.35

3 Thambalamanna 32 12 6.71 0.21 0.56

4 Pallom Ettumanoor 40 37.16 24.45 0.61 0.66

5 Kollam - Kottiyam - 11 10.87 - 0.99


- 46.23 7.60 - 0.16

7 Panthalacode 25 - 3.06 0.12 -

8 Vennakkara 72 - 5.88 0.08 -

Total 219 116.6 68.29 0.31

(Weighted Average)



Note: The substation labour cost of Kollam – Kottiyam and Mylatty-Vidhyanagar are ‘Zero’ as these projects involve only the construction/upgradation of the Transmission line. And, the transmission line labour cost of Panthalacode and Vennakkara are ‘Zero’ as these projects involve only the construction/upgradation of Substation.

It is observed that the weighted average labour cost per MVA is 0.31 Crore INR, which has been considered as the benchmark value. The below chart represents the labour cost per MVA.

26%32%

20%

39%

20%16% 14% 15%

0%

10%

20%

30%

40%

50%

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Figure 72: KSEB Estimated Labour, Civil and Erection Cost per MVA for New Capital projects


The proposed capacity addition in the Pallom-Ettumanoor project is 40 MVA, whereas the capacity addition for that of Vennakkara is 72 MVA. It is observed that the labour cost/MVA for the Vennakkara project is 0.08/MVA, which is the lowest among the 8 New Capital Works projects. Whereas, the labour cost/MVA for Pallom-Ettumanoor project is 0.61 Crore INR/MVA, which is the highest among the 8 New Capital Works projects.

It is also seen that Seethangoli and Panthalacode projects have similar labour cost/MVA of 0.13 Crore INR/MVA and 0.12 Crore INR/MVA. This similarity may be because, both the projects have the same capacity of 25 MVA. Whereas, the labour cost/MVA of the Chemperi project is 0.26 Crore INR/MVA, even though the proposed capacity is 25 MVA (same as that of Seethangoli and Panthalacode projects).

From the review of labour costs per Ckt-km., it is observed that the weighted average value for all projects is 0.59 Crore INR, which has been considered as the benchmark value. The below chart represents the labour cost per Ckt-km.

Figure 73: Estimated Labour, Civil and Erection Cost per Ckt-km. for New Capital Works Projects


Note: For the Seethangoli project, the labour cost per unit Ckt-km. is 5.35 Crore INR which is due to the construction of line for an insignificant length of 0.6 km.

0.26

0.13

0.21

0.61

0.00 0.00

0.120.08

0.31

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70in

Cro

re I

NR

/MV

A


0.68

5.35

0.56 0.660.99

0.16 0.00 0.00

0.59

0.00

1.00

2.00

3.00

4.00

5.00

6.00

in C

rore

IN

R/C

kt-

km


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It is also seen that the proposed capacity of both Thambalamanna and Kollam-Kottiyam is similar (~12km). Also, there are other similarities between Thambalamanna and Kollam-Kottiyam in terms of voltage level (110kV), type of conductor used (630mm² UG cable) and type of terrain (Township area). However, the labour cost per Ckt-km of Thambalamanna is 0.56 Crore INR/Ckt-km, which is closer to the benchmark value, whereas, the labour cost per Ckt-km of Kollam-Kottiyam is 0.99 Crore INR/Ckt-km. This variation may be because of other factors such as differences in technology or geographical locations, which is not inferable from the investment proposals.

Further to the above observation, clarification was requested from KSEB regarding the variation in the cost per Ckt-km of Thambalamanna and Kollam-Kottiyam project. The response from KSEB indicates that the reason for the variation in cost is because the specific type of conductor used in these two projects are different.

The response from KSEB, is given below.

• “The ratio of labour cost per Ckt km for Kollam- Kottiyam cable circuit is high as the cost of Lead sheathed 110kV XLPE UG cable is high when compared to OH lines and Aluminium corrugated sheathed 110kV UG cable. (For DPR estimate purpose, erection charges are taken generally 7.5% of material cost)”

It is observed from the KSEB response that, the type of the conductor used in Kollam-Kottiyam is different from that of other projects and also, the cost of the conductor in Kollam-Kottiyam project is higher than that of other projects. Further, as a part of the prevailing practice, KSEB adopts the methodology of deriving the labour and erection cost as 7.5% of the material cost. Hence, due to the higher conductor cost of Kollam-Kottiyam, the labour cost per Ckt-km for Kollam-Kottiyam project is higher than that of other projects.

5.4.2.3.2 Anticipated change in Labour, Civil and Erection Cost

According to the cost estimate review, the total labour, civil and erection cost is anticipated to increase from 68.29 Crore INR to 95.60 Crore INR, which is 40% higher than that of the original estimated cost. The KSEB estimated labour, civil and erection cost of individual projects and its anticipated cost is tabulated below:

Table 49: New Capital Works – KSEB Estimated Labour, Civil and Erection Cost vs. Anticipated Cost

S.N0. Project Name Units Estimated Labour,

Civil & Erection Cost

Anticipated Labour, Civil & Erection Cost

1 Chemperi Crore INR 6.50 9.10

2 Seethangoli Crore INR 3.21 4.49

3 Thambalamanna Crore INR 6.71 9.40

4 Pallom Ettumanoor Crore INR 24.45 34.23

5 Kollam - Kottiyam Crore INR 10.87 15.22

6 Mylatty - Vidhyanagar Crore INR 7.60 10.64

7 Panthalacode Crore INR 3.06 4.29

8 Vennakkara Crore INR 5.88 8.24

Total Crore INR 68.29 95.60 Source: Investment Proposal / SBU- T DPR, DSR 2018

Note: The detailed item-wise labour costs are not available in the investment proposal. Hence, the labour cost review was not able to be reviewed for New Capital Works. However, the average escalation in the labour, civil and erection cost for the TRANSGRID 2.0 projects is found to be 40%. Therefore, this escalation rate of 40% is used for the calculation of anticipated labour, civil and erection costs of ‘New Capital Works’.

5.4.2.4 Project-wise Tax estimates and anticipated change in the Tax

5.4.2.4.1 Appraisal of KSEB estimated tax

In the investment proposal, the tax was estimated in the following manner:

i. For the material costs, the tax was included in the item cost.

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ii. For Labour, Material and Erection costs, the corresponding tax was estimated based on the applicable tax rates at the time of the estimate (VAT has been considered in some of the investment proposals and majorly service tax has been applied).

iii. For other costs, the tax was included in the item cost.

The total estimated tax for the 8 New Capital Works projects amounts to 26.11 Crore INR. This accounts for 9% of the total project cost. The estimated tax for the 8 projects is tabulated below:

Table 50: KSEB Estimated Tax for New Capital Projects

S.N0. Project Name Units Taxes Tax as % of Total

Project Cost









Total Crore INR 26.11 9% Source: Investment Proposal / SBU- T DPR

5.4.2.4.2 Anticipated change in the Tax

The anticipated tax for the New Capital Works projects using the methodology mentioned in section 5.3.3 is shown below:

Table 51: New Capital Works - Anticipated Tax

S.N0. Project Name Units Anticipated Tax for Labour, Civil and

Erection

1 Chemperi Crore INR 1.62

2 Seethangoli Crore INR 0.81

3 Thambalamanna Crore INR 1.69

4 Pallom Ettumanoor Crore INR 6.16

5 Kollam - Kottiyam Crore INR 2.74

6 Mylatty - Vidhyanagar Crore INR 1.92

7 Panthalacode Crore INR 0.77

8 Vennakkara Crore INR 1.48

Total Crore INR 17.20 Source: Investment Proposal / SBU- T DPR, GST Rate data

The anticipated tax is computed as 17.20 Crore INR (18% applicable GST for Labour costs) and this is around 9 Crore INR less than the KSEB estimated tax.

5.4.2.5 Project-wise compensation (Land, RoW and Tree cutting)

KSEB Estimated compensation of the 8 New Capital Works projects under review amounts to 5.08 Crore INR. This accounts for 2% of the total project costs. The compensation for the 8 projects is tabulated below:

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Table 52: New Capital Works Projects – KSEB Estimated Compensation

S.N0. Project Name Units Compensation (Tree Cutting &

RoW)

Compensation as a % of Total Project

Cost











5.4.2.6 Project-wise - Other Cost components and anticipated change in expenditure

5.4.2.6.1 Appraisal of KSEB estimated Other Costs

The other cost components such as Land Purchase, Statutory approvals, and other miscellaneous costs are referred to as ‘Other costs. ‘Other costs’ amounts to 68.40 Crore INR. This accounts for 23% of the total New Capital Works costs. The estimated ‘other costs’ for the New Capital Works projects are tabulated below:

Table 53: KSEB Estimated ‘Other Costs’ for New Capital Works Projects

S.N0. Project Name Units Other Costs Other Costs % of

Total Project Cost





5 Kollam – Kottiyam Crore INR 14.24 26%

6 Mylatty – Vidhyanagar Crore INR 19.61 42%





Land Purchase

Out of 8 New Capital Works, there are 4 projects, which require the purchase of new land for the purpose of construction of substation, and the details are as below.

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Table 54: New Capital Works – Land Purchase details


(Acres) Type of Substation Transformer Capacity (MVA)

1 Chemperi 3.04 AIS 25

2 Seethangoli 2.4 GIS 25

3 Vennakkara 0.66 GIS 72

4 Pandalacode 0.35 AIS 25


It appears that the land parcel considered under Chemperi and Seethangoli projects is relatively on the higher side.

Further to the above observation, clarification was requested from KSEB regarding the proposed land requirement. The response from KSEB indicates that the proposed land requirement for Seethangoli project is necessary as the project is now changed to AIS instead of GIS.

The response from KSEB is given below.

• “Seethangoli s/s is proposed as AIS and not GIS and hence the land requirement as proposed.”

5.4.2.6.2 Anticipated ‘Other Costs’

For computing the anticipated cost, the ‘other costs’ are considered as such without any changes.

5.5 The commercial impact of the proposed projects

In the previous sub-sections, the cost estimates were reviewed, and it was found that the cost of the 12 TRANSGRID 2.0 projects are anticipated to increase by 14.7%. Similarly, the cost of 8 New Capital Works projects is anticipated to increase by 8.7%. This anticipated increase in the project cost will impact the financial performance of the project. In this section, the financial assumptions, the impact of anticipated cost on debt-equity requirements and the financial performance of proposed projects are discussed.

5.5.1 Appraisal of Financial Assumptions

The list of assumptions in the calculation of the financial returns in the investment proposal and its range of values across the projects is shown below:

Table 55: Financial Assumptions considered in the investment proposal

S.No. Particulars Units Range of Values

Allowable values in KSERC Tariff Regulations, 2018

Remarks Sensitivity

on IRR

1 Interest Rate on loans

% 9% - 10 %

-

Considering the present (FY 18) profitability of KSEB, the interest rate assumption of 9% is unlikely to be conservative. The rate between 10% to 10.75% may be a reasonable assumption.

1% change in interest rate has an impact of about 0.2% on the IRR

2 Loan repayment period

Years 12 years - Nominal Assumption -

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S.No. Particulars Units Range of Values

Allowable values in KSERC Tariff Regulations, 2018

Remarks Sensitivity

on IRR

3 Depreciation rate (with life 35 years)

% 5.28% 5.28% Nominal Assumption -

4 Interest on Working Capital Loan

% 12% - Nominal Assumption -

5 Return on Equity % 15.50% 14% Not as per regulations -

6 O&M Cost (as a % of capital cost)

% 1% - 2%

INR 10.71 Lakh/bay &

INR 0.93 Lakh/Ckt-km

(for FY 19)

Not as per regulations -

7

O&M cost escalation (for subsequent years)

% 5.85% 4.84% Not as per regulations -

8 Discount Rate % 10% - Nominal Assumption -

9 Transmission tariff

INR / Unit

0.37 - 0.47

- As per approved transmission

charges -

10 Annual energy transmission growth rate

% 5% -

The average annual growth of energy demand in the state is about 3.5% between FY 14 and FY 19. Hence, 5% is slightly higher.

1% change in energy sale will have an impact of about 1.2% on the IRR

11 Cost of power purchase

INR / Unit

3.5 - As per approved transmission charges

-

12 Debt:Equity Ratio of TRANSGRID 2.0 Projects

- 70:30 70:30 As per KSERC regulations -

13 Debt: Equity Ratio of New Capital Works

- 100:0 70:30 Not as per regulations -


Deviations in the financial assumptions in Investment proposals vis-à-vis Tariff Regulations

Financial Assumptions considered in the investment proposals that deviate from the KSERC Tariff Regulations, 201815 are listed below:

15 KSERC Tariff Regulations, 2018 - http://www.erckerala.org/regulations/Tariff%20regulations%202018%20web.pdf

http://www.erckerala.org/regulations/Tariff%20regulations%202018%20web.pdf

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i. Return on Equity – ROE is considered as 15.5% in the investment proposals as against 14% (as per Regulation 28). Considering a higher ROE may inflate the financial indicators (IRR and NPV).

ii. O&M costs - Tariff regulations prescribe O&M costs on the basis of ‘Cost per bay’ for substation projects and ‘Cost per Ckt-km’ for transmission line projects (as per Annexure VIII of Tariff Regulations).

Table 56: Annexure-VIII of Tariff Regulations, 2018 - O&M norms for the transmission business of KSEB and transmission licensee

Source: KSERC Tariff Regulations, 2018

In the project description of some investment proposals, it is mentioned that the O&M costs have been considered as per the regulations. However, in the cost-benefit analysis of all the investment proposals, the O&M cost has been considered as 2% of the total project cost. Comparison of O&M cost considered by KSEB in the investment proposals, vis-à-vis the allowable O&M costs as per Tariff regulations are tabulated in Table 61.

iii. O&M cost escalation – Tariff regulations prescribe O&M costs to be escalated by 4.84% each year. However, in the cost-benefit analysis of all the investment proposals, the escalation is considered as 5.84%. Considering a higher O&M escalation rate may deflate the financial indicators (IRR and NPV).

Observations on review of financial models of TRANSGRID 2.0 and New Capital Works projects

The observations regarding the computation of financial indicators in the investment proposal, that might affect the correctness of the calculation is as below:

a. In the TRANSGRID 2.0 projects, there were inconsistencies and discrepancies within the DPR (Investment Proposal) about the financial indicators (IRR & NPV) assumptions especially technical benefits (Peak loss savings & Additional sale of energy). The discrepancies are majorly among following sections in the DPR (Investment Proposal):

i. Project Description;

ii. Annexure, and;

iii. CBA calculation spreadsheet

b. For example, in Chalakudy project DPR (Investment Proposal), the value of the peak loss savings is mentioned as 1.56 MW, but in Annexure 05B Cost-Benefit Analysis, the peak loss savings is mentioned as 10.08 MW. Further, in the project description, the additional sale of energy is not mentioned, but in Annexure 05B- Cost-Benefit Analysis, the additional sale of energy is mentioned as 387.54 MU. However, in the CBA calculation spreadsheet, the additional sale of energy is mentioned as 131.76 MU. Despite, the above discrepancy in the values, for the purpose of evaluation, for all the projects, the IRR value that is mentioned in the Project Description in the DPR (Investment Proposal) is assumed to be correct. And, the CBA spreadsheets are adjusted (in case of discrepancy) using the values mentioned in the Project Description / Annexure / CBA Spreadsheets that results in the IRR value mentioned in the Project Description. Using this corrected CBA spreadsheet, the anticipated IRR is calculated for the anticipated increased capital cost. In the case of the Chalakudy project, the additional sale of energy of 131.76 MU is considered to be correct as it results in the IRR value of 10.08% (approx.) given in the Project Description.

c. For the Ernad project, the CBA spreadsheet is not available. Hence, the spreadsheet of another project has been used by changing the input variables pertaining to the Ernad project for the purpose of computing the anticipated financial indicators. However, the financial indicators computed in the created spreadsheet did not match with the values as mentioned in the investment proposal. Hence, the

Control Period

2018-19 2019-20 2020-21 2021-22

O&M cost for Bay (Lakh INR/Bay)

10.71 11.23 11.77 12.34

O&M cost per Circuit km (Lakh INR/Ckt-km)

0.93 0.98 1.03 1.08

Final


PwC 222

financial indicators (NPV and IRR) as estimated by KSEB for Ernad in the investment proposal, has been revised and corrected values are presented in Section 5.5.3.

d. In the NRHTLS investment proposal, the technical benefits are not provided. Further, the CBA spreadsheet is not available. Hence, the spreadsheet of another project has been used by changing the input variables pertaining to NRHTLS project (whichever information available) for the purpose of computing the anticipated financial indicators. Further, there are discrepancies in the data within the investment proposal document, which are mentioned below:

• In Chapter 1- Project Summary, the total project cost is mentioned as 89.13 Crore INR. But, in Chapter 4, the project cost is mentioned as 79.54 Crore INR.

• In Chapter 1- Project Summary, the PSDF grant is mentioned as 75% and the remaining is beneficiary contribution of 22.28 Crore INR. However, in Chapter-4 and Annexure A4, the beneficiary contribution is considered as 28.41 Crore INR. Hence, clarification was sought from KSEB and as per response, the total project cost is 89.12 Crore INR and PSDF grant is 66.85 Crore INR (75%PSDF grant).

Due to the above changes, the financial indicators (NPV and IRR) as estimated by KSEB for NRHTLS in the investment proposal, has been revised and corrected values are presented in Section 5.5.3.

e. For the Thalassery investment proposal, the CBA spreadsheet is not available. Hence, we computed the anticipated financial indicators using a spreadsheet of another project. However, there are discrepancies in the data within the investment proposal document, which are mentioned below:

• The investment proposal is about the Thalassery Project (Construction of GIS & Upgradation of Transmission line from Mundayad - Thalassery). However, Annexure A2, A3 and A4 are pertaining to the North Malabar Lines Package, which is a bigger project that includes Thalassery Project. The project cost details mentioned in the project description and in the Annexures do not match, therefore, for the purpose of capex appraisal, the values mentioned in the Project Description have been considered.

• In Annexure A7 - cost-benefit analysis, the project cost is mentioned as 106.28 Crore INR which does not match with the project cost given in the project description, 133.48 Crore INR. Therefore, the purpose of capex appraisal, the values mentioned in the Project Description have been considered.

Due to the above changes, the financial indicators (NPV and IRR) as estimated by KSEB for Thalassery in the investment proposal, has been revised and corrected values are presented in Section 5.5.3.

For our analysis, the above-mentioned assumptions are taken as such without any deviation.

5.5.2 Impact on Debt-Equity requirements of proposed investment projects

5.5.2.1 TRANSGRID 2.0 projects

The KSEB estimated total project cost of the 12 TRANSGRID 2.0 projects, as given in the investment proposal is 2,527.55 Crore INR. The total project cost is anticipated to increase by 14% to 2,899.16 Crore INR. The increase in the anticipated cost of the major components of the total project cost is summarized below:

Table 57: TRANSGRID 2.0 – KSEB Estimated vs. Anticipated Cost of Major components

S.No

. Particulars Units

KSEB Estimated Cost

Anticipated Cost

% increase

1 Material Cost Crore INR 1,367.88 1,446.26 5.73%

2 Labour, Civil & Erection Cost Crore INR 613.12 865.86 41.22%

Final


PwC 223

S.No

. Particulars Units

KSEB Estimated Cost

Anticipated Cost

% increase

3 Total Project Cost (including other costs)

Crore INR 2,527.55 2,899.16 14.70%


The change in the debt and equity for each of the TRANSGRID 2.0 projects is presented below. As mentioned above, the assumption of the D:E ratio (70:30) as given in the investment proposal is taken as such for the calculation of anticipated debt and equity.

Table 58: Anticipated Debt & Equity for TRANSGRID 2.0 projects excluding grant

S.No.

Project Name Units

Anticipated

Total Project Cost

Debt: Equity Ratio

Debt Equity

1 Aluva Crore INR 188.20 70:30 131.74 56.46

2 Chalakudy Crore INR 81.66 70:30 57.16 24.50

3 Kaloor Crore INR 181.39 70:30 126.97 54.42

4 Kothamangalam Crore INR 442.68 70:30 309.88 132.80

5 Kottayam Crore INR 553.85 70:30 387.70 166.16

6 Kunnamangalam Crore INR 96.75 70:30 67.73 29.03

7 Kunnamkulam Crore INR 139.77 70:30 97.84 41.93

8 Thalassery Crore INR 153.42 70:30 107.39 46.03

9 Manjeri Crore INR 49.64 70:30 34.75 14.89

10 Kolathanadu Crore INR 317.38 70:30 222.17 95.21

11 NRHTLS Crore INR 32.17 70:30 22.52 9.65

12 Ernad Crore INR 261.54 70:30 183.08 78.46

Total Crore INR 2,498.45

1,748.91 749.53


5.5.2.2 New Capital Works

The estimated total project cost of the 8 New Capital Works projects, as given in the investment proposal is 293.35 Crore INR. The total project cost is anticipated to increase by 8.72% to 318.88 Crore INR. The increase in the anticipated cost of the major components of the total project cost is summarized below:

Table 59: 8 New Capital Works – KSEB Estimated vs. Anticipated Cost of Major components

S.No.

Particulars Units KSEB

Estimated Cost Anticipated

Cost % increase

1 Material Cost Crore INR 125.48 132.67 5.73%

2 Labour, Civil & Erection Cost Crore INR 68.29 95.60 40%


Crore INR 293.35 318.88 8.72%


On extrapolating the above escalation rate of 8.72% to the remaining projects in New Capital Works, the KSEB estimated project cost increases from 1,153.44 Crore INR to 1,235.43 Crore INR.

Note: The anticipated cost of Reliable communication project of the New Capital Works project is taken as such without any changes, for computing the anticipated cost. It is a communication project unlike the other projects of the New Capital Works, hence the same escalation of 8.72% is not applicable to this project.

Final


PwC 224

The change in the debt and equity for each of the New Capital Works projects is presented below. As mentioned above, the assumption of the D:E ratio (100:0) as given in the investment proposal is taken as such for the calculation of anticipated debt and equity.

Table 60: Anticipated Debt & Equity for New Capital Works Projects

S.N0 Project Name Units Anticipated Total Project

Cost

Debt: Equity Ratio

Anticipated Debt

Anticipated Equity

1 Chemperi Crore INR 27.18 100:0 27.18 0

2 Seethangoli Crore INR 10.92 100:0 10.92 0

3 Thambalamanna Crore INR 36.15 100:0 36.15 0

4 Pallom Ettumanoor Crore INR 67.41 100:0 67.41 0

5 Kollam - Kottiyam Crore INR 59.12 100:0 59.12 0

6 Mylatty - Vidhyanagar Crore INR 51.10 100:0 51.10 0

7 Panthalacode Crore INR 24.12 100:0 24.12 0

8 Vennakkara Crore INR 42.95 100:0 42.95 0

9 Ambalavayal Crore INR 13.66 100:0 13.66 0

10 Edarikode-Parappanagadi Crore INR 14.79 100:0 14.79 0

11 Kunnamangalam-

Thamarassery Crore INR

17.40 100:0

17.40 0

12 Kuthumunda Crore INR 33.70 100:0 33.70 0

13 Malappuram Crore INR 63.06 100:0 63.06 0

14 Mankada Crore INR 13.79 100:0 13.79 0

15 Mankava Crore INR 12.89 100:0 12.89 0

16 Pulikkal Crore INR 14.13 100:0 14.13 0

17 Reliable Communication & Data Acquisition System

Crore INR 212.45

100:0 212.45

0

18 Solar Park Ambalathara Crore INR 36.58 100:0 36.58 0

19 Vengallur Crore INR 45.66 100:0 45.66 0

20 Chandranagar Crore INR 21.07 100:0 21.07 0

21 Ettumanoor Crore INR 18.16 100:0 18.16 0

22 Koothattukulam Crore INR 14.43 100:0 14.43 0

23 Koothattukulam-Kuravilangad

Crore INR 19.30

100:0 19.30

0

24 Kothamangalam-Koothattukulam

Crore INR 13.26

100:0 13.26

0

25 Malampuzha Crore INR 16.16 100:0 16.16 0

26 Pala - Ettumanoor Crore INR 13.75 100:0 13.75 0

27 Pattambi Crore INR 22.40 100:0 22.40 0

28 Pudukkad Crore INR 12.18 100:0 12.18 0

Final


PwC 225

S.N0 Project Name Units Anticipated Total Project

Cost

Debt: Equity Ratio

Anticipated Debt

Anticipated Equity

29 Vazhoor Crore INR 12.77 100:0 12.77 0

30 Viyyur-Ollur Crore INR 14.57 100:0 14.57 0

31 CHITHARA Crore INR 11.96 100:0 11.96 0

32 Kuttanad Crore INR 15.06 100:0 15.06 0

33 Edamon anchal ayur Crore INR 41.07 100:0 41.07 0

34 Karunagappally Crore INR 17.94 100:0 17.94 0

35 Kowdiar Crore INR 36.42 100:0 36.42 0

36 Kayamkulam to Karunagapally

Crore INR 44.47

100:0 44.47

0

37 Palode Crore INR 17.40 100:0 17.40 0

38 Punnapra-Allappuzha Crore INR 17.40 100:0 17.40 0

39 TVT Crore INR 58.71 100:0 58.71 0

Total Crore INR 1,235.43 1,235.43 0


5.5.3 Financial performance of proposed investment projects

5.5.3.1 TRANSGRID 2.0 Projects

As mentioned earlier, the financial assumptions (ROE, O&M cost and O&M cost escalation) considered in the investment proposals deviate from the KSERC Tariff Regulations, 2018. In the project description of some investment proposals, it is mentioned that the O&M costs have been considered as per the regulations. However, in the cost-benefit analysis of all the investment proposals, the O&M cost has been considered as 2% of the total project cost. The comparison of O&M cost as per investment proposal and the allowable O&M cost as per tariff regulations is tabulated below:

Table 61: KSEB estimated O&M cost vs. Allowable O&M cost for the first year of operation

S.No Project Name Project Type

Total No. of

Bays (a)

Transmission Line

Length (km) (b)

KSEB estimated O&M Cost

(Lakh INR/yr)

(c)

Allowable O&M cost

under Tariff

Regulations (Lakh

INR/yr) (d)

Deviation (Lakh

INR/yr) (e)=(c)-

(d)

TRANSGRID 2.0

1 Aluva Line & Substation 16 11.1 336.0 181.7 154.3

2 Chalakudy Line & Substation 12 11.7 126.2 139.4 -13.2

3 Kaloor Line & Substation 8 11.5 330.8 96.4 234.4

4 Kothamangalam Line & Substation 20 86.6 741.8 294.7 447.1

5 Kottayam Line & Substation 31 42.7 1002.8 371.7 631.1

6 Kunnamangalam Line & Substation 5 7.7 164.4 60.7 103.7

7 Kunnamkulam Line & Substation 7 22.8 236.0 96.2 139.8

8 Thalassery Line & Substation 19 22.2 267.0 224.2 42.8

9 Manjeri Line & Substation 4 0.5 89.0 43.3 45.7

Final


PwC 226

S.No Project Name Project Type

Total No. of

Bays (a)

Transmission Line

Length (km) (b)


(Lakh INR/yr)

(c)

Allowable O&M cost

under Tariff

Regulations (Lakh

INR/yr) (d)

Deviation (Lakh

INR/yr) (e)=(c)-

(d)

10 Kolathanadu Line Upgradation 4 90.1 479.5 126.6 353.0

11 NRHTLS Line Upgradation 14 77.0 178.3 221.6 -43.3

12 Ernad Line Upgradation 4 119.0 1103.3 153.5 949.8

Total 5,055.1 2,009.9 3,045.2

New Capital Works

1 Chemperi Line & Substation 6 9.6 50.0 73.2 -23.2

2 Seethangoli Line & Substation 4 1.5 20.0 44.2 -24.2

3 Thambalamanna Line & Substation 4 12.0 66.5 54.0 12.5

4 Pallom Ettumanoor

Line & Substation 2 37.2 124.0 56.0 68.0

5 Kollam - Kottiyam

Line Upgradation 2 11.0 108.7 31.7 77.1


Line Upgradation 6 46.2 94.0 107.2 -13.2

7 Panthalacode Substation 11 0.0 44.4 117.8 -73.5

8 Vennakkara Substation 17 0.0 79.0 182.1 -103.1

Total 586.6 666.2 -79.6 Source: Investment Proposal / SBU- T DPR, PwC Analysis

In TRANSGRID 2.0 projects, it is observed that the total KSEB estimated O&M cost for the first year of operation is 50.55 Crore INR, whereas the allowable O&M cost as per tariff regulation norm is only 20.09 Crore INR. But, in New Capital Works, the allowable O&M cost under tariff regulation is 6.66 Crore INR, whereas the KSEB estimated O&M cost is only 5.86 Crore INR. Further, 8 projects out of the 20 projects under review, have allowable O&M cost higher than KSEB estimated O&M cost and the rest of the projects are vice-versa. To understand further, the details of the two projects are representatively analyzed below:

Table 62: Details of representative projects

Project

Project Cost

(Crore INR)

Bay Cost (Crore INR)

Bay cost as % of Project

Cost

No. of Bays

Line length (km)


(Crore INR)

Allowable O&M cost

under Tariff

Regulations (Crore INR)

Kaloor 165.39 15.25 9.2% 8 11.5 33.08 0.96

Vennakkara 39.5 17.25 43.7% 17 0 0.79 1.82

Source: Investment Proposal / SBU- T DPR, PwC Analysis

For the Kaloor project, though the number of bays is 8 and the bay cost is only around 9.2% of the project cost, the KSEB estimated O&M cost is 33.08 Crore INR, which is around 34 times higher than the allowable O&M cost of 0.96 Crore INR under the tariff regulation. But for Vennakara project, the number of bays is 17 and the bay cost forms a significant portion of the project cost (around 43.7%). However, the allowable O&M cost is 1.82 Crore INR under tariff regulation, which is around 2 times higher than the KSEB estimated O&M cost which is only 0.79 Crore INR.

Final


PwC 227

From the above observations, it appears that the tariff regulation based approach of O&M cost on ‘per bay’ basis, lacks clarity in terms of total number of bays to be considered, voltage ratings, capacity ratings and other equipment that forms part of the bay.

For the purpose of analyzing the financial performance of each projects, two major changes in the financial assumptions have been done in comparison with the investment proposal: (i) no financing costs are considered, as per recommendation from Hon’ble commission and (ii) the financial assumptions are corrected as per tariff regulations, 2018.

By changing the financial assumptions as per Tariff Regulations and without considering financing costs (as tabulated below), the IRR is increasing about 2-6% on an individual project basis.

Table 63: KSEB Estimated vs. Anticipated Financial Indicators with financial assumptions as per Tariff Regulations and without considering financing costs

S.No Project Name

KSEB Estimated

Project Cost excluding

grant (Crore INR)

KSEB Estimated

IRR (%)

Anticipated IRR (%)

KSEB Estimated

NPV (Crore INR)

Anticipated NPV

(Crore INR)

1 Aluva 168 7.04% 10.46% -79.79 9.46

2 Chalakudy 63.11 10.23% 15.26% 23.56 44.33

3 Kaloor 165.39 10.80% 14.94% 7.42 109.98

4 Kothamangalam 370.9 12.91% 16.94% 139.76 355.77

5 Kottayam 501.4 10.24% 14.98% 19.08 335.99

6 Kunnamangalam 82.19 12.61% 17.62% 35.26 87.26

7 Kunnamkulam 117.98 6.94% 11.24% -51.12 18.26

8 Thalassery 133.49 8.50% 11.73% -30.11 29.18

9 Manjeri 44.51 29.03% 34.92% 212.45 236.95

10 Kolathanadu 239.77 11.83% 16.99% 71.40 232.13

11 NRHTLS 22.28 78.42% 80.82% 260.89 237.53

12 Ernad 217.74 17.72% 23.08% 259.79 390.80

Total 2,126.76 868.59 2,087.64

Source: Investment Proposal / SBU-T DPR, PwC Analysis, KSEB SOR, KPTCL SOR, JUSNL SOR, DSR 2018

The comparison of KSEB estimated IRR and Anticipated IRR is shown below.

Final


PwC 228

Figure 74: KSEB Estimated IRR vs Anticipated IRR of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations


It is seen that, KSEB estimated IRR is greater than the acceptable range of 10% only for 9 projects. However, Anticipated IRR of all the 12 projects is greater than 10%, by changing the financial assumptions as per tariff regulations and without considering financing costs.

Similarly, the anticipated NPV of TRANSGRID 2.0 projects increase to 2,088 Crore INR from the KSEB estimated NPV of 869 Crore INR (as per investment proposals). The comparison of KSEB estimated NPV and Anticipated NPV is shown below.

Figure 75: KSEB Estimated vs Anticipated NPV of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations


7%10% 11% 13% 10% 13%

7% 9%

29%

12%

78%

18%10%

15% 15%17%

15%18%

11%12%

35%

17%

81%

23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

KSEBL Estimated IRR(%)

Anticipated IRR(%)

-80

24 7140 19 35

-51 -30

21271

261 260

869

9 44 110356 336

87 18 29237 232 238 391

2088

-500

0

500

1000

1500

2000

2500

KSEBL Estimated NPV(Crore INR)

Anticipated NPV(Crore INR)

Final


PwC 229

It is seen that KSEB estimated NPV was negative for 3 projects in TRANSGRID 2.0. However, Anticipated NPV of all 12 projects are positive, by changing the financial assumptions as per tariff regulations and without considering financing costs.


The KSEB estimated IRR and NPV of the New Capital Works Projects is tabulated below.

Table 64: KSEB Estimated financial indicators of New Capital Works Project

S.No Project Name IRR NPV

(Crore INR)

1 Chemperi 5.20% -10.74

2 Kollam - Kottiyam 4.20% -26.21

3 Mylatty - Vidhyanagar 5.50% -7.21

4 Seethangoli 29% 20.38

5 Thambalamanna 0.50% -23.5

6 Vennakkara <0% -47.62

7 Pallom - Ettumanoor 7.60% -13.66

8 Pandalacode <1% -20.05

9 Ambalavayal 3.70% -6.77

10 Edarikode-Parappanagadi 18.60% 12.35

11 Kunnamangalam-Thamarassery 10.40% 0.6

12 Kuthumunda 10.30% 0.88

13 Malappuram Not Provided Not Provided

14 Mankada 10.30% -1.71

15 Mankava 12.50% 2.94

16 Pulikkal Not Provided Not Provided

17 Reliable Communication & Data Acquisition System Not Provided Not Provided

18 Solar Park Ambalathara Not Provided Not Provided

19 Vengallur 7.10% Not Provided

20 Chandranagar 5.40% -7.86

21 Ettumanoor 7.20% Not Provided

22 Koothattukulam 8.10% -8.5

23 Koothattukulam-Kuravilangad 8.10% -8.5

24 Kothamangalam-Koothattukulam 8.10% -8.5

25 Malampuzha 11.90% 2.91

26 Pala - Ettumanoor 14.10% 5.23

27 Pattambi 12.80% 5.77

28 Pudukkad 1% -7.96

29 Vazhoor 5.90% -4.4

30 Viyyur-Ollur 6.30% -4.61

31 CHITHARA 7.50% -2.65

32 Kuttanad 22% 18.14

33 Edamon anchal ayur <1% -31.92

34 Karunagappally 6.70% -5.18

35 Kowdiar 8% -5.7

36 Kayamkulam to Karunagapally 0.10% -30.65

37 Palode 8.10% -2.76

38 Punnapra-Allappuzha 1.50% -10.92

39 TVT 3.60% -30.26 Source: KSEB SBU-T DPR

Final


PwC 230

Only about 10 projects out of 40 New Capital Works are having the IRR more than the cost of capital. i.e. 10%.

Figure 76: KSEB Estimated IRR of New Capital Works


5.20%

4.20%

5.50%

29%

0.50%

0%

7.60%

1%

3.70%

18.60%

10.40%

10.30%

10.30%

12.50%

7.10%

5.40%

7.20%

8.10%

8.10%

8.10%

11.90%

14.10%

12.80%

1%

5.90%

6.30%

7.50%

22%

1%

6.70%

8%

0.10%

8.10%

1.50%

3.60%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Chemperi

Kollam - Kottiyam


Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal



Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal



Vengallur

Chandranagar

Ettumanoor

Koothattukulam



Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

CHITHARA

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar


Palode

Punnapra-Allappuzha

TVT

10 Projects out of 40 have IRR more than cost of capital

Final


PwC 231

Most of the projects are having negative NPV under New Capital Works.

Figure 77: KSEB Estimated NPV of New Capital Works


Note:

It is to note that, majority of projects under New Capital Works are having IRR less than 10% and NPV is negative. Due to an anticipated increase in the capital cost, the IRR and NPV are further expected to get weaker.

-10.74

-26.21

-7.21

-23.5

-47.62

-13.66

-20.05

-6.77

-1.71

-7.86

-8.5

-8.5

-8.5

-7.96

-4.4

-4.61

-2.65

-31.92

-5.18

-5.7

-30.65

-2.76

-10.92

-30.26

-59.7 -49.7 -39.7 -29.7 -19.7 -9.7 0.3

Chemperi

Kollam - Kottiyam


Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal



Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal



Vengallur

Chandranagar

Ettumanoor

Koothattukulam



Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

CHITHARA

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar


Palode

Punnapra-Allappuzha

TVT

NPV (Crore INR)

Ax

is T

itle

Most projects are having negative NPV

Final


PwC 232

6. Assessment of SBU-T ability to undertake TRANSGRID 2.0 and New Capital Works Projects

The ability of SBU-T to implement the proposed transmission projects has to be assessed from the below mentioned three aspects which centric around resource required for implementation of the transmission works.

Figure 78: Aspects required for implementation of transmission works

6.1 Human Capital

The review of human capital resource allocation to the proposed TRANSGRID 2.0 is appraised in this section. The human capital information for proposed New Capital Works is not available for the appraisal. Hence, the assessment of the project under New Capital Works are not covered in this section.

6.1.1 Overview of SBU-T organization structure for TRANSGRID 2.0 Projects

Organizational structure for TRANSGRID 2.0 is structured into two circles TRANSGRID (North), Shoranur and TRANSGRID (South), Kalamassery. TRANSGRID North Circle consists of 31 personnel and TRANSGRID South Circle consist of 37 personnel, which are commonly headed by Deputy Chief Engineer of TRANSGRID, Shoranur. It is to note that the majority of TRANSGRID projects are concentrated in the northern circle which has relatively less human capital than the southern region.

Table 65: Projects under TRANSGRID Northern and Southern Circle

S.No TRANSGRID (North) Projects TRANSGRID (South) Projects 1 Ernad Lines Kaloor 2 Kunnamangalam Aluva 3 Kolathanadu Kottayam 4 Kunnamkulam Kothamangalam 5 Thalassery 6 Chalakudy 7 Manjeri 8 NRHTLS

The details of workforce deployed for the 12 projects of TRANSGRID 2.0 are shown below.

Figure 79: Workforce for TRANSGRID 2.0 Program

1. Human Capital

•Influencing Factors: •Availability of skilled resources•Team Availability• Relevant and Similar

Experience•Project Management,

Procurement and Implementation Skill

2. Materiality

•Influencing Factors: •Total Turnkey Project• Partial Turnkey Project

3. Finance

•Influencing Factors: •Availability of cash reserves• Creditworthiness of the utility

Final


PwC 233

Source: KSEB SBU-T

We understand from SBU-T that, the top management middle management and operation management shall minimum possess the experience in the below-mentioned domains.

Figure 80: Skillset required in each level of management

In order to comply with timely execution of the project, SBU-T shall undertake case to case assessment of resources and necessary deployments.

6.2 Materiality

As per the inputs from KSEB SBU-T, the proposed projects under TRANSGRID 2.0 program will be implemented through “Total Turnkey” projects. Hence, the SBU-T will not be involved in the procurement of materials required for the project implementation and it is under the scope of EPC player. As the proposed projects would be developed through total turnkey, the direct experience in procurement is not a must need skill for the operation team, however the same is necessary at middle and top management level to review the EPC progress.

SBU-T team for TRANSGRID 2.0 program has a capability of project management, which is a necessary skill required for implementing the proposed projects.

25%

28%

25%

25%

25%

17%

33%

25%

25%

25%

22%

17%

37%

43%

37%

37%

37%

33%

17%

37%

37%

37%

33%

33%

38%

29%

38%

38%

38%

50%

50%

38%

38%

38%

45%

50%

0% 20% 40% 60% 80% 100% 120%

Aluva

Chalakudy AIS and NSIP

Kaloor Upgradation

Kothamangalam

Kottayam Upgradation Pack

Kunnamangalam_NMLP

Kunnamkulam GIS

Thalassery Substation & Upgradation

Manjeri AIS

Kolathanadu Line Strengthening

NRHTLS

Ernad Lines

Top Management Middle Management Operational Management

Top Management

• Project Management• Project Supervision

• Procurement

•Project Execution•Past Experience in Similar Projects

Middle Management

• Project Supervision•Procurement

•Project Execution

•Past Experience in Similar Projects

Operation Management (On Ground Team)

•Project Supervision•Project Execution

•Past Experience in Similar Projects

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In the case of New Capital Works, the projects are to be implemented through partial turnkey. Details of designated team for New Capital Works and their skills were not available for the validation to assess the materiality impact that can impact the project progress in terms of cost overrun and time overrun.

6.3 Project Financing

As per the investment proposal, the debt and equity required for the proposed TRANSGRID 2.0 and New Capital Works program is about 2,642.17 Crore INR and 638.03 Crore INR which is likely to increases by about 2,984.34 Crore INR and 749.53 Crore INR, due to inflation and prevailing market price.

Table 66: Debt and equity of Transmission Projects- KSEB Estimate vs. Envisaged Revision

S. No.

Projects Capital Cost as per DPR excluding grant (Crore INR)

Envisaged Revision in Capital Cost excluding grant (Crore INR)

Equity16 Debt Total Equity Debt Total

1 TRANSGRID 2.0

638.03 1,488.73 2,126.76 749.53 1,748.91 2,498.45

2 New Capital Works

0 1,153.44 1,153.44 0 1,235.43 1,235.43

Total 638.03 2,642.17 3,280.2 749.53 2,984.34 3,733.88

Source: KSEB SBU-T and PwC Analysis

The detailed assessment of proposed capital cost and the envisaged revision in capital cost is discussed in Section 5 of this report.

As per the latest available financial statement17 (for FY 18) of the KSEB, the company is having the loss of 784 Crore INR18 which is not adequate to fund the above equity requirements for the proposed projects.

Table 67: Financial Position of KSEB for FY 18

S.No Parameters Unit Value

1 Revenue Crore INR 12,665.44

2 Expenditure Crore INR 13,449.54

3 Profit for FY 18 Crore INR -784.09

4 Total Assets Crore INR 30,560

Source: KSEB Annual Report for FY 18

It is mentioned in the investment proposal that; the debt part will be secured from Kerala Infrastructure Investment Fund Board (KIIFB) and there a few projects that are partially funded with grants. Given the financial position of KSEB from FY 16 to FY 18, the utility appears to be not holding enough financial reserves to fund the equity requirements for the proposed projects. There is a need to secure equity funding outside KSEB for implementing the proposed projects.

6.4 Progress achieved in FY 19 by SBU-T

16 In the investment proposals D:E ratio is assumed to be 70:30 for TRANSGRID 2.0, and 100:0 for New Capital Transmission Works. The same assumptions taken has been considered in our calculation of anticipated debt and equity. 17 Loss for the period FY 16 was 313.29 Crore INR and loss for the period FY 17 was 1,494.63 Crore INR. 18 KSEB Annual Report for FY 18 http://www.kseb.in/index.php?option=com_jdownloads&view=download&id=11384:seventh-annual-report-2017-2018&catid=80&Itemid=522&lang=en

http://www.kseb.in/index.php?option=com_jdownloads&view=download&id=11384:seventh-annual-report-2017-2018&catid=80&Itemid=522&lang=en


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For assessing the progress made until August 2019, the development of 12 projects of TRANSGRID 2.0 and 8 projects of New Capital Works has been reviewed based on the inputs received from KSEB SBU-T through questionnaire (Appendix-A.8) and the results are as discussed in below sub-sections.

6.4.1 TRANSGRID 2.0

Out of 12 TRANSGRID 2.0 projects, about 67% of projects (in terms of volume) are progressing as per the implementation plan indicated in the investment proposal and 33% projects (in terms of volume) are delayed off the track.

Figure 81: Progress Status of TRANSGRID 2.0 Projects (as on Sep 2019)


Further, the projects that are delayed from the implementation plan are Kottayam, Kunnamkulam, Thalassery and Kolathanadu, which got delayed about 13% to 25%. These delayed projects are exposed to time overrun, which in turn may end up in possible cost overrun as well.

In terms of project cost, 8 projects worth 1,534.91 Crore INR (~ 60%) are on on-track, and 4 projects mentioned above worth 992.64 Crore INR (~40%) are delayed by about one year.

The details of progress made by each project under TRANSGRID 2.0 are discussed in Appendix- A.7.


Out of eight New Capital Work projects, the details for one project were not provided. Hence, a totally seven projects have been evaluated, out of which 14% projects (in terms of volume) are progressing as per the implementation plan indicated in the investment proposal and 86% projects (in terms of volume) are delayed off the track which is significant.

Delayed33%

On-Track67%

Progress Status

25% 25% 25%

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Kottayam Kunnamkulam Thalassery Kolathanadu

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Figure 82: Progress Status of New Capital Works Projects (as of Sep 2019)


The projects that were delayed under New Capital Works are Kollam-Kottiyam, Seethangoli, Thambalamanna, Vennakkara, Pallom-Ettumanoor and Pandalacode. The magnitude of delay varies from 5% to 25% from the proposed implementation plan in the investment proposal. These delayed projects are exposed to time overrun, which in turn may end up in possible cost overrun as well.

In terms of project cost, 6 projects worth 221.31 Crore INR (~ 89%) are delayed by about one year and 1 project worth 25 Crore INR (~11%) is on-track.

The details of progress made by select New Capital Works Projects are discussed in Appendix-A.7.

It is to note that, that New Capital Works are more likely exposed to time overrun relative to TRANSGRID 2.0 projects.

6.5 Highlights of constraints experienced by KSEB SBU-T in FY 19 for implementing the projects

Some of the key constraints experienced by KSEB in implementing the proposed capital investment projects that result in delay are

Figure 83: Key constraints experienced by KSEB in implementing the proposed capital investment projects

The above reasons are the major factors that contributed to a delay in the implementation of the project, which needs to be targeted by the utility for effective implementation.

1.Approvals for floating the tender

2.Land Registration

3.RoW Issues

Delayed86%

On Track14%

Progress Status

25% 25%

5%

13%

25% 25%

0%

10%

20%

30%

Indicative Delay in Progress,%


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7. Summary

In the petition filed by SBU-T, the capital investment projects proposed under TRANSGRID 2.0 and New Capital Works program constitute about 66% of the total Gross Fixed Assets (GFA) proposed under the transmission business (excluding SLDC operations).

GFA proposed under TRANSGRID 2.0 is for 2,697.38 Crore INR which comprise of 12 projects and the GFA proposed under New Capital Works is 1,126.07 Crore INR which constitutes of 40 projects. Among the above projects, all 12 projects of TRANSGRID 2.0 and 10 Projects of New Capital Work is appraised as part of the assessment to evaluate its prudent and non-prudent position.

7.1 Summary of TRANSGRID 2.0 and New Capital Works program Appraisal results

There are three scenarios that are emerging out as a result of the appraisal of investment projects submitted by the SBU-T.

Figure 84: Scenario that is emerging out as a result of appraisal of investment projects

For the future investment proposals, the Hon’ble Commission shall consider all the above three scenarios for selecting the prudent proposal, however, in the case of the present TRANSGRID 2.0 projects (12 Nos.) and New Capital Work projects (40 Nos.), some of the projects have already commenced implementation. Hence, the Hon’ble Commission may consider either of the above three scenarios or combinations thereafter to approve the capital investment projects.

7.1.1 TRANSGRID 2.0 Projects

The prudent, non-prudent and non-deducible status of 12 TRANSGRID projects as per the identified three scenarios are as follows


In this scenario, two projects i.e. Aluva and Kunnamkulam are Non-Deducible due to lack of baseline information regarding quantification of downstream demand and improvement in performance.

• Investment proposal is considered as "prudent" when it scores the gross grading of 60 marks out of 100

Scenario 1

• Investment proposal is considered as "prudent" when it satisfies the gross grading of 60 marks out of 100 as well as minimum score requirements under "Compliance to CEA Transmission Planning Criteria" and "Need for Investment"

Scenario 2

• Investment proposal is considered as "prudent" when it satisfies the priority project selection criteria as mentioned in sub-section 4.5.1.3

Scenario 3

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In the investment proposals, the financial assumptions (namely, ROE, O&M cost and O&M escalation rate) deviate from the allowable assumptions as per KSERC Tariff Regulations, 2018, especially, the KSEB estimated O&M cost is higher than the O&M norms for most of the projects. The deviations in the financial assumptions are discussed in detail in Section 5.5.1. When the assumptions are corrected as per tariff regulations, the financial indicators (IRR and NPV) of all the TRANSGRID 2.0 projects appear to increase significantly, which improves the financial attractiveness of the projects. Due to increase in IRR, all the projects would score the maximum grade of 10 in the parameter ‘Financial Justification and Cost-Benefit Analysis’. Hence, the overall grade would increase, especially for Aluva (from 56 to 61 out of 100) and for Kunnamkulam (from 57 to 67 out of 100). However, depending on the actual O&M and other costs of these projects, the resulting financial indicators would vary accordingly.


In this scenario, all the projects are non-deducible as all the 12 projects have not scored the minimum score requirements of 20 marks out of total 25 under “Need for Investment” parameter and four projects namely Aluva, Kottayam, Kunnamkulam & Ernad has not scored the minimum requirements under “Compliance to CEA Transmission Panning Criteria” parameter.

Figure 86: TRANSGRID 2.0 Prudent, Non-prudent and Non-Deducible Investment Proposals under Scenario-2


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In this scenario, nine projects are envisaged to remove the N-1 constraint, however, all these projects are not fulfilling the minimum scorings required under “Need for Investment” as in above Scenario-2. Further, all non-deducible projects under scenario 1 are meeting a mandatory criterion for selection of priority project i.e. N-1 contingency.

Figure 87: TRANSGRID 2.0 N-1 Contingency Projects under Scenario-3


The priorities of projects to be pursued by KSEB SBU-T based on the scoring of projects under the parameter “Need for Investment” is as below [Note: 1 - Top Priority and 10 - Least Priority]

1. Manjeri (18 marks out of 25)

2. Kothamangalam (16 marks out of 25)

3. NRHTLS ( 15 marks out of 25)

4. Kunnamangalam (14 marks out of 25)

5. Thalassery and Kolathanadu ( 13 marks out of 25)

6. Kottayam and Kunnamkulam (12 marks out of 25)

7. Chalakudy (11 marks out of 25)

8. Aluva and Ernad (8 marks out of 25)

9. Kaloor (7 marks out of 25)

It is to note that, other than Kothamangalam, NRHTLS and Thalassery project, all other N-1 contingency projects are not sturdily justifying the need for investment with substantiating data in its investment proposal.

7.1.2 New Capital Works Projects

The prudent, non-prudent and non-deducible status of 8 New Capital Works projects as per the three scenarios are as follows


In this scenario, all project is prudent as its scores more than the minimum scoring requirements of 60 marks.

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Figure 88: New Capital Works Prudent, Non-Prudent and Non-Deducible Investment Proposals under Scenario-1



In this scenario, all the projects are non-deducible as all the 8 projects has not scored the minimum score requirements of 20 marks out of total 25 under “Need for Investment” parameter (Subsection 4.5.2.4.6) and no projects have breached the minimum score requirements under “Compliance to CEA Transmission Panning Criteria” parameter.

Figure 89: New Capital Works Prudent, Non-Prudent and Non-Deducible Investment Proposals under Scenario-2



In this scenario, three projects are envisaged to remove the N-1 constraint, however, all these projects are not fulfilling the minimum scorings required under the “Need for Investment” parameter as seen in above Scenario-2.

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Figure 90: New Capital Works – N-1 Contingency Projects under Scenario-3


The priorities of projects to be pursued by KSEB SBU-T based on the scoring of the project under the parameter “Need for Investment” is as below [Note: 1 - Top Priority and 10 - Least Priority]

1. Thambalamanna and Chemperi (17 out of 25 marks)

2. Seethangoli and Pallom-Ettumanoor (14 out of 25 marks)

3. Kollam-Kottiyam, Vennakkara and Panthalacode (13 out of 25 marks)

It is to note that, all N-1 contingency projects are not sturdily justifying the need for investment with substantiating data in its investment proposal.

7.1.3 Summary of project observations under TRANSGRID 2.0 and New Capital Works projects

7.1.3.1 Projects under TRANSGRID 2.0 projects

A. Aluva

Particulars Details Appraisal Observations

• Aluva project is proposed to meet the growing demand in Aluva region and to became Interstate power import point.

• In the existing Aluva substation, there is no breach in maximum and minimum voltage limit noted across months in FY 19, which indicates that there is no breach in prescribed limits.

• The proposed project is for the capacity of 2x200 MVA whereas the maximum demand reached during FY 19 in the existing Aluva sub-station is 99.15 MVA. The proposed capacity is four times higher than the maximum recorded demand in the Sub Station. In this regard, clarification was requested and KSEB responded that the LFS shows a loading of 106% for 2x100 MVA transformers, while the loading is 58% for 2x200 MVA transformers.

• It is noted from the public domain information (KSEB website) that; the prevailing capacity of the substation is 138.5 MVA. In FY 19, the SS is maximum loaded at about 72% (99.15 MVA/138.5 MVA), during the month of March, however, the proposed capacity is 400 MVA which may be due to the requirement of downstream SS which are connected to Aluva. However, the demand requirement of the downstream substation is not discussed in the load

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Particulars Details flow study to support the premise (i.e. Aluva substation as interstate import node).

In this regard, clarification was requested and KSEB responded that, according to LFS, the voltage profile of the Aluva substation will be poor in the base case scenario without the proposed upgradation. Therefore, it is opined that:

• the prudence of the Aluva project is ‘Non-deducible’, due to non-quantification of envisaged growing demand

• From the perspective of upcoming projects, the 4x capacity may be considered by the Hon’ble Commission, provided the capacity is utilized within the current control period, with an envisaged increase in demand. With reference to the LFS, the utility has also an option to consider 2x150 MVA in such loading scenario, instead of 2x200 MVA, which may be further deliberated with the utility.


Appraisal Result

Non-Deducible (Score: 56/100, Min Required Score: 60)

B. Chalakudy


• Chalakudy project is aimed at creating a backup power source to Thrissur District to satisfy the N-1 criteria by connecting with LPHEP - Madakathara 220 kV line.

• The load detail of Chalakuddy SS shows the need for increasing the capacity of the SS to operate at optimal loading (75%) against the present overloading of about 92%.

• However, quantification for the interruption due to present constraints is not provided.

• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 110 kV line is 123 kV. It is noted that the maximum voltage in FY 19 is within the prescribed limit.

• Similarly, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. It is noted that the minimum voltage reached in FY 19 is 107 kV which is within the prescribed limit.

Appraisal Result

Prudent (Score: 65/100, Min Required Score: 60)

C. Kaloor


• Kaloor project is proposed to relieve the overloading and satisfy the N-1 constraint by connecting to a secondary source. • As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is 123 kV. It is noted that, maximum voltage profile is within the prescribed limit. • In addition, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the minimum voltage has occurred during April with 91 kV, which is beyond the prescribed limits. • Load profile of Kaloor SS is partially available (i.e. Voltage profile is available but MVA details are not provided) for validation. It is noted that the prevailing capacity of Kaloor SS is about 113.5 MVA whereas the proposed capacity is 320 MVA. Justification for the proposed capacity is not discussed in detail in the investment proposal. Further to the clarification sought to KSEB, it is clarified that current peak demand in the region is about 60 MW and in the proposed project scenario, the substation is expected to be loaded at 58% (with a buffer of about

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Particulars Details 17% to operate at optimal loading of 75%) and accommodate the future growth in power demand. Therefore, during the approval of the project, the Hon’ble Commission may consider approving the project capacity, provided the surplus capacity is utilized through the anticipated additional demand to prevent the sub-optimal operation of the asset. • The loading of the transformer is averagely high across the months in FY 19. • It is also seen that quantification of benefits to meet the objectives is not completely connected (The envisaged objectives such as the reduction in the line loading and improvement in the voltage profiles of the concerned substations).

Appraisal Result


D. Kothamangalam and Chithirapuram Package


• Kothamangalam SS is loaded about 84% in FY 19, which is above the optimum loading of 75%. The proposed project is for the capacity of 200 MVA (220 kV/110 kV) + 80 MVA (stepping down 110kV/66 kV) at Kothamangalam and switching station at Chitharapuram for 50 MVA (220 kV/66 kV), however the prevailing load at Kothamangalam is 25.33 MVA for FY 19.

• The existing capacity of Kothamangalam Substation is 3x10 MVA (66/11kV) and there is no additional voltage level other than 66/11kV being observed from the ‘Power System Statistics FY 17. As per KSEB, the utility expects a short-term anticipated demand of 125 MVA which is about 5 times the existing peak load in FY 19 (i.e. 25.33 MVA). With the anticipated demand, the proposed capacity may be within the acceptable range, however, the utility shall ensure that the proposed capacity meet its growing demand in the immediate future (i.e. within FY 19 and FY 22) to avoid sub-optimal operation of the asset.

• It is also noted from the proposal that, project (Kothamangalam & Chitharapuram) is necessary to evacuate 500 MW from the proposed generation capacities, however, the quantum of capacity (out of proposed 500 MW) to be evacuated from Kothamangalam SS is not mentioned explicitly in the investment proposal.

• Further, as per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. It is noted that the minimum voltage for FY 19 is 56 kV which breaches the prescribed limit particularly during summer and onset of winter.

• In addition, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 66 kV line is 72.5 kV, whereas the maximum voltage in FY 19 for Kothamangalam SS is 69.4 kV which is within the CEA prescribed limit.

Appraisal Result


E. Kottayam Upgradation Package


• The project is aimed at removing the N-1 constraint by connecting to additional sources. •The existing capacity is 30 MVA, whereas the maximum load in the Kottayam substation is 20.87 MVA. This accounts for 69.5% loading (20.87/30 MVA). • Further, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 66 kV line is 72.5 kV. The maximum voltage reached by Kottayam SS is 71.6 kV during the month of July 18 in FY 19. Hence, there is no breach in the maximum voltage limit noted in FY 19. • Similarly, as per CEA Transmission planning criteria, the minimum voltage limit for 66 kV line is 60 kV. The minimum voltage reached during FY 19 is 64.7 kV which is within the prescribed limits.

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Particulars Details • Though the details for the N-1 constraint are not available in a quantified manner, however, projected demand scenario for Ettamanur, Thurayur and Kottam is described in the investment proposal in a qualitative manner.

Appraisal Result


F. Kunnamangalam – 220 kV GIS


• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. During the month of summer (i.e. April 18), the minimum voltage has reached 99.06 kV which slightly higher than the limits prescribed by the CEA. • It is noted from the public domain information that; the prevailing capacity of the substation is 80 MVA (110/66 kV) and 20 MVA (66/11 kV). In FY 19, the SS is maximum loaded at 42% (33.98 MVA/80 MVA), during the month of May, however, the proposed capacity is 200 MVA (which is 2.5 times of that of the existing capacity), which might be due to requirement of downstream SS which are connected to Kunnamangalam to serve Kunnamangalam town and Kozhikode district. The reason for the need of 2x100 MVA at existing 80 MVA Kunnamangalam SS is not explained in the investment proposal; given the maximum recorded demand in FY 19 is 33.98 MVA only. • Further to the clarification sought on proposed capacity, the utility responded that, it expects the near future loading of about 40% of the proposed capacity (i.e. 80 MVA [ 40% of 200 MVA]) due to the proposed upgradation. The existing demand is about 34 MVA in FY 19 and the anticipated near-term load is about 80 MVA, whereas the proposed capacity is 200 MVA. Therefore, it is recommended that the utility shall ensure the utilization of the proposed capacity with the anticipated additional power demand, to prevent any sub-optimal utilization of the asset.

Appraisal Result


G. Kunnamkulam 220/110 kV GIS


• The proposed project was envisaged to satisfy the N-1 criteria, and the proposed capacity for the sub-station (i.e. 2x100 MVA) is higher than the prevailing load of the existing Kunnamkulam substation. Further, the justification for the proposed capacity i.e. 2x100 MVA SS is not clear in the investment proposal. Consequent to the clarification sought to KSEB, it is informed by the SBU-T that, the demand is expected to grow by another 35 MVA (total 66 MVA), after upgradation to 220 kV. Therefore, it is inferred that

▪ the N-1 criteria would be satisfied by the line upgradation. However, the quantification for the improvement in performance (removing N-1 constraint) is not traceable. Hence the prudency of the Kunnamkulam project is ‘Non-deducible’ due to lack of the above information.

▪ the proposed 2x100 MVA transformers will be working in parallel whereas the expected demand in the immediate future (as anticipated by the utility) is about 66 MVA only. It is noted that the anticipated demand (i.e. 66 MVA) and the proposed capacity (i.e. 200 MVA) is having a wider gap in terms of capacity. Therefore, during the approval of the project, the Hon’ble Commission may consider the performance improvement due to the proposed project and the utilization of the proposed capacity through envisaged additional demand to prevent sub-optimal operation of the asset.

• The proposed upgradation of the Kunnamkulam-Wadakkanchery line from 66kV to 220kV may result in improvement of voltage profile in the region being served by Kunnamkulam SS.

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Particulars Details • Further, the maximum and minimum voltage of the existing substation is within the limit.

Appraisal Result

Non-Deducible (Score: 57/100, Min Required Score: 60)

H. Thalassery 220/110 kV GIS


• The proposed project is to satisfy the N-1 requirement, however the supply interruption from an existing source is not quantified in the investment proposal. • Maximum voltage of existing substation is within the limit • However, the minimum voltage has breached the limit across 6 months in FY 19. • The proposed project was envisaged to satisfy the N-1 criteria, by strengthening the link between Thalasseri SS and Mundayad SS. However, the justification for the proposed transformer capacity to evacuate the power from Kakayam HEP in the future is contradicting with the proposal of NRHTLS under TRANSGRID 2.0. In this regard, clarification was requested and KSEB informed that there would be an increase in the load up to 50 MVA only in the proposed scenario. The existing demand is about 22 MVA in FY 19 and the anticipated near-term load is about 50 MVA, whereas the proposed capacity is 200 MVA. Therefore, the utility shall ensure that the proposed capacity would be utilized with the growing power demand, to prevent any sub-optimal operation of the asset.

Appraisal Result


I. Manjeri 220 kV AIS


• Project is envisaged by considering the overloading of MLMJ line. Based on seven-month data of MLMJ line loading (in FY 19), it is noted that MLMJ line is breaching the low voltage limits during the month of March. • Further, as per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. It is noted that the minimum voltage for FY 19 is 97.2 kV (during high load condition) which is has breached the prescribed limit. • However, as per CEA Transmission planning criteria, the maximum voltage limit under steady-state is for 110 kV line is 123 kV, whereas the maximum voltage in FY 19 for MLMJ line is 116.2 kV (based on given seven months data, during least load condition) which is within the prescribed limit. • Additionally, quantification of improvement in loading of line in the project scenario is not explicitly discussed in the investment proposal other than the Load Flow Study. • The proposed capacity under this project is 2x100 MVA and the justification for the proposed capacity is not discussed in the investment proposal. Further to the clarification sought for the proposed capacity, KSEB informed that there would an increase in loading of the substation (which is 97 MVA), due to the proposed scenario. • With anticipated near-future demand of 97 MVA, the proposed capacity of 2x100 MVA may be considered by the Hon’ble Commission, provided, it is ensured that the proposed capacity would be utilized with the growing power demand, to prevent any sub-optimal operation of the asset.

Appraisal Result


J. Kolathunadu


• As per CEA Transmission planning criteria, the minimum voltage limit for the 220 kV line is 198 kV. In FY 19, the minimum voltage has breached during the month of July, Aug, Sep and Jan. From this, it is inferred that there is scope for improvement in the existing system. • Further, the loading details for Kanhirode and Mundayad were not available to validate the prevailing system performance.

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Particulars Details Appraisal Result


K. Ernad Lines Package


• In the existing scenario, there is an upstream constraint in power evacuation from Karnataka through Areacode SS, to northern Kerala. Hence, the project is proposed to connect the Northern region with the southern region to improve the voltage profile in northern Kerala. Further, it is mentioned in the investment proposal that, due to a shortage in capacity, the voltage profile of the region has been affected.

As per CEA Transmission planning criteria, the minimum voltage limit for the 220 kV line is 198 kV. In FY 19, the minimum voltage has breached during the summer months of FY 19 in Areacode, Mylatty and Kanhirode substations. The breach in the minimum voltage in Areacode, Mylatty and Kanhirode substations shows the overloading condition in Northern Kerala. This justifies the requirement of the Ernad project.

Appraisal Result

Non-Prudent (Score: 64/100, Min Required Score: 60)


A. Chemperi, 110 kV Substation


• The proposed project is for the construction of a new substation in Chemperi in Kannur district.

• The 11kV feeders from Sreekandapuram to Chemperi area are overloaded, which can be seen from the minimum voltage profile of Sreekandapuram as well as its outgoing 11kV feeders to Chemperi region (provided in KSEB response).

• The maximum loading of Sreekantapuram SS is 42% (8.4/20 MVA), whereas, the optimal loading is about 75%. Though the SS is loaded only 42%, it is noted that the Sreekandapuram SS is about 8.8km away from the Chemperi region, which implies the necessity of new substation due to the prevailing load in Sreekantapuram.

Appraisal Result


B. Kollam-Kottiyam Interlinking


• Kollam SS is proposed to be connected with Kottiyam SS for satisfying N-1 constraint. However, it is noted that the voltage profile of Kollam SS is within the prescribed limit.

• Interruption detail of Kollam SS shows that, the substation had minimal interruptions in FY 19 [i.e. 6 no’s and 350 Minutes] whereas the interruption details of Kottiyam SS is about 69 Nos for 261 Hrs during FY 19. It is to note that, the Interruptions in Kottiyam SS is far higher than Kollam SS.

• Though the project is envisaged to satisfy the N-1 constraint, the objective of satisfying N-1 criteria may be defied as Kottiyam SS has a greater number of interruptions than Kollam SS.

Appraisal Result


C. Mylatty-Vidhyanagar Line Upgradation

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• Project is proposed to evacuate the proposed 80 MW solar power, and

• Existing line has already completed its lifetime

Appraisal Result


D. Pallom-Ettumanur 110 kV Upgradation


• The proposed project is envisaged due to the upgradation of the source substation. • Further, the review of existing substations shows that the loading is within the

limits. Appraisal Result


E. Panthalacode 110 kV Switching cum Substation


• Presently the Paruthippara substation is feeding the major portion of Trivandrum through 66 kV GIS LA, GIS Power House, Vattiyoorkavu and Balaramapuram, in addition to 15 kV feeders originating from Paruthippara SS.

• In case of any failure in Pothencode Paruthippara DC lines, the project can feed the said load by taking supply from the Pothencode-new Kattakkada 110 kV DC lines, by switching at Panthalacode station (through EMPP and KIPP lines).

• The proposed projects appear to be satisfying N-1 criteria, however, the substantiating data to validate the prevailing N-1 constraint and interruptions in the region is not available for review.

Appraisal Result


F. Seethangoli 110 kV Substation


• As per CEA transmission guidelines, the minimum voltage of Vidyanagar SS is 95 kV, which breaches the CEA prescribed limit of 99 kV.

• Further, the peak demand in Cherkala region is 55 MVA whereas the current serving SS i.e. Vidyanagar SS capacity is 40 MVA

• The minimum voltage of Vidyanagar SS breaches the CEA prescribed limit of 99kV and the demand of the Cherkala region is more than the capacity of the present serving substation.

Appraisal Result


G. Thambalamanna 110 kV Substation


• The envisaged project is to evacuate power from the nearby small hydro plants.

• As per CEA Transmission guidelines, 2010, the maximum voltage limit under steady-state for 33kV line is 36kV. It is noted that the maximum voltage level reached during July 2018 in Thambalamanna SS is 34.4 kV, which is within the prescribed voltage limit.

• As per CEA Transmission guidelines, 2010, the minimum voltage limit under steady-state for 33kV line is 30kV. It is noted that the minimum voltage level reached during February 2019 in Thambalamanna SS is 27.4 kV, which breaches

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PwC 248

Particulars Details the CEA prescribed limits. Further, the minimum voltage limit is breached during 9 months in FY 19.

• The present 33 kV capacity of the Thambalamanna Substation is 10 MVA. The maximum load for FY 19 is observed during April 18 which is 4.36 MVA (43.6% loading= 4.36/10 MVA). The present loading is 43.6% whereas, the optimal loading is 75%.

• KSEB has decided to phase out the 66kV line which also supports the proposed project under Government directives.

Appraisal Result


H. Vennakkara 110 kV GIS


• As per CEA Transmission planning criteria, the maximum voltage limit under steady-state for 110 kV line is 123 kV. It is noted that the maximum voltage level is 110kV which is within the prescribed voltage limit.

• As per CEA Transmission planning criteria, the minimum voltage limit for 110 kV line is 99 kV. In FY 19, the minimum voltage limit was reached during February with 99 kV which reaches the lower prescribed limits.

• The present 110 kV capacity of the Vennakkara Substation is 81 MVA. The maximum load for FY 19 is observed during March 19 which is 62.10 MVA (76% loading= 62.10/81 MVA). The present loading is 76%, whereas, the optimal loading is about 75%.

• It is noted from the response of KSEB that the lifetime of the existing substation has reached its maximum period, which necessitates the need for a new substation. However, the loading of the existing substation is within the limit, other than the breach of minimum voltage in February 2019.

Appraisal Result


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PwC 249

7.2 Summary of Cost Estimate Appraisal

7.2.1 TRANSGRID 2.0 projects

7.2.1.1 Appraisal of KSEB estimated Total Project Cost

The total cost of 12 projects under TRANSGRID 2.0 is 2,527.55 Crore INR. Out of which, 54% accounts for material cost component, 24% accounts for Labour, Civil and Erection cost component. The component-wise share of cost is not uniform across the 12 projects. This variation may be due to variabilities such as project type, project capacity, voltage ratings, terrain conditions and others. Due to inflation and change in market price (as per recent SOR), the anticipated total project cost of 12 projects is considered as 2,899.16 Crore INR with an increase of 371 Crore INR from the KSEB estimated project cost. This is mainly due to an increase in material cost (of 78 Crore INR) and an increase in labour costs (of 252 Crore INR).

Table 68: TRANSGRID 2.0 – KSEB Estimated vs. Anticipated Cost of Major components

S.No Particulars Units Estimated Cost Anticipated

Cost % increase

1 Material Cost Crore INR 1,367.88 1,446.26 5.73%

2 Labour, Civil & Erection Cost Crore INR

613.12 865.68 41.22%


Crore INR 2,527.55 2,899.16 14.70%

Source: SBU-T investment proposals, PwC Analysis

The further cost component breakup of each project is shown below in the chart.



50%43%

63%

36%

71% 70% 71%

62%53%

34%

81%

48%54%

27%46%

16%

32%

14%

26% 23%

23%

20%51%

12%

18%

24%

11%

5%

4%

3%

3%

2%

2%

3%

4%

5%

2%

7%

5%

0%

5%

1%17%

3%

2%3%

12%

0%

9% 0%

6%

6%

1%

15% 12% 10%

24%

5%

21%

11%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

Material Cost as % of Total Project Cost Labour, Civil & Erection Cost as % of Total Project Cost

Tax as % of Total Project Cost Compensation as a % of Total Project Cost


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PwC 250

The component-wise share of cost for each project shows that there is a significant variation across the projects. For e.g. the material cost of the NRHTLS project is 81% of its project cost, whereas, the material cost of Kothamangalam is 36% of its project cost. Similarly, the share of labour, civil and erections cost component varies from 12% to 51%. This could be due to the variables such as:

• Variation in the project types (Construction/upgradation of only Transmission line or Construction/Upgradation of Substation and Transmission line);


• Voltage ratings (400kV/220kV/110kV);


• Type of lines, towers and materials used;


• Other factors.

As the component-wise cost varies even within similar projects, material cost is compared on a unit cost basis (i.e. INR/MVA for substation projects and INR/Ckt-km for transmission line projects) and tabulated below.

Table 69: KSEB Estimated Total Material Cost per capacity for TRANSGRID 2.0

S.N

o. Project Name

Transformer

Capacity

Addition (MVA)

Transmissi

on line

addition (km)

Material

Cost –

Substation (Crore INR)

Substation

Material Cost per

MVA (Crore

INR/MVA)

Material

Cost - Transmissi

on Line

(Crore INR)

Transmissi

on line -

Material Cost per km

(Crore

INR/Ckt-km)

Total

Material

Cost (Crore INR)

1 Aluva 400 11.1 73.76 0.18 10.99 0.99 84.75

2 Chalakudy 200 11.726 12.25 0.06 15.07 1.29 27.32

3 Kaloor 320 11.5 61.94 0.19 42.24 3.67 104.18

4 Kothamangalam 330 86.6 48.69 0.15 83.30 0.96 132.00

5 Kottayam 1135 42.7 315.97 0.28 37.80 0.89 353.77

6 Kunnamangalam 220 7.66 48.27 0.22 9.6 1.25 57.86

7 Kunnamkulam 200 22.8 52.59 0.26 31.77 1.39 84.35

8 Thalassery 240 22.236 57.15 0.24 25.15 1.13 82.30

9 Manjeri 225 0.5 23.24 0.10 0.39 0.78 23.63

10 Kolathanadu - 90.05 - - 82.71 0.92 82.71

11 NRHTLS - 77 - - 72.63 0.94 72.63

12 Ernad - 119 - - 262.37 2.20 262.37

Total 3270 502.87 693.86 0.21

(Weighted Average)

674.03 1.34

(Weighted Average)

1,367.88


It is observed that the weighted average of material cost per MVA is 0.21 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the substation material cost per MVA.

Note: The substation material cost of Kolathanadu, NRHTLS and Ernad are Zero, as these projects involve only the construction/upgradation of the Transmission line, and no substation is part of the proposal.

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PwC 251

Figure 92: Substation Material Cost per MVA TRANSGRID 2.0


The cost per MVA for the projects Chalakudy, Kothamangalam and Manjeri are lesser (huge variation) than the benchmark value and it may be due to the reason that Chalakudy, Kothamangalam and Manjeri projects involves AIS instead of GIS. Amongst these 3 AIS projects, Kothamangalam is having 0.15 Crore INR/MVA, which is higher than the other two AIS projects. This may be due to the reason that the capacity of the Kothamangalam project is 330 MVA whereas the capacities of the other two projects are around 200 MVA. Further, the cost per MVA of Kottayam is the highest among the TRANSGRID projects. The reason for the high value may be that the capacity addition of Kottayam project is 1,135 MVA (in total), which is the highest among the TRANSGRID projects.

It is also observed that the cost per MVA for the projects Kunnamangalam, Kunnamkulam and Thalassery are more or less similar (in the range of 0.22 – 0.26 Crore INR/MVA), which is due to similar capacities (in the range of 200-240 MVA). Further, it is observed that the cost per MVA for the projects Aluva and Kaloor are similar (0.18 & 0.19 Crore INR/MVA respectively), which is due to similar capacities (in the range of 320-400 MVA).

Further to the above observation, clarification was requested and KSEB responded that the high cost for the Kottayam project (0.28 Crore INR/MVA) is due to the 400kV level transformer, unlike the other 220 kV level projects of TRANSGRID 2.0. In addition, the costs of the Kunnamkulam & Thalassery project (0.26 and 0.24 Crore INR/MVA respectively), are higher than the benchmark level, which is due to longer length of Gas Insulated Bus as compared to other projects. However, the reason for the cost of the Kunnamangalam project (0.22 Crore INR/MVA), being higher than the benchmark value, is not explained by the KSEB.

Similarly, from the review of material cost per unit Ckt-km for lines, it is observed that the weighted average line material cost per Ckt-km is 1.34 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the substation material cost per Ckt-km.

Figure 93: Transmission Line Material Cost per Ckt-km TRANSGRID 2.0


0.18

0.06

0.19

0.15

0.28

0.220.26

0.24

0.10

0.00 0.00 0.00

0.21

0.00

0.05

0.10

0.15

0.20

0.25

0.30

in C

rore

IN

R /

MV

A Internal Benchmark value: 0.21 Crore INR/MVA

0.991.29

3.67

0.96 0.891.25 1.39

1.130.78 0.92 0.94

2.20

1.34

0.00

0.50

1.00

1.50

2.00

2.50

3.00

3.50

4.00

in C

rore

IN

R/

Ck

t-k

m


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PwC 252

It is seen from the above graph, that the transmission line material cost for the projects Kaloor and Ernad are 3.67 Crore INR/Ckt-km and 2.20 Crore INR/Ckt-km respectively, which is higher (significant variation) than the internal benchmark value of 1.34 Crore INR/Ckt-km. Further, it is observed that the Kolathanadu project involves 90 km transmission line, yet, the material cost is 0.92 Crore INR/Ckt-km (within the benchmark value), whereas, the transmission line length for Kaloor is only 11 km. Ideally, the Kaloor projects should have the material costs less than that of Kolathanadu, however variabilities like voltage level, terrain, line type, tower type may result in a wide variation of the cost among these projects. Therefore, factors such as the voltage level, terrain along the transmission line, type of conductor and type of tower are appraised to understand the rationale for cost variation. A comparison of variables among these projects is shown below.

Table 70: Details of the factors of concerned projects


Level

Line Length

(km)

Transmission Line between

Terrain Type of

Conductor Type of Tower

1 Kolathanadu (Reference Project)

220/110 kV

90.05 Mylatty - Kanhirode

Township area

ACSR Kundah and Panther

220/110kV Multi-Circuit Multi-Voltage Lattice Type Hot Dip Galvanized Steel Towers and Stub & cleat of various

types (KLA/B/C/D)

2 Kaloor

220/110 kV MCMV,

220 kV Double circuit

11.5 Brahmapuram

to Kaloor

Township

area ACSR Wolf

220/110kV Multi-Circuit Multi-Voltage Lattice Type Hot Dip Galvanized Steel Towers and Stub & cleat of various types (KLA/B/C/D)

3 Ernad

400 / 220 kV,

220/110 kV

119

Madakathara - Areakode Kizhisery - Nallalam

Madakathara - Areakode- Township Area Kizhisery - Nallalam - Township area (with

20-30% of the line in hilly areas)

a. ACSS Great Hornbill

for 400 kV line b. CCC Eranad for 220 kV line c. WOLF for 110 kV Line d. STACIR

a. MLA, MLB, MLC,MLD,MLS (for 400/220 kV MCMV line) b. KLA,KLB,KLC,KLD (For 220/110kV MCMV line)

c. MA, MB,MC,MD (For 220 kV DC line)


It is noted that, Kolathanadu project involves a 220kV transmission line, which passes through the township area. The conductor types are ACSR Kundah & Panther and the type of tower is Multi Voltage Lattice Type Towers.

Ernad project is unique in terms of the voltage level of 400/220kV line and it passes through the hilly region for about 20 to 30% of line length. Therefore, it is considered that this 400kV voltage level and terrain may be the reason for the variation in the material cost per Ckt-km.

Kaloor project involves 220kV voltage level transmission, which passes through the township area. The conductor type used in Kaloor project is ACSR Wolf and the tower type is Multi Voltage Lattice Type. The main difference between Kaloor and Kolathanadu (reference project) is the type of conductor used in the project.

The price details of the concerned conductors and towers (according to the investment proposal) are listed below.

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PwC 253

Table 71: Price details of the conductors and towers

S.No Item Price (INR)

Remarks

Type of Conductor

1 ACSR Panther Conductor 1,98,300 • Price of Kundah and Panther is almost

the same (INR 2 Lakh)

• Price variation between Panther and Wolf is 36% (i.e. difference between 1.98 lakh – 1.25 lakh)

2 ACSR Kundah Conductor 2,00,235

3 ACSR Wolf Conductor 1,25,000

Type of Tower

4

220/110kV Multi-Circuit Multi-Voltage, 220/220kV &110/110kV MC Lattice Type Galvanized Steel Towers and Stub & cleat of various types (MLD for 400/220kV, KLA/B/C/D

71,057

• Type of tower and it cost is same for Kolathanadu, Kaloor and Kunnamangalam


As seen above, the price of wolf conductor is 36% lesser than that of the Panther conductor. Therefore, the material cost per Ckt-km. of Kaloor should be lesser than that of Kolathanadu, as all other factors are similar.

Considering the above scenarios, clarification was requested and KSEB responded that the cost/Ckt-km for Kaloor is higher (3.67 Crore INR/Ckt-km) because, 7km (out of 11.5 km) involves underground cabling. In addition, the Ernad project involves the construction of 400/220kV lines, and the work is complex in nature. Therefore, the cost of Ernad (2.20 Crore INR/Ckt-km) is higher than the benchmark value (1.34 Crore INR/Ckt-km).

Further, the total KSEB estimated cost of labour, civil and erection works for the 12 TRANSGRID projects amounts to 613.12 Crore INR. This accounts for 24% of the total project costs. Among the projects, there is a significant variation in the share of labour, civil and erection cost with respect to total project cost. It is observed that, percentage share of labour cost varies from 12% to 51%.

The significant variation in the share of labour, civil and erection cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). Therefore, to compare the cost across the projects, the labour, civil and erection cost per capacity is computed and tabulated below (in INR/MVA for substation and in INR/Ckt-km for transmission line respectively). However, unlike the material cost breakup, the separate labour, civil and erection cost breakup for substation and transmission lines are not clearly available in some of the investment proposals. Hence, the labour cost component for substation and labour cost component for the line part is not differentiable. So, the total labour, civil and erection cost for a project is considered for computing the labour cost per capacity for both substation and transmission line.

Table 72: KSEB Estimated Labour, Civil and Erection Cost per unit capacity for TRANSGRID 2.0

S.No. Project Name


(MVA)


(km)

Labour, Civil & Erection Cost (Crore INR)

Labour Cost per MVA

(Crore INR/MVA)


(Crore INR/Ckt-

km)

1 Aluva 400 11.1 45.75 0.11 4.12

2 Chalakudy 200 11.726 29.00 0.15 2.47

3 Kaloor 320 11.5 26.54 0.08 2.31

4 Kothamangalam 330 86.6 119.87 0.36 1.38

5 Kottayam 1135 42.7 68.03 0.06 1.59

6 Kunnamangalam 220 7.66 21.23 0.10 2.77

7 Kunnamkulam 200 22.8 27.68 0.14 1.21

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PwC 254

S.No. Project Name


(MVA)


(km)

Labour, Civil & Erection Cost (Crore INR)

Labour Cost per MVA

(Crore INR/MVA)


(Crore INR/Ckt-

km)

8 Thalassery 240 22.236 30.91 0.13 1.39

9 Manjeri 225 0.5 8.74 0.04 17.48

10 Kolathanadu - 90.05 123.33 - 1.37

11 NRHTLS - 77 10.77 - 0.14

12 Ernad - 119 101.29 - 0.85

Total 3,270 502.87 613.12 0.19

(Weighted Average)



Note: The substation labour cost of Kolathanadu, NRHTLS and Ernad are ‘Zero’ as these projects involve only the construction/upgradation of the Transmission line.

It is observed that the weighted average labour cost per unit of MVA is 0.19 Crore INR. which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per MVA.

Figure 94: KSEB Estimated Labour, Civil and Erection Cost per MVA for TRANSGRID 2.0 projects


It is observed that the labour cost per MVA for Kothamangalam is 0.36 Crore INR, which is a significant variation from the benchmark value. It is also observed that the Kothamangalam project involves the transmission line from Pallivasal to Aluva, in which 40% of the line is through the hilly area. This may be the reason for the significant variation in the Labour cost per MVA. Further, it is noted that the cost/MVA for Chalakudy and Manjeri are 0.15 and 0.04 Crore INR/MVA respectively. Though, both the projects involve AIS, and similar transformer capacities (220 and 200 MVA), there is a huge variation in labour cost/MVA. The reason for this variation is not deducible with the available information.

It is noted that, labour cost/MVA for the Kottayam project is 0.06 Crore INR/MVA, which is lower compared to most of the other TRANSGRID projects. The reason for this lower value may be because the total proposed capacity of Kottayam project is 1,135 MVA.

Also, it is noted that labour cost/MVA for the projects Kunnamkulam and Thalassery is 0.14 and 0.13 Crore INR/MVA respectively, which is almost equal. This similarity may be due to, similar transformer voltage rating, (220kV), similar capacity (200 and 240 MVA) and similar transmission line length (~22km). It is also seen that the characteristics of the Kunnamangalam project viz, transformer capacity and voltage rating are similar to

0.110.15

0.08

0.36

0.060.10

0.14 0.13

0.040.00 0.00 0.00

0.19

0.00

0.05

0.10

0.15

0.20

0.25

0.30

0.35

0.40

in C

rore

IN

R /

MV

A


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PwC 255

that of the Kunnamkulam and Thalassery project. However, the labour cost/MVA for the Kunnamangalam project is 0.10 Crore INR/MVA, which is lower compared to that of Kunnamkulam and Thalassery. The reason may be that the line length of Kunnamangalam is 7 km as compared to that of Kunnamkulam and Thalassery (~22km).

The labour cost/MVA for the projects Aluva and Kaloor is 0.11 and 0.08 Crore INR/MVA respectively. Though, these 2 projects have similar voltage level (220kV) and similar line length (~11 km), the labour cost/MVA for have significant variation. which may be due to difference in transformer capacities (Aluva - 400 MVA, Kaloor -325 MVA).

Similarly, from the review of labour costs per unit Ckt-km., it is observed that the weighted average value for all projects is 1.22 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per Ckt-km.

Figure 95: KSEB Estimated Labour, Civil and Erection Cost per Ckt-km. for TRANSGRID 2.0 projects


Note: For the Manjeri project, the labour cost per Ckt-km. is 17.48 Crore INR which is due to the construction of line for an insignificant length of 0.5 km.

Though the NRHTLS project transmission length is 77km (110kV level) and it passes through hilly areas (around 10%), the labour cost/Ckt-km is 0.14 Crore INR/Ckt-km, which is the lowest among TRANSGRID 2.0 projects. The reason for this lowest cost is not deducible with the available information. In the case of projects such as Aluva, Chalakudy and Kaloor, the labour cost/Ckt-km. have significant variation (2.31 – 4.12 Crore INR/Ckt-km), although these projects have similar terrain (township area), similar towers and similar line length (~11km, expect for Kunnamangalam with 7km). Further, all these projects have labour cost/Ckt-km higher than the benchmark value. The reason for these variations is not deducible with the available information.

In this regard, clarification had been requested and KSEB responded that the higher labour cost/Ckt-km of Kaloor project (2.31 Crore INR/Ckt-km) is majorly due to underground cabling, however, the reasons for the higher cost of Aluva and Chalakudy project were not explained by the utility.

7.2.1.2 Land Purchase for the Projects

Out of 12 TRANSGRID 2.0 projects, there are 3 projects, which require the purchase of new land for the purpose of construction of a substation, and the details are as below.

4.122.47 2.31

1.38 1.592.77

1.21 1.39

17.48

1.370.14

0.85 1.22

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00

16.00

18.00

20.00

in C

rore

IN

R/

Ck

t-k

m


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PwC 256

Table 73: TRANSGRID – Land Purchase details


(Acres) Type of Substation

Transformer Capacity (MVA)

1 Kaloor 0.7 GIS 320

2 Kottayam

15.3 acres for Kottayam 400kV GIS 8.5 acres for Thuravoor 220kV AIS 1.5 acres additional for 220kV Ettumanoor GIS

GIS & AIS 1135

3 Manjeri 6.12 AIS 225 Source: KSEB SBU-T DPR

It appears that the land parcel considered under Kottayam and Manjeri projects, is relatively on the higher side and the following points have been clarified by KSEB :

• 15.3 acres of land is required for Kottayam substation to accommodate the new equipment,

• 2 acres (instead of 8.5 acres) of land is required for Thuravoor substation as it is now proposed as GIS, and

• Additional land of 1.5 acres for Ettumanoor is not required now.

The above-mentioned change in the land requirement is expected to change the project cost of Kottayam project. Therefore, during the approval of the project, the Hon’ble Commission may consider only the cost of the revised land requirement as mentioned by the utility.


7.2.2.1 Appraisal of KSEB estimated Total Project Cost

The total cost of 8 New Capital Works projects is 293.35 Crore INR. Out of which, 43% accounts for material cost component, 23% accounts for Labour, Civil and Erection cost component. The component-wise share of each project is not uniform across the 8 projects. This variation may be due to variabilities such as project type, project capacity, voltage ratings, terrain conditions and others.

Due to inflation and change in market price (as per recent SOR), the anticipated total project cost of 8 projects is considered as 293.75 Crore INR with an increase of 25.54 Crore INR from the KSEB estimated project cost. This is mainly due to an increase in material cost (of 7.19 Crore INR) and an increase in labour costs (of 27.31 Crore INR).

Table 74: New Capital Works – KSEB Estimated vs. Anticipated Cost of Major components

S.No.

Particulars Units Estimated Cost Anticipated

Cost % increase

1 Material Cost Crore INR 125.48 132.67 5.73%

2 Labour, Civil & Erection Cost Crore INR 68.29 95.60 40%

3 Total Project Cost

(including other costs)

Crore INR 293.35 318.88 8.7%

Source: Investment Proposal/ SBU-T DPR, PwC Analysis

The cost component breakup of each project is tabulated below.

Final


PwC 257

Table 75: KSEB Estimated Component-wise Project cost of New Capital Works

S.N0 Project Name Units Material

Cost

Labour, Civil &

Erection Cost

Taxes

Compensation (Tree Cutting &

RoW)

Other Costs

Total Project

Cost

1 Chemperi Crore INR 7.14 6.50 3.49 1.47 6.47 25.00

2 Seethangoli Crore INR 4.43 3.21 0.75 0.00 1.60 10.04

3 Thambalamanna Crore INR 20.16 6.71 1.43 0.00 4.96 33.25

4 Pallom

Ettumanoor Crore INR 22.62 24.45 7.19 0.65 7.09 62.00

5 Kollam - Kottiyam Crore INR 27.02 10.87 2.25 0.00 14.24 54.37

6 Mylatty -

Vidhyanagar Crore INR 12.18 7.60 4.65 2.96 19.61 47.00

7 Panthalacode Crore INR 5.35 3.06 2.07 0.00 11.70 22.18

8 Vennakkara Crore INR 26.58 5.88 4.29 0.00 2.75 39.50

Total Crore INR 125.48 68.29 26.11 5.08 68.40 293.35


The component-wise share of cost for each project shows that there is a significant variation across the projects. For e.g. the material cost of the Thambalamanna project is 61% of its project cost, whereas, the material cost of Panthalacode is 24% of its project cost. The chart below represents the component-wise share of cost for the 8 New Capital Works Projects.



It is observed that, percentage share of material cost varies from 16% to 67% for substation and 2% to 50% for the transmission line. Further, the percentage share of each cost component with respect to the total project cost across projects is not uniform. This could be due to the variables such as:

29%44%

61%

36%50%

26% 24%

67%26%

32%

20%

39%20%

16% 14%

15%

14%

7% 4% 12%

4%

10%9%

11%

6%

0%1%

6%

0%26%

16% 15% 11%26%

42%53%

7%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%



Tax as % of Total Project Cost

Labour, Civil & Erection Cost as % of Total Project Cost

Material Cost as % of Total Project Cost

Final


PwC 258

• Type of projects (Construction/upgradation of only Transmission line or Construction/Upgradation of Substation and Transmission line);


• Voltage ratings (110kV/66kV);




• And other factors.

As the component-wise cost varies even within similar projects, material cost is compared on a unit cost basis (i.e. INR/MVA for substation projects and INR/Ckt-km for transmission line projects).

Table 76: KSEB Estimated Total Material Cost per capacity for New Capital Works

S.N0

Project Name

Transfor

mer Capacity Addition

(MVA)


(km)

Materia

l Cost – Substati

on (Crore

INR)

Substation

Material Cost per

MVA (Crore

INR/MVA)

Material

Cost - Transmissi

on Line (Crore

INR)

Transmission line -

Material Cost per km

(Crore

INR/Ckt-km)

Estimate

d Material

Cost (Crore

INR)

1 Chemperi 25 9.61 4.41 0.18 2.73 0.28 7.14

2 Seethangoli 25 0.6 4.23 0.17 0.20 0.33 4.43

3 Thambalamanna 32 12 7.66 0.24 12.50 1.04 20.16

4 Pallom Ettumanoor

40 37.16 10.10 0.25 12.52 0.34 22.62

5 Kollam - Kottiyam

- 11 - - 27.02 2.46 27.02


- 46.23 - - 12.18 0.26 12.18

7 Panthalacode 25 - 5.35 0.21 - - 5.35

8 Vennakkara 72 - 26.58 0.37 - - 26.58

Total 219 116.6 58.33 0.27

(Weighted Average)

67.15 0.58

(Weighted Average)

125.48


It is observed that the weighted average material cost per unit of MVA is 0.27 Crore INR which has been considered as an internal benchmark for comparison. The below chart represents the substation material cost per MVA.

Note: The substation material cost of Kollam – Kottiyam and Mylatty - Vidhyanagar are ‘Zero’ as these projects involve only the construction/upgradation of Transmission line, and no substation is part of the proposal.

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Figure 97: KSEB Estimated Substation - Material Cost per MVA for New Capital Works Projects


It is observed that the material cost/MVA of Vennakkara project is the highest among the 8 New Capital Works projects under review. This may be because, the Vennakkara project involves the transformer capacity addition of 72 MVA, which is the highest among the 8 projects.

Further, it is observed that the material cost/MVA of Thambalamanna and Pallom-Ettumanoor is 0.24 and 0.25 Crore INR/MVA respectively, which is almost similar. This similarity may be due to similar capacities (32 and 40 MVA respectively).

Earlier, the cost per MVA of Chemperi, Seethangoli and Panthalacode were 0.22, 0.16 and 0.21 Crore INR/Ckt-km respectively, though the capacity of all these projects were the same (25 MVA). Therefore, clarification was sought and KSEB informed that there is an error in the cost estimate for Seethangoli and Chemperi project because of which the variation was observed. In the case of Panthalacode, the higher cost per MVA is due to a higher number of 110kV feeder bays compared to other projects.

Due to the error mentioned by KSEB, the cost per MVA for Seethangoli and Chemperi project got revised from 0.16 to 0.17 Crore INR/MVA and from 0.22 to o.18 Crore INR/MVA respectively. In the case of Panthalacode, the cost variation in comparison to Seethangoli and Chemperi projects is majorly due to the increased number of 110kV feeder bays.

Further, from the review of material cost per unit Ckt-km for lines, it is observed that the weighted average material cost per Ckt-km is 0.58 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the transmission line material cost per Ckt-km.

Figure 98: Transmission Line - Material Cost per Ckt-km for New Capital Works


0.18 0.17

0.24 0.25

0.00 0.00

0.21

0.37

0.27

0.00

0.10

0.20

0.30

0.40

in C

rore

IN

R/

MV

A Internal Benchmark value = 0.27 Crore INR/MVA

0.28 0.33

1.04

0.34

2.46

0.260.00 0.00

0.58

0.00

0.50

1.00

1.50

2.00

2.50

3.00

in C

rore

IN

R/

Ck

t-k

m

Internal Benchmark value = INR 0.57 Crore INR/Ckt-km

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It is observed from the above graph, that the transmission line material cost for the projects Kollam- Kottiyam and Thambalamanna are 2.46 Crore INR/Ckt-km and 1.04 Crore INR/ Ckt-km respectively, which is higher (significant variation) than the internal benchmark value of 0.58 Crore INR/Ckt-km. Further, it is observed that the Pallom-Ettumannor project involves 37 km transmission line (110kV), yet, the material cost is 0.34 Crore INR/Ckt-km(within the benchmark value), whereas, the transmission line length of Thambalamanna and Kollam-Kottiyam is only 12 km and 11 km respectively. Therefore, the variabilities such as voltage level, terrain, conductor type and tower type among these projects were reviewed and the comparison is shown below.

Table 77: Details of cost variable factors for concerned projects


Level Line

Line Length (km)

Line from and to Terrain Type of

Conductor

1 Pallom-Ettumanoor

110kV 37.16 Pallom- Gandhinagar-Ettumanoor

Township Area

ACSR Wolf

2 Thambalamanna 110kV SC (UG) 12 Thambalamanna to Agasthiamuzhi Township Area

Single-core 630mm² XLPE UG cable

3 Kollam-Kottiyam

110kV (UG) 11 Kollam-Kottiyam Township Area

110kV, 630 mm2 Cable


It is noted that, Pallom – Ettumanoor project involves a 110 kV transmission line, which passes through the township area and the conductor type used is ACSR Wolf.

Thambalamanna project involves a 110kV transmission line, which passes through the township area and it is similar to the Pallom project and the conductor type used in the project is 630mm² XLPE UG cable. Though, the factors of Thambalamanna are similar to that of Pallom-Ettumanoor, the material cost per Ckt-km. is higher.

Further, the Kollam-Kottiyam project involves a 110 kV transmission line, which passes through the township area and it is similar to the Pallom project and the conductor type used is 630mm² XLPE UG cable. Though, the factors of Kollam- Kottiyam are similar to that of Pallom-Ettumanoor, the material cost per Ckt-km. is higher.

Further to the above observation, clarification was requested and KSEB responded that the higher cost of Thambalamanna and Kollam-Kottiyam project (more than benchmark value) is due to the UG cabling. In addition, the reason for variation in the material cost/Ckt-km is due to the difference in the type of conductor to be used in these two projects.

Further, the total estimated cost of labour, civil and erection works for the 8 New Capital Works projects amounts to 68.29 Crore INR. This accounts for 23% of the total project costs. Among the projects, there is a significant variation in the share of labour, civil and erection cost with respect to total project cost. The labour, civil and erection costs for the New Capital Works projects are tabulated below:

Table 78: KSEB Estimated Cost of Labour, Civil and Erection works for New Capital Works


Labour, Civil & Erection Cost as % of Total

Project Cost





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Labour, Civil & Erection Cost as % of Total

Project Cost







It is observed that, percentage share of labour cost varies from 14% to 39%.

The significant variation in the share of labour, civil and erection cost may be due to the possible reason that each project is a combination of construction/upgradation of substation (of different capacities and voltage ratings) and transmission lines (of different capacities, voltage ratings, different terrain and varying length, in circuit-km). Therefore, to compare the cost across the projects, the labour, civil and erection cost per unit of capacity is computed and tabulated below (in INR/MVA for substation and in INR/Ckt-km for transmission line respectively). However, unlike the material cost breakup, the separate labour, civil and erection cost breakup for substation and transmission lines are not clearly available in some of the investment proposals. Hence, the labour cost component for substation and labour cost component for the line part is not differentiable. So, the total labour, civil and erection cost for a project is considered for computing the labour cost per unit of capacity for both substation and transmission line.

Table 79: KSEB Estimated Labour, Civil and Erection Cost per capacity for New Capital Works

S.N0.

Project Name


(MVA)


(km)

Estimated Labour, Civil

& Erection Cost

(Crore INR)

Labour Cost per MVA

(Crore INR/MVA)


(Crore INR/Ckt-

km)

1 Chemperi 25 9.61 6.50 0.26 0.68

2 Seethangoli 25 0.6 3.21 0.13 5.35

3 Thambalamanna 16 12 6.71 0.21 0.56

4 Pallom Ettumanoor 40 37.16 24.45 0.61 0.66

5 Kollam - Kottiyam - 11 10.87 - 0.99


- 46.23 7.60 - 0.16

7 Panthalacode 25 - 3.06 0.12 -

8 Vennakkara 72 - 5.88 0.08 -

Total 219 116.6 68.29 0.31

(Weighted Average)



Note: The substation labour cost of Kollam – Kottiyam and Mylatty-Vidhyanagar are ‘Zero’ as these projects involve only the construction/upgradation of the Transmission line. And, the transmission line labour cost of Panthalacode and Vennakkara are ‘Zero’ as these projects involve only the construction/upgradation of Substation.

It is observed that the weighted average labour cost per MVA is 0.31 Crore INR, which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per MVA.

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Figure 99: KSEB Estimated Labour, Civil and Erection Cost per unit of MVA for New Capital Works projects


The proposed capacity in the Pallom-Ettumanoor project is 40 MVA, whereas the capacity of Vennakkara is 72 MVA. It is observed that the labour cost/MVA for the Vennakkara project is 0.08/MVA, which is the lowest among the 8 New Capital Works projects. Whereas, the labour cost/MVA for Pallom-Ettumanoor project is 0.61 Crore INR/MVA, which is the highest among the 8 New Capital Works projects.

It is also seen that Seethangoli and Panthalacode projects have similar labour cost/MVA of 0.13 Crore INR/MVA and 0.12 Crore INR/MVA. This similarity may be because, both the projects have the same proposed capacity of 25 MVA. Whereas, the labour cost/MVA of the Chemperi project is 0.26 Crore INR/MVA, even though the proposed capacity is 25 MVA (same as that of Seethangoli and Panthalacode projects).

From the review of labour costs per unit Ckt-km., it is observed that the weighted average value for all projects is 0.59 Crore INR which has been considered as an internal benchmark for comparison. The below chart represents the labour cost per Ckt-km.

Figure 100: Estimated Labour, Civil and Erection Cost per Ckt-km. for New Capital Works projects


0.26

0.13

0.21

0.61

0.00 0.00

0.120.08

0.31

0.00

0.10

0.20

0.30

0.40

0.50

0.60

0.70

in C

rore

IN

R/

MV

A Internal Benchmark value = 0.31 Crore INR/MVA

0.68

5.35

0.56 0.660.99

0.16 0.00 0.00

0.59

0.00

1.00

2.00

3.00

4.00

5.00

6.00

in C

rore

IN

R/C

kt-

km


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Note: For the Seethangoli project, the labour cost per unit Ckt-km. is 5.35 Crore INR which is due to the construction of line for an insignificant length of 0.6 km.

It is also seen that the proposed capacity of both Thambalamanna and Kollam-Kottiyam is similar (~12km). Also, there are other similarities between Thambalamanna and Kollam-Kottiyam in terms of voltage level (110kV), type of conductor used (630mm² UG cable) and type of terrain (Township area). However, the labour cost per Ckt-km of Thambalamanna is 0.56 Crore INR/Ckt-km, which is closer to the benchmark value, whereas, the labour cost per Ckt-km of Kollam-Kottiyam is 0.99 Crore INR/Ckt-km. This variation may be because of other factors such as differences in technology or geographical locations, which is not inferable from the investment proposals.

Further to the above observation, clarification was requested and utility responded that the type of conductor used in Kollam-Kottiyam is different from that of other projects and also, the cost of the conductor in Kollam-Kottiyam project is higher than that of other projects. Further, as a part of the prevailing practice, KSEB adopts the methodology of deriving the labour and erection cost as 7.5% of the material cost. Hence, due to the higher conductor cost of Kollam-Kottiyam, the labour cost per Ckt-km for Kollam-Kottiyam project is higher than that of other projects.

7.2.2.2 Land Purchase for the Projects

Out of 8 New Capital Works, there are 4 projects, which require the purchase of new land for the purpose of construction of a substation, and the details are as below.

Table 80: New Capital Works – Land Purchase details


(Acres) Type of Substation Transformer Capacity (MVA)

1 Chemperi 3.04 AIS 25

2 Seethangoli 2.4 GIS 25

3 Vennakkara 0.66 GIS 72

4 Pandalacode 0.35 AIS 25


It appears that the land parcel considered under Chemperi and Seethangoli projects is relatively on the higher side.

Further to the above observation, clarification was requested from KSEB and utility responded that the proposed land requirement for the Seethangoli project is required now because the project is now proposed as AIS instead of GIS.

7.3 Summary of SBU-T capacity to implement the proposed investment projects

7.3.1 Project Financing

As per the investment proposal, the debt and equity required for the proposed TRANSGRID 2.0 and New Capital Works program is about 2,642.17 Crore INR and 638.03 Crore INR which is likely to increases by about 2,984.34 Crore INR and 749.53 Crore INR, due to inflation and prevailing market price.

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Table 81: Debt and equity of Transmission Projects- KSEB Estimate vs. Envisaged Revision

S.No Program Capital Cost as per DPR excluding grant

(Crore INR)

Envisaged Revision in Capital Cost excluding grant(Crore INR)

Equity19 Debt Total Equity Debt Total

1 TRANSGRID 2.0 638.03 1,488.73 2,126.76 749.53 1,748.91 2,498.45

2 New Capital Works 0 1,153.44 1,153.44 0 1,235.43 1,235.43

Total 638.03 2,642.17 3,280.2 749.53 2,984.34 3,733.88


The detailed assessment of proposed capital cost and the envisaged revision in capital cost is discussed in Section 5 of this report.

As per the latest available financial statement20 (for FY 18) of the KSEB, the company is having the loss of 784 Crore INR21 which is not adequate to fund the above equity requirements for the proposed projects.

Table 82: Financial Position of KSEB for FY 18

S.No Parameters Unit Value

1 Revenue Crore INR 12,665.44

2 Expenditure Crore INR 13,449.54

3 Profit for FY 18 Crore INR -784.09

4 Total Assets Crore INR 30,560

Source: KSEB Annual Report for FY 18

It is mentioned in the investment proposal that; the debt part will be secured from Kerala Infrastructure Investment Fund Board (KIIFB) and there a few projects that are partially funded with grants. Given the financial position of KSEB from FY 16 to FY 18, the utility appears to be not holding enough financial reserves to fund the equity requirements for the proposed projects. There is a need to secure equity funding outside KSEB for implementing the proposed projects.

7.3.2 Progress achieved in FY 19 by SBU-T

For assessing the progress made until August 2019, the development of 12 projects of TRANSGRID 2.0 and 8 projects of New Capital Works has been reviewed based on the inputs received from KSEB SBU-T through questionnaire (Appendix-A.8) and the results are discussed in below sub-sections.

7.3.2.1 TRANSGRID 2.0 Projects

Out of 12 TRANSGRID 2.0 projects, about 67% projects (in terms of volume) are progressing as per the implementation plan indicated in the investment proposal and 33% projects (in terms of volume) are delayed off the track.

19 In the investment proposals D:E ratio is assumed to be 70:30 for TRANSGRID 2.0, and 100:0 for New Capital Transmission Works. The same assumptions taken has been considered in our calculation of anticipated debt and equity. 20 Loss for the period FY 16 was 313.29 Crore INR and loss for the period FY 17 was 1,494.63 Crore INR. 21 KSEB Annual Report for FY 18 http://www.kseb.in/index.php?option=com_jdownloads&view=download&id=11384:seventh-annual-report-2017-2018&catid=80&Itemid=522&lang=en



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Figure 101: Progress Status of TRANSGRID Projects (as on Sep 2019)


Further, the projects that are delayed from the implementation plan are Kottayam, Kunnamkulam, Thalassery and Kolathanadu, which got delayed about 13% to 25%. These delayed projects are exposed to time overrun, which in turn may end up in possible cost overrun as well. In terms of project cost, 8 projects worth 1,534.91 Crore INR (~ 60%) are on On-track, and 4 projects mentioned above worth 992.64 Crore INR (~40%) are delayed. The details of progress made by each project under TRANSGRID 2.0 are discussed in Appendix- A.7.

7.3.2.2 New Capital Works Projects

Out of eight New Capital Work projects, the details for one project were not provided. Hence, a total of seven projects have been evaluated, out of which 14% projects (in terms of volume) are progressing as per the implementation plan indicated in the investment proposal and 86% projects (in terms of volume) are delayed off the track which is significant.

Figure 102: Progress Status of New Capital Work Projects (as of Sep 2019)


The projects that were delayed under New Capital Works are Kollam-Kottiyam, Seethangoli, Thambalamanna, Vennakkara, Pallom-Ettumanoor and Pandalacode. The magnitude of delay varies from 5% to 25% from the proposed implementation plan in the investment proposal. These delayed projects are exposed to time overrun, which in turn may end up in possible cost overrun as well. In terms of project cost, 6 projects worth 221.31 Crore INR (~ 89%) are delayed, and 1 project worth 25 Crore INR (~11%) is On track. The details of progress made by select New Capital Works projects are discussed in Appendix-A.7.

Delayed33%

On-Track67%

Progress Status


Delayed86%

On Track14%

Progress Status

25% 25% 25%

13%

0%

5%

10%

15%

20%

25%

30%

Kottayam Kunnamkulam Thalassery Kolathanadu

Indicative Delay in Progress, %

25% 25%

5%

13%

25% 25%

0%

10%

20%

30%

Indicative Delay in Progress,%


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PwC 266

It is to note that, that New Capital Works are more likely exposed to time overrun relative to TRANSGRID 2.0 projects.

7.3.3 Highlights of constraints experienced by KSEB SBU-T in FY 19 for implementing projects

Some of the key constraints experienced by KSEB in implementing the proposed capital investment projects that result in delay are as follows

Figure 103: Key constraints experienced by KSEB in implementing the projects

The above reasons are the major factors that contributed to the delay in the implementation of the project, which needs to be targeted by the utility for effective implementation.

7.4 Corollary for TRANSGRID 2.0 and New Capital Works Program

As the projects proposed under TRANSGRID 2.0 and New Capital Works are on the basis of the Load Flow Study conducted by KSEB, there is a need for validating the results of the Load Flow Study in order to ascertain the energy demand growth envisaged in the state. The Hon'ble Commission may conduct an independent validation exercise of Load Flow Study for the current and future investment proposals from the Utility.

7.4.1 TRANSGRID 2.0 program

TRANSGRID 2.0 program consists of 12 projects for the control period FY 19 to FY 22, and all the 12 projects have been appraised under this study. Out of the appraised 12 projects under TRANSGRID 2.0 program, 2 projects namely Aluva and Kunnamkulam are non-deducible due to lack of sufficient information. The appraisal of TRANSGRID 2.0 projects are tabulated below.

Table 83: Appraisal of TRANSGRID 2.0 Projects



grant) (Crore INR)

Project Status

1 Aluva Line & Substation 168.0 Non-Deducible

2 Chalakudy Line & Substation 63.1 Prudent

3 Kaloor Line & Substation 165.4 Prudent

4 Kothamangalam Line & Substation 370.9 Prudent

5 Kottayam Line & Substation 501.4 Prudent

6 Kunnamangalam Line & Substation 82.2 Prudent

1. Approvals for floating the tender

2. Land Registration

3. RoW issues

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PwC 267



grant) (Crore INR)

Project Status

7 Kunnamkulam Line & Substation 118.0 Non-Deducible

8 Thalassery Line & Substation 133.5 Prudent

9 Manjeri Line & Substation 44.5 Prudent

10 Kolathanadu Only Line Upgradation 239.8 Prudent

11 NRHTLS Only Line Upgradation 89.1 Prudent

12 Ernad Only Line Upgradation 551.7 Prudent

Total 2,527.55

In terms of project cost, projects worth 286 Crore INR are Non-deducible, which is 11.3% of the project cost of 12 TRANSGRID 2.0 projects.

In the case of Aluva, the details on the growing demand for power in the Aluva region are not discussed in the investment proposal. During approval of the project, the Hon’ble Commission may consider the quantification of the growing demand in the Aluva region and also the utilization of the proposed capacity (through envisaged additional demand) to prevent sub-optimal operation of the asset.

In the case of Kunnamkulam, the improvement in performance from the existing scenario to the project scenario is not discussed in the investment proposal. During the approval of the project, the Hon’ble Commission may consider the performance improvement due to the proposed project and the utilization of the proposed capacity through envisaged additional demand to prevent sub-optimal operation of the asset.

Other than Aluva and Kunnamkulam projects, all other projects are considered as Prudent as they score the minimum requirement of 60 grade out of 100. Further, it is to note that, all the 12 projects have not met the minimum score required under the assessment parameters “Compliance to CEA Transmission Planning Criteria” and “Need for Investment”. As the proposed evaluation framework is new to the utility and some of the projects have already commenced implementation, the Hon’ble Commission may consider an exemption for the present 12 projects in meeting the minimum scoring requirement under “Compliance to CEA Transmission Planning Criteria” and “Need for Investment”. However, for the future capital investment proposals, the individual projects need to mandatorily meet the minimum scoring requirements.

In addition, among the 12 projects of TRANSGRID 2.0 program, 9 projects (namely Aluva, Chalakudy, Kaloor, Kothamangalam, Kottayam, Kunnamkulam, Thalassery, NRHTLS and Ernad) are envisaged to meet the N-1 criteria. Hence, the Hon’ble Commission may consider these projects as prudent, and going forward, the KSEB needs to sufficiently substantiate the N-1 criteria projects with both baseline scenario and project scenario data.

Cost estimates of the 12 TRANSGRID 2.0 projects were analyzed to check whether the KSEB cost estimates are on par with the market price [i.e. latest Schedule of Rates (SOR) price] and to analyze any deviation in the estimated price as compared to the price in relevant SOR. It is anticipated that the total project cost may vary at the time of execution as compared to the cost estimates provided in the investment proposals. The total project cost of TRANSGRID 2.0 projects is anticipated to increase from 2,527.55 Crore INR to 2,899.16 Crore INR, which is around 14.7% higher than that of the KSEB estimated cost due to WPI (inflation) and recent DSR rates.

In the investment proposals, some of the financial assumptions deviate from the parameters prescribed in KSERC tariff regulations, which are mentioned below:

i. Return on Equity – ROE is considered as 15.5% in the investment proposals as against 14% (as per Regulation 28). Considering a higher ROE may inflate the financial indicators (IRR and NPV).

ii. O&M costs - Tariff regulations prescribe O&M costs on the basis of ‘Cost per bay’ for substation projects and ‘Cost per Ckt-km’ for transmission line projects (as per Annexure VIII of Tariff Regulations). In the project description of some investment proposals, it is mentioned that the O&M

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PwC 268

costs have been considered as per the regulations. However, in the cost-benefit analysis of all the investment proposals, the O&M cost has been considered as 2% of the total project cost, which is different from the prescribed assumption as per tariff regulations. It is observed that the O&M cost estimated by KSEB is around 40% - 370% higher than the O&M cost allowable under tariff regulations.

iii. O&M cost escalation – Tariff regulations prescribe O&M costs to be escalated by 4.84% each year. However, in the cost-benefit analysis of all the investment proposals, the escalation is considered as 5.84%. Considering a higher O&M escalation rate may deflate the financial indicators (IRR and NPV)

In TRANSGRID 2.0 projects, it is observed that the total KSEB estimated O&M cost for the first year of operation is 50.55 Crore INR, whereas the allowable O&M cost as per tariff regulation norm is only 20.09 Crore INR. But, in New Capital Works, the allowable O&M cost under tariff regulation is 6.66 Crore INR, whereas the KSEB estimated O&M cost is only 5.86 Crore INR. Further, 8 projects out of the 20 projects under review, have allowable O&M cost higher than KSEB estimated O&M cost and the rest of the projects are vice-versa. To understand further, the details of the two projects are representatively analyzed below:

Table 84: Details of representative projects

Project

Project Cost

(Crore INR)

Bay Cost

(Crore INR)

Bay cost as % of

Project Cost No. of Bays

Line length (km)


(Crore INR)

Allowable O&M cost

under Tariff Regulations (Crore INR)

Kaloor 165.39 15.25 9.2% 8 11.5 33.08 0.96

Vennakkara 39.5 17.25 43.7% 17 0 0.79 1.82

Source: Investment Proposal / SBU- T DPR, PwC Analysis

For the Kaloor project, though the number of bays is 8 and the bay cost is only around 9.2% of the project cost, the KSEB estimated O&M cost is 33.08 Crore INR, which is around 34 times higher than the allowable O&M cost of 0.96 Crore INR under the tariff regulation. But for Vennakara project, the number of bays is 17 and the bay cost forms a significant portion of the project cost (around 43.7%). However, the allowable O&M cost is 1.82 Crore INR under tariff regulation, which is around 2 times higher than the KSEB estimated O&M cost which is only 0.79 Crore INR.

From the above observations, it appears that the tariff regulation based approach of O&M cost on ‘per bay’ basis, lacks clarity in terms of total number of bays to be considered, voltage ratings, capacity ratings and other equipment that forms part of the bay.

For the purpose of analyzing the financial performance of each projects, two major changes in the financial assumptions have been done in comparison with the investment proposal: (i) no financing costs are considered, as per recommendation from Hon’ble commission and (ii) the financial assumptions are corrected as per tariff regulations, 2018.

By changing the financial assumptions as per Tariff Regulations and without considering financing costs, the IRR (for both KSEB estimated and anticipated project cost) is increasing about 2-6% on an individual project basis.

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Figure 104: KSEB Estimated IRR vs Anticipated IRR of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations


It is seen that, KSEB estimated IRR is greater than the acceptable range of 10% only for 9 projects. However, Anticipated IRR of all the 12 projects is greater than 10%, by changing the financial assumptions as per tariff regulations and without considering financing costs.

Similarly, the anticipated NPV of TRANSGRID 2.0 projects increase to 2,088 Crore INR from the KSEB estimated NPV of 869 Crore INR (as per investment proposals).

Figure 105: KSEB Estimated vs Anticipated NPV of TRANSGRID 2.0 Projects without considering financing costs and with assumptions as per Tariff Regulations


It is seen that KSEB estimated NPV was negative for 3 projects in TRANSGRID 2.0. However, Anticipated NPV of all 12 projects are positive, by changing the financial assumptions as per tariff regulations and without considering financing costs.

7% 10% 11% 13% 10% 13%7% 9%

29%

12%

78%

18%10% 15% 15% 17%

15%18%

11%12%

35%

17%

81%

23%

0%

10%

20%

30%

40%

50%

60%

70%

80%

90%

KSEBL Estimated IRR(%)

Anticipated IRR(%)

-80

24 7140 19 35

-51 -30

21271

261 260

869

9 44 110356 336

87 18 29237 232 238 391

2088

-500

0

500

1000

1500

2000

2500

KSEBL Estimated NPV(Crore INR)

Anticipated NPV(Crore INR)

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New Capital Works consists of 40 projects, out of which 10 projects have been appraised under this study. Among the 10 projects, 2 projects namely Mannuthy and Kottayi has been not pursued by the KSEB during the course of appraisal, due to lack of grant and land-related issues. Hence, the results of these two projects are not considered in the assessment.

Out of the appraised 8 projects under the New Capital Works program, all the projects have scored the minimum scoring requirement of 60 grade out of 100, which may be considered as prudent by the Hon’ble Commission. The appraisal of New Capital Works are tabulated below.

Table 85: Appraisal of New Capital Works



grant) (Crore INR)

Project Status

1 Chemperi Line & Substation 25.00 Prudent

2 Seethangoli Line & Substation 10.00 Prudent

3 Thambalamanna Line & Substation 33.25 Prudent

4 Pallom Ettumanoor Line & Substation 62.00 Prudent

5 Kollam - Kottiyam Line Upgradation 54.37 Prudent

6 Mylatty - Vidhyanagar Line Upgradation 47.00 Prudent

7 Panthalacode Substation 22.18 Prudent

8 Vennakkara Substation 39.50 Prudent

Total 293.31

However, all the 8 projects have not secured the minimum scoring requirements under the assessment parameter “Compliance to CEA Transmission Planning Criteria” and “Need for Investment”. As the proposed evaluation framework is new to the utility and some of the projects have already commenced implementation, the Hon’ble Commission may consider exemption for the present 8 projects in meeting the stipulated minimum scoring requirement under “Compliance to CEA Transmission Planning Criteria” and “Need for Investment”. However, for the future capital investment proposals, the individual projects need to mandatorily meet the minimum scoring requirements.

In addition, among the 8 projects of New Capital Works, 3 projects (namely Kollam-Kottiyam, Panthalacode, and Vennakkara) are envisaged to meet the N-1 criteria. Hence, the Hon’ble Commission may consider these projects as prudent, and going forward, the KSEB needs to sufficiently substantiate the N-1 criteria projects with both baseline scenario and project scenario data.

It is anticipated that the total project cost may vary at the time of execution as compared to the cost estimates provided in the investment proposal. The total project cost of these 8 projects is anticipated to increase from 1,153.44 Crore INR to 1,235.43 Crore INR, which is around 8.7% higher than that of KSEB estimated cost.

The estimated IRR and NPV of the New Capital Works Project is shown below. Only about 10 projects out of 40 New Capital Works are having the IRR more than the cost of capital. i.e. 10%.

It is to note that, majority of projects under New Capital Works are having IRR less than 10% and NPV in negative values. Due to an anticipated increase in the capital cost, the IRR and NPV are further expected to get weaker.

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Figure 106: KSEB Estimated IRR of New Capital Works


5.20%

4.20%

5.50%

29%

0.50%

0%

7.60%

1%

3.70%

18.60%

10.40%

10.30%

10.30%

12.50%

7.10%

5.40%

7.20%

8.10%

8.10%

8.10%

11.90%

14.10%

12.80%

1%

5.90%

6.30%

7.50%

22%

1%

6.70%

8%

0.10%

8.10%

1.50%

3.60%

0.00% 5.00% 10.00% 15.00% 20.00% 25.00% 30.00%

Chemperi

Kollam - Kottiyam


Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal



Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal



Vengallur

Chandranagar

Ettumanoor

Koothattukulam



Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

CHITHARA

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar


Palode

Punnapra-Allappuzha

TVT

10 Projects out of 40 have IRR more than cost of capital

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Most of the projects are having negative NPV under New Capital Works.

Figure 107: KSEB Estimated NPV of New Capital Works


-10.74

-26.21

-7.21

-23.5

-47.62

-13.66

-20.05

-6.77

-1.71

-7.86

-8.5

-8.5

-8.5

-7.96

-4.4

-4.61

-2.65

-31.92

-5.18

-5.7

-30.65

-2.76

-10.92

-30.26

-59.7 -49.7 -39.7 -29.7 -19.7 -9.7 0.3

Chemperi

Kollam - Kottiyam


Seethangoli

Thambalamanna

Vennakkara

Pallom - Ettumanoor

Pandalacode

Ambalavayal



Kuthumunda

Malappuram

Mankada

Mankava

Pulikkal



Vengallur

Chandranagar

Ettumanoor

Koothattukulam



Malampuzha

Pala - Ettumanoor

Pattambi

Pudukkad

Vazhoor

Viyyur-Ollur

CHITHARA

Kuttanad

Edamon anchal ayur

Karunagappally

Kowdiar


Palode

Punnapra-Allappuzha

TVT

NPV (Crore INR)

Most projects are having negative NPV

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7.4.3 Impact of proposed TRANSGRID 2.0 and New Capital Works program on the grid

The total proposed transmission capacity addition under 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Works is about 4,273 MVA substation capacity with about 846 Ckt-km line length at different voltage levels (110 kV, 220 kV and 400 kV).

These proposals are envisaged to get completed between FY 19 and FY 22, and the proposed capacity addition makes about 21% and 7% of the prevailing substation capacity (MVA) and line length capacity (Ckt-km) as on the end of the FY 18. It is to note that proposed MVA and Ckt-km is a combination of new capacity addition as well as upgradation of existing capacity, hence it is not a cumulative increase in capacity in MVA and Ckt-km.

The investment proposals under TRANSGRID 2.0 and New Capital Works shows the envisaged benefits of 171 MW in term of peak loss reduction, 773 MU in term of peak energy loss reduction and 3,798 MU in terms of additional sale of energy. It is to note that, a few investment proposals have not quantified the technical benefits.

The TRANSGRID 2.0 project is envisaged to have maximum peak loss reductions benefits than the New Capital Works, and the New Capital Works projects are envisaged to have maximum additional sale of energy benefits than the TRANSGRID 2.0 program. The summary of technical benefits anticipated from the proposed transmission capacities are as below.

Table 86: Summary of technical benefits anticipated from the proposed transmission capacities

S.No Transmission

Program No of

Projects

Peak Loss Reduction Additional Sale of

Energy (MU)

Investment Cost (Crore INR) (as

per ARR Petition) MW MU

1 TRANSGRID 2.0 12 151 599 1,688 2,697

2 New Capital Works 40 21 173 2,109 1,126

Total 171 773 3,798 3,823


In the ARR petition filed by KSEB, the proposed transmission charges are computed with an assumption that all the TRANSGRID 2.0 and New Capital Works would be 100% approved. The summary of proposed transmission losses and Intrastate Transmission charges are as below.



1 Energy Input MU 24,846 26,243 27,248 28,295


3 Energy Loss MU 1,006.27 1,042.33 1,058.41 1,074.19


5 Cost of Intrastate Transmission (ARR)

Crore INR 951.08 1,106.19 1,394.26 1,637.13

6 Transmission Charges [(6)=(5)/(4)]

INR/ kWh 0.40 0.44 0.53 0.60


In the above table, the energy input parameter includes the additional sale of energy and the energy loss parameter includes the peak loss reduction envisaged under the TRANSGRID 2.0 and New Capital Works

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program. Further, the ARR includes the existing GFA as well as the proposed projects under TRANSGRID 2.0 and New Capital Works program.

In order to assess the impact of projects under TRANSGRID 2.0 and New Capital Works program on the transmission charges, the additional sale of energy has been deducted from energy input; and peak loss savings have been added to the energy loss. Further, ARR under TRANSGRID 2.0 and New Capital Transmission Works program has been deducted from the year-wise intrastate transmission cost to arrive the transmission charges contributed by TRANSGRID 2.0 and New Capital Works program. The data for additional sale of energy and peak loss savings has been extracted from the investment proposals.

The details of the impact on the transmission charges are as below and calculations are attached in Appendix A.10.


S.No.

Particulars Unit FY 19 FY 20 FY 21 FY 22

1

Energy Input (excluding addition sale of energy from TRANSGRID and New Capital Works program)

MU 24,846.15 24,808.98 23,892.64 24,497.75


3

Loss of Energy (including peak loss saving from TRANSGRID and New Capital Works program)

MU 1,006.27 1,277.56 1,831.44 1,937.41


5

Cost of Intrastate Transmission (excluding ARR of TRANSGRID and New Capital Works program)

Crore INR

874.60 955.45 1,029.21 1,241.90

6 Marginal Tariff of New Projects

Crore INR

- 0.90 0.88 0.85


INR/ kWh

0.37 0.41 0.47 0.55

8

KSEB computed Transmission Charges considering 100% approval of projects

INR/ kWh

0.40 0.44 0.53 0.60


INR/ kWh

0.03 0.03 0.06 0.05


The impact of 3,798 MU of additional sale of energy, 773 MU of peak loss reduction and ARR of proposed projects under TRANSGRID 2.0 and New Capital Works program result in an increase of transmission charges by INR 0.03 – 0.06 per kWh (FY 19 – FY 22).

7.4.4 Impact of non-deducible projects on GFA addition

The total project cost of non-deducible investment proposals in the TRANSGRID 2.0 is 285.98 Crore INR and the envisaged benefits from these projects are 237.85 MU in terms of peak loss energy saving, 9.1 MW in term of peak power-saving and 193.77 MU in term of additional sale of energy.

The proposed capital expenditure and technical benefits of the Non-deducible Projects are as shown below.

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Table 89:Proposed capital expenditure and technical benefits of the Non-Deducible Projects

S.No Non-Deducible Project

Capital Cost (Crore INR)

Envisaged Technical Benefits

Peak Loss Saving (MU)

Peak Power Saving (MW)

Additional Energy Sale

(MU)

1 Aluva 168 37.3 7.7 0

2 Kunnamkulam 117.98 26.64 1.4 193.77

Total 285.98 44.08 9.1 193.77


The proposed GFA under TRANSGRID 2.0 program for the control period FY 19 to FY 22 is 2,697.37 Crore INR whereas the Non- Deducible investment proposal is about 11% of the proposed GFA.

Table 90: Proposed GFA under TRANSGRID 2.0 program for the control period FY 19 to FY 22

S.No Name of Work 2018-19 2019-20 2020-21 2021-22 Total

Crore INR

SBU-T

1 Ongoing projects plus new small works 804.12 568.73 196.28 254.26

1,823.39

2 New Capital Works above 10Cr 0 662.59 421.83 41.65 1,126.07

3 TRANSGRID Works 0 362.57 2,073.84 260.96 2,697.37

4 Edamon-Kochi Line compensation 10 118.02

128.02

Total 814.12 1,711.91 2,691.95 556.87 5,774


The commission may consider the above-mentioned project as prudent, if the justification and substantiating information is provided by the SBU-T to support the investment proposal.

Among the appraisal of select New Capital Works, no project is evaluated as Non-Prudent. However, the prudence of remaining New Capital Works needs to be assessed on a case to case basis and it shall be approved by the Hon’ble Commission accordingly.

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Appendix A. - Appendices

A.1. Appendix – KPI’s for Capital Investment Proposals

Indicative KPI’s for a select category of Capital Investment Proposals in Transmission business is shown below

S.No Category of

Transmission Project

Primary Objective KPIs to Monitor

Baseline Scenario Project Scenario

1

Line Upgradation and/or Substation Upgradation due to increased or envisaged increase in demand, low voltage profile in the region

Meeting the increased demand and improve the prevailing low voltage profile

• Voltage Profile

• Energy Loss (MU) • Peak Loss (MW)

• Improved Voltage Profile

• Reduction in energy loss (MU)

• Reduction in peak loss (MW)

• Additional sale of energy (MU)

• Other envisaged improvements

2

Line Upgradation and/or Substation Upgradation due to serve more demand or consumers

Serving new consumers

• Existing no of customers/connected load (MW/MVA)

• Existing sale of energy (MU)


• Envisaged increased sale of energy (MU)

• No. of new customer added/connected load (MW/MVA)addition,

• Capacity Margin(redundancy)

• Reduction in energy loss (MU)

• Reduction in peak loss (MW)


3

Line Upgradation and/or Substation Upgradation due to evacuation of generation capacity

Evacuating generation capacities

• Existing evacuation capacity of the system

• Envisaged evacuation capacity of the system


4

Line Upgradation and/or Substation Upgradation for connecting to additional supply source/substation/line to remove N-1 constraint

Removing N-1 constraints/Additional source of supply

• Interruptions (Nos and period) in an existing scenario

• Voltage Profile

• Improved interruptions (Nos and period) in the project scenario

• Improved voltage profile

5

Line Upgradation and/or Substation Upgradation for system constraint

Load relief/New Load


• System Loading Relaxation, Technical Loss reduction,

• Reduction in No. of customers complaints/Faults/tripping, Tail-end voltage improvement

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S.No Category of

Transmission Project

Primary Objective KPIs to Monitor

Baseline Scenario Project Scenario

6 System upgradation due to vintage of equipment

Safeguard for N-1 constraint

• Prevailing outages in existing system due to vintage

• Technical loss

• Improved outage • Loss reduction • Other envisaged

improvements

In addition to the above category, the utility shall adopt and mention the KPIs in its investment proposal for both the baseline scenario and project scenario.

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A.2. Appendix – Typical Template Structure for Transmission Capital Investment Proposal/DPR

Indicative structure for DPR (Investment Proposal) preparation to be followed consistently across utilities is shown below

Structure of DPR

A. Executive Summary: Introduction of the project in this section and summarize the key parameters being discussed in DPR such as need for the project, objectives to be achieved, key alternatives considered, cost involved, BCR/IRR, timelines involved, key risks and mitigation strategy.

B. Introduction: This section shall cover the need for the project and also capture the existing status of the system which shall form the baseline information for the project. This section can also talk about how the project/work can help in meeting the utility’s long term or short-term objectives

C. Defining objective, perceived outcomes, strategy of implementation: Define measurable objectives, perceived outcomes (quantitative and qualitative), the strategy of implementation and other strategic aspects of implementation of project (s).

D. Field survey report: The findings and analysis of field survey shall be captured in this section of DPR. The field survey report shall be exhaustive in nature and shall provide complete details of network configuration and topology along with loss levels, DT wise loading and other related aspects as covered in the field survey

Identification of Key Options and their Evaluation

E. Project identification and technical evaluation: Detail out the available alternatives for implementation of identified project/work/scheme, geographical area and based on the field survey, technical feasibility, load flow study, revised network configuration, revised loss levels etc. shall be captured in the technical feasibility report.

F. Financial Evaluation: Assess the broad level financial impact/implication for the implementation of each option. The broad level cost estimates shall be prepared for each project for financial evaluation

G. Cost-Benefit Analysis: Detail out cost-benefit analysis including the IRR and other measures used to capture the techno-economic viability of each option and to select the most suitable approach to be taken to achieve the perceived objectives

Detailed project design and implementation plan

H. Technical Design and Drawings: Detailed project designs, drawings, layouts, Bill of Quantity, technical specification, etc. and related technical aspects

I. Preparation of Cost Estimates: Estimate the cost of implementation for the finalized option, based on the prevailing Schedule of Rates of the utility

J. Implementation Plan: Develop the detailed implementation plan along with milestones, monitoring framework, MIS templates monitoring the progress of various activities during the execution stage, etc. The section should also cover the details of approvals and clearances required, and estimated timelines for obtaining the same.

K. Means of Finance and Project Budget: This section should cover details related to the cost of the project, the means of finance and comment on provisions in the budget for the project. The section should also cover the cash flow requirement at each stage of the project development. This can help the management understand the cash flow requirements over the project’s construction period and make necessary arrangements for the same.

L. Risks in Implementations and Mitigation Strategy: Identify key risks, which can occur during the execution of Capex work. The steps to mitigate risks should be highlighted in this section.

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A.3. Appendix – Default Objectives for Transmission Capital Investment Proposal

Indicative default list of objectives for transmission projects are as follows

S.No Transmission Project Category Default Objectives 1 Line and Substation Upgradation/Augmentation Reduce technical losses 2 Capacity Addition/ Line and Substation

Upgradation/Augmentation Improve System Availability

3 Capacity Addition/ Line and Substation Upgradation/Augmentation

Reduce the peak load

4 System Strengthening/ Bulk Power Transmission Line/ Line and/or Substation Upgradation/Augmentation

Improve the reliability and supply of electricity

5 Line Reconductoring, Capacity Addition, Line and Substation Upgradation/Augmentation

Improve voltage drop in low-voltage grids

6 Identifying new supply source, Line and Substation Upgradation/Augmentation

Satisfying the N-1 requirements

7 Capacity Addition/ Line and Substation Upgradation/Augmentation

Meeting the demand growth

8 Line and Substation Upgradation/Augmentation Removing generation evacuation constraint/Accommodating Renewable Energy

Note: The above objectives are more or less applicable for all projects. Appropriate objectives shall need to be assigned based on the context of the capital investment proposal

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A.4. Appendix – Template for Capital Expenditure Assessment

Capital expenditure assessment template in Microsoft Excel format is attached with this report as Appendix-4

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A.5. Appendix – Project wise details of proposed capacity addition in MVA and Ckt-km under 12 projects of TRANSGRID 2.0 and 40 projects of New Capital Work

A. TRANSGRID 2.0 (12 Projects)

S.No Project Name Proposed Transformer Capacity (MVA)

Total Transformer Capacity Addition (MVA)

Transformer Voltage Level (kV)

Proposed Line Length (Ckt), km

Total Ckt-km. addition (km)

Transmission Line Voltage Level (kV)

1 Aluva 2x200 400 220kV/110kV 11.1 11.1 220kV

2 Chalakudy 2x100 MVA 200 220kV 11.726 11.726 220kV & 110kV

3 Kaloor 2x160 MVA 320 220/110kV 4.5 km, 7 km 11.5 220/110 kV MCMV, 220 kV Double circuit

4 Kolathanadu - - 9.05 km , 81 km 90.05 , 220kV 220/110 kV

5 Kothamangalam 2x100, 2x40, 1x50 330 220/110kV, 110/66kV, 220kV/66kV

86.6 86.6 220kV & 110kV

6 Kottayam 2x315 MVA, 2x200 MVA, 115 MVA 1135 400/220, 220/110kV, 220kV

34.1km , 3.8km, 4.8km

42.7 220/110 kV MCMV, 220 kV Double circuit, 110kV

7 Kunnamangalam 2x100MVA, 20MVA 220 220kV, 110/11kV 7.66 7.66 220/110kV MCMV

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Proposed Line Length (Ckt), km


Transmission Line Voltage Level (kV)

8 Kunnamkulam 2x100 MVA, 200 220kV/110kV 22.8 22.8 220kV

9 NRHTLS - - 77 77 110kV Double circuit

10 Thalassery 2 X 100MVA, 2 X 20MVA 240 220/110 kV ,110/11 kV 22.236 22.236 220/110 kV MCMV

11 Ernad - - 95, 24 119 400 / 220 kV, 220/110 kV

12 Manjeri 2 x 100 MVA, 2 x 12.5 MVA 225 220/110 kV, 110/11kV 0.5 0.5 220kV

Total 3270 MVA

Total 502.872 Ckt-km

B. New Capital Works (40 Projects)




Proposed Line Length (Ckt-km),

km


Transmission Line Voltage Level

(kV)

1 Chemperi 2x 12.5 25 110kV 9.61 9.61 110kV

2 Kollam - Kottiyam - - 11 11 110kV

3 Mylatty - Vidhyanagar - - 11.853 km, 19.67 km, 7.3 km, 4.1 km, 3.3 km

46.223 220/110kV MC/MV, 110 kV DC, 110 kV DC, 110 kV DC, 110kV MCMV

4 Seethangoli 2 x 12.5 MVA 25 110/11kV 1.5 1.5 110 kV LILO

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km



(kV)

5 Thambalamanna 16 MVA 16 110/33 kV 12 12 110kV SC

6 Vennakkara 2x16 MVA, 2x20 MVA

72 110 / 33 kV, 110 / 11 kV

- - -

7 Pallom - Ettumanoor 2x20MVA 40 110 kV 37.16 37.16 110Kv

8 Pandalacode 2x12.5MVA 25 110 kV - - -

9 Ambalavayal 2x10 MVA 20 110/11 kV 5 5 110kV

10 Edarikode-Parappanagadi - - 16 16 110 kV DC LILO

11 Kunnamangalam-Thamarassery - - 17.7 17.7 110kV DC

12 Kuthumunda 2x12.5MVA 25 110kV GIS - - -

13 Malappuram 3x12.5, 2x16 69.5 GIS - 110/11kV, 110/33kV

14 Mankada 2x12.5MVA 25 110/11kV 15 15 110kV

15 Mankava 2x20MVA 40 110/11kV - - -

16 Pulikkal 2x12.5MVA 25 110/11kV -

17 Reliable Communication & Data Acquisition System

18 Solar Park Ambalathara 2x100 MVA 200 220/110kV 3 3 110kV

19 Vengallur 2x12.5MVA 25 GIS - 110kV - - -

20 Chandranagar 2x12.5MVA 25 110kV 15 15 110kV Double Circuit

21 Ettumanoor 2x20MVA 40 110/11kV - - -

22 Koothattukulam 2x12.5MVA, 1x40MVA

65 110/11kV, 110/66kV - - -

23 Koothattukulam-Kuravilangad 2x12.5MVA 25 110/11kV - - -

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km



(kV)

24 Kothamangalam-Koothattukulam - - 18.5 18.5

25 Malampuzha - - 18 18 110kV

26 Pala - Ettumanoor - -

27 Pattambi 2x12.5MVA 25 110/11kV 3 3 110kV

28 Pudukkad - - 13 13 110kV

29 Vazhoor 2x12.5MVA 25 110/11kV 2 2 110kV

30 Viyyur-Ollur - - 12 12 110kV

31 Chithara 2x12.5MVA 25 110/11kV 0.25 0.25 110kV

32 Kuttanad 2x12.5MVA 25 110/11kV 5.2 5.2 110kV

33 Edamon anchal ayur 2x12.5MVA 25 110/11kV 21 21 110kV

34 Karunagappally 2x20MVA 40 110/11kV 14.5 14.5 110kV

35 Kowdiar 2x12.5MVA 25 110/11kV - - -

36 Kayamkulam to Karunagapally - - 18 18 110kV

37 Palode 2x12.5MVA 25 110/11kV - - -

38 Punnapra-Allappuzha - - 8.9 8.9 110kV

39 TVT - - 19.5 19.5 110kV Double Circuit

40 Mannuthi Project not pursued by the KSEB

41 Kottayi Project not pursued by the KSEB

Total 1002.5

Total 343.043

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A.6. Appendix – Data gaps in the DPRs and response received from SBU-T

Data gaps in the DPR and response received from SBU-T is attached as Appendix-6 with this report in the Microsoft Excel format.

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A.7. Appendix – Progress of TRANSGRID 2.0 and New Capital Work Projects

A. TRANSGRID 2.0 Projects

S.No Project Name Progress Made until Sep 2019 (as per KSEB Inputs)

Implementation Plan as per DPR (Start Date assumed as Oct 2018)

Progress Status Estimated Delay Period (in Year)

% Delay

1 Aluva GIS building construction in progress Progress in line with Implementation Plan Non-Delay 0 0

2 Chalakudy Building room construction and yard equipment erection in progress

Progress in line with Implementation Plan Non-Delay 0 0

3 Kaloor GIS building construction in progress Progress in line with Implementation Plan Non-Delay 0 0

4 Kothamangalam Yard equipment erection and building room construction in progress


5 Kottayam Tender floated. Land registration in process Appointment of EPC is in the process of finalization. Project is behind the schedule of implementation plan and delayed almost by one year.

Delayed 1 25%

6 Kunnamangalam Control room construction in progress Progress in line with Implementation Plan Non-Delay 0%

7 Kunnamkulam Awaiting Bid approval Delayed Delayed 1 25%

8 Thalassery Awaiting Bid approval Delayed Delayed 1 25%

9 Manjeri Control room construction completed and yard equipment erection in progress

Progress in line with Implementation Plan Non-Delay

10 Kolathanadu Agreement executed Delayed Delayed 0.5 13%

11 NRHTLS Kakkayam-Nallalam portion commissioned. Westhill-Koyilandi portion commissioned. Westhill tap line-Reconductoring in Progress Mankavu tap line-foundation work in progress. Chevayur-West hill-foundation work in progress


12 Ernad 400/220 kV MCMV line 97.38 Ckt km and 220/110 kV MCMV line 20.20 Ckt km completed. Balance work in progress.

Progress in line with Implementation Plan (Linework is completed)

Non-Delay 0 0

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B. New Capital Work Projects

S.No Project Name Progress Made until Sep 2019 (as per KSEB Inputs)

Implementation Plan as per DPR (Start Date assumed as Oct 2018)

Progress Status Estimated Delay Period (in Year)

% Delay

Chemperi 1. Line: - Out of 37 stub work, 20 Nos have been completed, 2Nos. of tower erection have been completed. 2.110kV SS control room and yard work under progress, 30% completed so far.

Progress in line with Implementation Plan

Non-Delay 0 0%

Kollam - Kottiyam DPR submitted Not started Delayed 1 25%


Not Provided No Information available No Information available

- -

Seethangoli Application for land submitted to District Collector, Kasaragod. Sanction to be received.

Delayed Delayed 1 25%

Thambalamanna Work of Substation – 80% Cable laying work - 33%

Slightly delayed Delayed 0.2 5%

Vennakkara Construction of Control room in progress. Construction of cable trench in progress. GIS EQUIPMENT, C&R panel SAS work awarded to M/s GE India Ltd. EOT Crane tendered. 110kV Cable tending under progress

Delayed Delayed 0.5 13%

Pallom - Ettumanoor Work not started as the approval is not received.

Delayed Delayed 1 25%

Pandalacode All the deeds and documents of landowners scrutinized by standing counsel KSEB and legally cleared for documentation.

Likely to be delayed Delayed 1 25%

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A.8. Appendix – KSEB SBU-T Response for the Questionnaire on SBU-T Capacity Assessment

Response from KSEB SBU-T for the questionnaire on SBU-T capacity assessment is attached to this report as Appendix-9 in Microsoft Excel format.

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A.9. Appendix – Project wise Appraisal of Cost Estimate

A.9.1. Project-wise Summary of KSEB Cost Estimate Appraisal for TRANSGRID 2.0 projects

A.9.1.1. Summary of Cost Estimates of Aluva Upgradation Package

A.9.1.1.1. Total Project Cost

The total project cost of the Aluva Upgradation Package is 168 Crore INR. This amounts to around 7% of the total project cost of 12 TRANSGRID 2.0 projects. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Aluva Project

S.No

Description Units Aluva GIS 11kV work OH line Total

1 Cost of Materials Crore INR 73.76 1.79 9.20 84.75

2 Transportation, Insurance & Contingencies

Crore INR 4.43 0.11 0.00 4.53

3 Cost of Labour Crore INR

30.86 0.28 14.61 45.75

4 Overhead charges Crore INR

10.90 0.22 1.46 12.58

5 Service tax @ 15% Crore INR

5.29 0.06 2.41 7.76

6 kVAT @14.5% Crore INR 10.70 0.26 0.00 10.95

7 Tree cutting and Land compensation

Crore INR 0.00 0.00 0.30 0.30

8 Unforeseen Crore INR

0.56 0.29 0.52 1.37

9 Grand Total Crore INR 136.50 3.00 28.50 168.00


Component-wise distribution of KSEB estimated cost (as a % of project cost) – Aluva


50%

3%

27%

7%

5%

7% 0%1%Cost of Materials

Transportation, Insurance &Contigencies

Cost of Labour

Overhead charges

Service tax @ 15%

KVAT @14.5%

Tree cutting and Landcompensation

Unforeseen

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PwC 290

It is observed that, the method of segregation of cost components in the investment proposals, is not uniform across the projects. Therefore, for appraisal of cost estimates for individual projects, the cost components are segregated into the following six categories (separately for Substation and Transmission Line):

Component-wise cost distribution of costs (segregation by PwC) for Aluva Project

S.No.

Particulars Units Substation Transmission

Line Total % of total

1 Materials Crore INR 73.76 10.99 84.75 50.44%

2 Labour, Civil Works and Erection

Crore INR 30.86 14.89 45.75 27.23%

3 Tax Crore INR 15.99 2.73 18.72 11.14%

4 Compensation (Tree Cutting & RoW)

Crore INR 0.00 0.30 0.30 0.18%

5 Land Purchase Crore INR 0.00 0.00 0.00 0.00%

6 Others Crore INR 15.89 2.59 18.48 11.00%

Total Crore INR 136.50 31.50 168.00


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Aluva upgradation package is 196.7 Crore INR, which is a 17% increase compared to the KSEB estimated project cost of 168 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Aluva Project


A.9.1.1.2. Material Cost

The KSEB estimated material costs is 84.75 Crore INR, which is around 50% of the total project cost of the Aluva Upgradation package. Using the available Schedule of rates, only 6.47 Crore INR worth items were reviewed, which is around 8% of the total material costs of the project.

84.75

45.75

168.00

89.60

67.64

196.70

0.00

50.00

100.00

150.00

200.00

250.00

Material Cost Labour, Civil and Erection Cost Total Project Cost

Cro

re I

NR

Estimated Anticipated

Final


PwC 291

Aluva - Material Cost Estimates – Summary


After review, it was observed that items worth 1.89 Crore INR were overestimated, 4.26 Crore INR items were underestimated and 0.32 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. As the reviewable item is around 8%, extrapolating the above net result to 100% material cost may not reflect the accurate scenario. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.1.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Aluva – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.

With the above scenario, the KSEB estimated material cost of 84.75 Crore INR is anticipated to increase by 5.73% to 89.60 Crore INR.

A.9.1.1.3. Labour, Civil and Erection Costs & Tax

The KSEB estimated cost of labour, civil and erection works of the Aluva TRANSGRID project is 45.75 Crore INR, which amounts to 27% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 31.16 Crore INR, out of which items worth 18.15 Crore INR (around 40% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 47.8%. Extrapolating this, the cost is expected to increase by 47.8% from 45.75 Crore INR to 67.64 Crore INR. Further, the anticipated tax for the labour costs is 12.18 Crore INR.

84.75 Crore INR

Available Cost Estimate

6.47 Crore INR

Cost Estimate able to be reviewed

1.89 Crore INR Overestimated Cost

4.26 Crore INR Underestimated

Cost

Final


PwC 292

A.9.1.2. Summary of Cost Estimates of Chalakudy 220kV AIS


The total project cost of the Chalakudy project is 63.11 Crore INR. This amounts to around 2% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Chalakudy Project

S. No. Description Units NSIP Phase1 220kV AIS Total

Project

1 Land Purchase Crore INR 0 0 0 2 Supply of Materials Crore INR 16.03 11.70 27.73

3 Labour Charge - Electrical Works Crore INR 9.45 9.30 18.75

4 Labour Charge - Civil Works Crore INR - 10.25 10.25

5 Supply of Spares, Special Tools and Tackles

Crore INR - 0.56 0.56

6 Provision for Taxes Crore INR 1.70 1.31 3.01

7 Compensation - Tower Footing Crore INR 1.48 - 1.48

8 Compensation - Tree Cutting Crore INR 0.12 - 0.12

9 Rehabilitation of House Holds, if any

Crore INR 1.25 - 1.25

10 Statutory Approval charges-PTCC Crore INR 0.08 - 0.08

11 Initial Development / Centage Charges

Crore INR 0.78 - 0.78

12 Miscellaneous/Unforeseen Items Crore INR 0.07 - 0.07

13 Less- Scrap Items/Dismantled Items

Crore INR -0.96 - -0.96

Total Crore INR 30.00 33.11 63.11 Source: Investment Proposal / SBU- T DPR

Component-wise distribution of KSEB estimated costs (as a % of project cost) – Chalakudy


0

43.9%

29.7%

16.2%

0.9%4.8%

2.3%0.2%2.0%

0.1%1.2%

0.…-1.5%

Land Purchase

Materials

Labour - Electrical Works

Labour - Civil Works

Supply of Spares, Special Tools and Tackles

Taxes

Compensation - Tower Footing

Compensation - Tree Cutting

Rehabilitation of House Holds, if any

Statutory Approval charges-PTCC

Initial Development / Centage Charges

Miscelleneous/Unforeseen Items

Less- Scrap Items/Dismantled Items

Final


PwC 293

It is observed that the method of segregation of cost components in the investment proposals, is not uniform across the projects. Therefore, for appraisal of cost estimates for individual projects, the cost components are segregated into the following six categories (separately for Substation and Transmission Line):

Component-wise cost distribution of costs (segregation by PwC) for Chalakudy Project

S.No. Particulars Units Substation Line Total % of total



Crore INR 19.55 9.45 29.00 45.95%

3 Tax Crore INR 1.31 1.70 3.01 4.77%

4 Compensation (Tree Cutting & Land)

Crore INR 0.00 2.85 2.85 4.51%


6 Others Crore INR 0.00 0.93 0.93 1.47%

Total Crore INR 33.11 30.00 63.11


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Chalakudy project is 81.66 Crore INR, which is a 29% increase compared to the KSEB estimated project cost of 63.11 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Chalakudy Project


27.3229.00

63.11

28.89

41.52

81.66

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00

90.00


Cro

re I

NR


Final


PwC 294


The KSEB estimated material costs is 27.32 Crore INR, which is around 43% of the total cost of the Chalakudy project. Using the available Schedule of rates, only 22.54 Crore INR worth items were reviewed, which is around 82% of the total material costs of the project.

Chalakudy - Material Cost Estimates – Summary


After review, it was observed that items worth 14.03 Crore INR were overestimated, 6.10 Crore INR items were underestimated and 2.4 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. The net effect results in overestimation of reviewed material costs. As 82% of the materials were reviewed, this net effect, on extrapolating to the total material costs would result in 28.59 Crore INR. However, the anticipated cost is calculated using the methodology mentioned in section 5.3 only.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the Chalakudy – Review of Cost Estimates.xls which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Chalakudy project is 29 Crore INR, which amounts to 45% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 15.31 Crore INR, out of which items worth 6.91 Crore INR (around 24% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 43%. Extrapolating this, the cost is expected to increase by 43% from 29 Crore INR to 41.52 Crore INR. Further, the anticipated tax for the labour costs is 7.47 Crore INR.

27.32 Crore INR


22.5 Crore INR


14.03 Crore INR Overestimated

Costs


Costs

Final


PwC 295

A.9.1.3. Summary of Cost Estimates of Kaloor Upgradation Package


The Total project cost of Kaloor Upgradation Package project is 165.39 Crore INR. This amounts to around 7% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Kaloor Project

S.No

Description Units Kaloor

GIS

Brahma-puram

Bay

220kV UG

Cable

Terminating

station

OH line

Total % of total

1 Cost of Materials Crore INR

58.51 3.43 38.03 0.15 4.06 104.18 63%


Crore INR

3.51 0.21 2.28 0.01 0.24 6.25 4%

3 Cost of Labour Crore INR

5.58 1.21 14.60 0.54 4.61 26.54 16%

4 Compensation Crore INR

- - - 1.00 0.90 1.90 1%

5 Overhead charges Crore INR

6.76 0.48 5.49 0.07 0.98 13.79 8%

6 Service tax Crore INR

3.78 0.20 2.45 - 0.68 7.11 4%

7 Green belt including landscaping

Crore INR

0.15 - - - - 0.15 0%

8 Solar photovoltaic plant with battery backup

Crore INR

1.80 - - - - 1.80 1%

9 Unforeseen Crore INR

0.11 0.02 0.17 - 0.22 0.52 0%

10 PTCC Approval Crore INR

- - 0.10 - - 0.10 0%

11 Road restoration charges Crore INR

- - 3.05 - - 3.05 2%

Grand Total Crore INR

80.2 5.54 66.17 1.77 11.7 165.39


Component-wise distribution of KSEB estimated costs (as a % of project cost) – Kaloor


63%

4%

16%

1%

9%

4%0%

1%0%0%

2%

Cost of Materials

Transportation, Insurance&Contigencies

Cost of Labour

Compensation

Overhead charges

Service tax

Green belt includinglandscaping

Solar photovoltaic plant withbattery backup

Final


PwC 296


Component-wise cost distribution of costs (segregation by PwC) for Kaloor Project



2 Labour, Civil Works and Erection Crore INR 6.79 19.75 26.54 16.0%

3 Tax Crore INR 3.98 3.13 7.11 4.3%

4 Compensation (Tree Cutting & Land) Crore INR 0.15 1.90 2.05 1.2%


6 Others Crore INR 12.88 12.62 25.51 15.4%

Total Crore INR 85.74 79.65 165.39


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kaloor upgradation package is 181.31 Crore INR, which is a 10% increase compared to the KSEB estimated project cost of 165.39 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kaloor Project



The KSEB estimated material costs are 104.18 Crore INR, which is around 63% of the total cost of the Kaloor project. Using the available Schedule of rates, only 22.34 Crore INR worth items were reviewed, which is around 24% of the total material costs of the project.

104.18

26.54

165.39

110.15

36.95

181.31

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00

200.00


Cro

re I

NR


Final


PwC 297

Kaloor - Material Cost Estimates – Summary


After review, it was observed that items worth 21.6 Crore INR were overestimated, 0.74 Crore INR items were underestimated and no items correctly estimated. The net effect results in overestimation of reviewed material costs. As only 24% of the materials costs were able to be reviewed, the resultant effect is not extrapolated to the remaining 76% of the material cost. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kaloor – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Kaloor project is 26.5 Crore INR, which amounts to 16% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 26.5 Crore INR, out of which items worth 8.72 Crore INR (around 33% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 39%. Extrapolating this, the cost is expected to increase by 39% from 26.5 Crore INR to 36.95 Crore INR. Further, the anticipated tax for the labour costs is 6.65 Crore INR.

94.36 Crore INR


22.34 Crore INR



Costs


Costs

Final


PwC 298

A.9.1.4. Summary of Cost Estimates of Kothamangalam Package


The total project cost of the Kothamangalam project is 370.9 Crore INR. This amounts to around 15% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Kothamangalam Project

S.No

Description Units Chithirapuram

SS

PES LILO

Pallivasal

Aluva line

Kothamangalam

SS

Karukado

m line

Total

% of

Total

1 Cost of Materials Crore INR 19.38 0.45 79.62 29.32 3.23 132.0

0 36%


Crore INR 1.16 0.03 4.78 1.76 0.19 7.92 2%

3 Cost of Labour Crore INR 9.42 0.28 84.44 22.30 3.42 119.8

7 32%

4 Tree cutting compensation and Survey

Crore INR 0.01 0.10 47.30 0.10 1.81 49.32 13%

5 Overhead charges Crore INR 3.00 0.09 20.77 5.35 0.86 30.05 8%

6 T&P including EOT crane, furniture, computer etc.

Crore INR - - - 0.75 - 0.75 0%

7 Compensation for land and building along line route

Crore INR - - 12.15 - 0.15 12.30 3%

8 Service tax @ 15% Crore INR 0.70 0.02 7.68 3.61 0.53 12.54 3%

9 Unforeseen Crore INR 0.33 0.03 5.26 0.42 0.11 6.15 2%

Grand Total Crore INR 34.00 1.00 262.00 63.60 10.30 370.90


Component-wise distribution of KSEB estimated costs (as a % of project cost) – Kothamangalam



36%

2%

32%

13%

8%

0%3%

4% 2%Cost of Materials

Transportation, Insurance& Contigencies

Cost of Labour

Tree cutting compensationand Survey

Overhead charges

T&P including EOT crane,furniture, computeretc

Compensation for land andbuilding along line route

Final


PwC 299

Component-wise cost distribution of costs (segregation by PwC) for Kothamangalam Project

S.No Particulars Units Substation Line Total % of total



Crore INR 31.72 88.15 119.87 32.32%

3 Tax Crore INR 4.30 8.23 12.54 3.38%


Crore INR 0.11 61.50 61.61 16.61%


6 Others Crore INR 12.77 32.11 44.88 12.10%

Total Crore INR 97.60 273.30 370.90


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kothamangalam package is 442.68 Crore INR, which is a 19% increase compared to the KSEB estimated project cost of 370.9 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kothamangalam Project



The KSEB estimated material costs is 132 Crore INR, which is around 36% of the total cost of the Kothamangalam project. Using the available Schedule of rates, only 72.21 Crore INR worth items were reviewed, which is around 55% of the total material costs of the project.

132.00119.87

370.90

139.56

166.63

442.68

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00

400.00

450.00

500.00


Cro

re I

NR


Final


PwC 300

Kothamangalam - Material Cost Estimates – Summary


After review, it was observed that items worth 70.96 Crore INR were overestimated, 1.25 Crore INR items were underestimated and no items were correctly estimated. The net effect results in overestimation of reviewed material costs. As 55% of the materials were reviewed, this net effect, on extrapolating to the total material costs would result in 121.12 Crore INR. However, the anticipated cost is calculated using the methodology mentioned in section 5.3 only.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kothamangalam – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.

With the above scenario, the KSEB estimated material cost of 132 Crore INR is anticipated to increase by 5.73% to 139 Crore INR.


The KSEB estimated cost of labour of the Kothamangalam project is 119.87 Crore INR, which amounts to 32% of the total project cost.

However, the breakup of labour costs is not available in the investment proposal. Therefore, the labour cost is escalated by 40% (average labour cost escalation rate of other TRANSGRID projects). Therefore, the anticipated labour cost is expected to increase by 40% from 119.87 Crore INR to 166.63 Crore INR. Further, the anticipated tax for the labour costs is 29.9 Crore INR.

79.62 Crore INR


72.21 Crore INR



Costs


Costs

Final


PwC 301

A.9.1.5. Summary of Cost Estimates of Kottayam Upgradation Package


The total project cost of the Kottayam Upgradation Package project is 501.4 Crore INR. This amounts to around 20% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate Summary (as given in the KSEB investment proposal) for Kottayam Project

S.No. Description Units Amount

1 400kV Kottayam GIS Crore INR 285

2 220kV Ettumanoor GIS Crore INR 66.5

3 220kV Thuravur AIS Crore INR 52

4 Kottayam Lines Package Crore INR 97.9

5 Total Crore INR 501.4



Component-wise cost distribution of costs (segregation by PwC) for Kottayam Project




3 Tax Crore INR 6.00 6.69 12.69 2.53%



6 Others Crore INR 3.67 0.28 3.95 0.79%

Total Crore INR 403.50 97.90 501.40


Component-wise distribution of segregated costs (as a % of project cost) – Kottayam


71%

14%

2%

3%

9%1%

Materials

Labour , Civil Works andErection

Tax

Compensation (Tree Cutting& Land)

Land Purchase

Others

Final


PwC 302

As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kottayam package is 553.85 Crore INR, which is a 10% increase compared to the KSEB estimated project cost of 501.4 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kottayam Project



The KSEB estimated material costs are 353.77 Crore INR, which is around 70% of the total cost of the Kottayam project. Using the available Schedule of rates, only 86.5 Crore INR worth items were reviewed, which is around 24% of the total material costs of the project.

Kottayam - Material Cost Estimates – Summary


353.77

68.03

501.40

374.04

95.67

553.85

0.00

100.00

200.00

300.00

400.00

500.00

600.00


Cro

re I

NR


331 Crore INR


86.5 Crore INR



Costs


Costs

Final


PwC 303

After review, it was observed that items worth 4.34 Crore INR were overestimated, 77.55 Crore INR items were underestimated and 4.62 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kottayam – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Kottayam project is 68 Crore INR, which amounts to 13% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 68 Crore INR, out of which items worth 34.8 Crore INR (around 51% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 40.64%. Extrapolating this, the cost is expected to increase by 40.64% from 68 Crore INR to 95 Crore INR. Further, the anticipated tax for the labour costs is 17.22 Crore INR.

Final


PwC 304

A.9.1.6. Summary of Cost Estimates of Kunnamangalam 220kV GIS Upgradation Package


The total project cost of the Kunnamangalam project is 82.19 Crore INR. This amounts to around 3% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Kunnamangalam Project

Part A – Construction of Substation

S.No. Particulars Unit Rate (INR) % of total

1 Civil 1 - Building (GIS & Control room) Crore INR 3.70

2 Civil 2 - Foundation, Fencing, Metalling Crore INR 2.72

3 Civil 3 - Site leveling and preliminaries Crore INR 0.57

4 Supply 1 - 220 kV GIS Crore INR 22.29

5 Supply 2 - 110 kV Equipment Crore INR 1.68

6 Supply 3 - Accessories Crore INR 5.52

7 Supply 4 - Power Transformer Crore INR 12.27

8 Supply 5 - Control, Cabling & Earthing Crore INR 5.10

9 Supply 6 - Scada & Automation Crore INR 1.42

10 Erection 1 - GIS & Yard Erection Crore INR 2.85

11 Erection 2 - Transformer & Equipment Crore INR 1.40

12 Erection 3 - Illumination, Earthmat etc. Crore INR 2.00

13 Erection 4 - Protection & Scada Crore INR 0.49

14 Erection 5 - Control Cabling Crore INR 0.23

15 Total Civil Crore INR 6.99 11.13%

16 Total Supply Crore INR 48.27 76.86%

17 Total Erection Crore INR 6.98 11.11%

18 Total Crore INR 62.23

19 PTCC Approval Crore INR 0.10 0.16%

20 Electrical Inspectorate Approval Crore INR 0.10 0.16%

21 Fire & Safety & Other Statutory Approval Crore INR 0.10 0.16%

Unforeseen Expenses Crore INR 0.27 0.42%

Grand Total Crore INR 62.80 Source: Investment Proposal / SBU- T DPR

Cost Estimate (as given in the KSEB investment proposal) for Kunnamangalam Project

Part B – North Malabar Lines Package Phase 1B

S. No Particulars Unit Amount % of total

1 Materials and Spares Inclusive of F & I and all taxes/GST Crore INR 9.60 49.51%

2 Labour Crore INR 7.26 37.43%


3 GST 18% of Labour Charges Crore INR 1.31 6.74%

Subtotal Crore INR 18.16

4 RoW & Tower Footing Compensation Crore INR 0.54 2.79%

5 Tree Cutting Compensation Crore INR 1.15 5.92%

Total of compensations expected Crore INR 1.69

6 Less Scrap value of dismantled items inc. 18% GST Crore INR -0.46 -2.39%

Say INR Crore INR 19.39


Final


PwC 305


Component-wise cost distribution of costs (segregation by PwC) for Kunnamangalam Project




Crore INR 13.97 7.26 21.23 25.83%

3 Tax Crore INR 0.00 1.31 1.31 1.59%


Crore INR 0.00 1.69 1.69 2.06%


6 Others Crore INR 0.57 -0.46 0.10 0.12%

Total Crore INR 62.80 19.39 82.19


Component-wise distribution of segregated costs (as a % of project cost) – Kunnamangalam


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kunnamangalam package is 96.75 Crore INR, which is an 18% increase compared to the KSEB estimated project cost of 82.19 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

70%

26%

2% 2%0%

0%

Materials


Tax

Compensation (Tree Cutting& Land)

Land Purchase

Others

Final


PwC 306

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kunnamangalam Project



The KSEB estimated material costs are 57 Crore INR, which is around 70% of the total cost of the Kunnamangalam project. Using the available Schedule of rates, only 22.49 Crore INR worth items were reviewed, which is around 38% of the total material costs of the project.

Kunnamangalam - Material Cost Estimates – Summary


After review, it was observed that items worth 15.95 Crore INR were overestimated, 5.92 Crore INR items were underestimated and 0.61 Crore INR were correctly estimated. The net effect results in overestimation of reviewed material costs. As only 35% of the materials costs were able to be reviewed, the resultant effect is not extrapolated to the remaining 62% of the material cost. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

57.86

21.23

82.19

61.18

28.63

96.75

0.00

20.00

40.00

60.00

80.00

100.00

120.00


Cro

re I

NR


39.22 Crore INR


22.49 Crore INR



Costs


Costs

Final


PwC 307

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kunnamangalam – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Kunnamangalam project is 21.23 Crore INR, which amounts to 25% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 7.25 Crore INR, out of which items worth 5.36 Crore INR (around 25% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 44%. Extrapolating this, the cost is expected to increase by 44% from 21.23 Crore INR to 28.63 Crore INR. Further, the anticipated tax for the labour costs is 5.15 Crore INR.

Final


PwC 308

A.9.1.7. Summary of Cost Estimates of Kunnamkulam 220kV GIS Upgradation Package


The total project cost of the Kunnamkulam project is 117.98 Crore INR. This amounts to around 5% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Kunnamkulam Project

S. No Description Units TLSP Phase 1 220kV

GIS Total % of total

1 Land Crore INR - - -

1.1 Purchase of land for substation & Tower Footage Crore INR - - -

2 Materials & Labour Charges Crore INR - - -

2.1 Supply of Materials Crore INR 32.20 52.59 84.78 72%

2.2 Labour Charge - Electrical Works Crore INR 13.54 13.54 27.08 23%

2.3 Labour Charge - Civil Works Crore INR - - 0

2.4 Tower design and testing for 4 types Crore INR 0.60 0.00 0.60 1%

Total - Material & Labour Charge Crore INR 46.34 66.12 112.46

3 Spares & Tools Crore INR 0 0 -

3.1 Supply of Spares, Special Tools and Tackles Crore INR - - 0

Sub Total - Material, Labour & Spares Crore INR 46.34 66.12 112.46

Taxes Crore INR 2.54 - 2.54 2%

4 Compensation Charges Crore INR - - -

4.1 Compensation - Tower Footing Crore INR 2.42 0 2.42 2%

4.2 Compensation - RoW Crore INR - - 0

4.3 Compensation - Tree Cutting Crore INR 0.84 0 0.84 1%

4.4 Rehabilitation of House Holds, if any Crore INR - 0 0

Sub Total - Compensation Charges Crore INR 3.26 0 3.26

5 Statutory Approval charges-PTCC Crore INR 0.14 0.01 0.15 0%

6 Initial Development / Centage Charges Crore INR - 0 -

7 Miscellaneous/Unforeseen Items Crore INR - 0 -

Total Crore INR 52.28 66.13 118.41

8 Less- Scrap Items/Dismantled Items Crore INR -0.43 0.00 -0.43 0%

Grant Total - INR Crore INR 51.85 66.13 117.98 Source: Investment Proposal / SBU- T DPR


Final


PwC 309

Component-wise cost distribution of costs (segregation by PwC) for Kunnamkulam Project




3 Tax Crore INR 0.00 2.54 2.54 2.16%



6 Others Crore INR 0.01 0.14 0.15 0.13%

Total Crore INR 66.13 51.85 117.98


Component-wise distribution of segregated costs (as a % of project cost) – Kunnamkulam


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kunnamkulam package is 139.77 Crore INR, which is an 18% increase compared to the KSEB estimated project cost of 117.98 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kunnamkulam Project


71%

23%

1%

2%2%1% 0%0%

Supply of Materials

Labour Charge - ElectricalWorks

Tower design andtestingfor 4 types

Taxes

Compensation - TowerFooting

Compensation - TreeCutting

84.35

27.68

117.98

89.19

39.98

139.77

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00


Cro

re I

NR


Final


PwC 310


The KSEB estimated material costs are 84.35 Crore INR, which is around 72% of the total cost of the Kunnamkulam project. Using the available Schedule of rates, only 27 Crore INR worth items were reviewed, which is around 32% of the total material costs of the project.

Kunnamkulam - Material Cost Estimates – Summary


After review, it was observed that items worth 12.88 Crore INR were overestimated, 14.28 Crore INR items were underestimated and no items were correctly estimated. The net effect results in overestimation of reviewed material costs. As only 32% of the materials costs were able to be reviewed, the resultant effect is not extrapolated to the remaining 68% of the material cost. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kunnamkulam – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Kunnamkulam project is 27.68 Crore INR, which amounts to 23% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 27.68 Crore INR, out of which items worth 11.87 Crore INR (around 43% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 44%. Extrapolating this, the cost is expected to increase by 44% from 27 Crore INR to 39 Crore INR. Further, the anticipated tax for the labour costs is 7.2 Crore INR.

84.35 Crore INR


27.16 Crore INR



Costs


Costs

Final


PwC 311

A.9.1.8. Summary of Cost Estimates of Thalassery 220kV GIS


The total project cost of the Thalassery project is 133.49 Crore INR. This amounts to around 5% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Thalassery Project

Part A. Construction of 220/110kV GIS Substation

S. No Description Units Amount INR (All-inclusive

Cost) % of Total

1 Land - Purchase of land for substation

Crore INR 0.00 0%

2 Materials & Labour Charges Crore INR 0.00 0%

2.1 Supply of Materials Crore INR 55.42 82%

2.2 Labour Charge - Electrical Works Crore INR 2.04 3%

2.3 Labour Charge - Civil Works Crore INR 7.38 11%

2.4 110kV Feeder Re-arrangement and Termination Charges

Crore INR 0.02 0%

Sub Total -Material & Labour Charge Crore INR 64.85

3 Spares and Special Tool- Supply of Spares, Special Tools and Tackles

Crore INR 1.74 3%

Sub Total - Material, Labour & Spares Crore INR 66.58

4 Statutory Approval charges- State/Central Government Department

Crore INR 0.31 0%

5 Unforeseen Items Crore INR 0.00 0%

Grant Total - Phase 1 & 2 Crore INR 67.20


Cost Estimate (as given in the KSEB investment proposal) for Thalassery Project

Part B. Malabar Lines Package- PHASE 1A

S.No Particulars Units Amount % of Total

1 Materials and Spares Inclusive of F & I and all taxes/GST

Crore INR 26.38 40%

2 Labour (Civil Included) Crore INR 21.48 32%


3 GST 18% of Labour Charges Crore INR 3.87 6%

Subtotal Crore INR 51.72

Grand Total Crore INR 51.72

4 RoW& Tower Footing Compensation Crore INR 12.45 19%

5 Tree Cutting Compensation Crore INR 3.34 5%

Total of compensations expected Crore INR 15.79

6 Less Scrap value of dismantled items inc. 18% GST Crore INR -1.23 -2%

Say INR Crore INR 66.28




Final


PwC 312

Component-wise cost distribution of costs (segregation by PwC) for Thalassery Project




Crore INR 9.43 21.48 30.91 23.15%

3 Tax Crore INR 0.00 3.87 3.87 2.90%


Crore INR 0.00 15.79 15.79 11.83%


6 Others Crore INR 0.31 0.00 0.31 0.23%

Total Crore INR 67.20 66.28 133.49


Component-wise distribution of segregated costs (as a % of project cost) – Thalassery


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Thalassery package is 153 Crore INR, which is a 15% increase compared to the KSEB estimated project cost of 133 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

62%

23%

3%

12%0%0%

Materials


Tax

Compensation (Tree Cutting &Land)

Land Purchase

Others

Final


PwC 313

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Thalassery Project



The KSEB estimated material costs are 82 Crore INR, which is around 61% of the total cost of the Thalassery project. Using the available Schedule of rates, only 25.38 Crore INR worth items were reviewed, which is around 31% of the total material costs of the project.

Thalassery - Material Cost Estimates – Summary


After review, it was observed that items worth 7.07 Crore INR were overestimated, 18.02 Crore INR items were underestimated and 0.29 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in 5.3.

82.30

30.91

133.49

87.01

42.37

153.42

0.00

20.00

40.00

60.00

80.00

100.00

120.00

140.00

160.00

180.00


Cro

re I

NR


81.8 Crore INR


25.38 Crore INR



Costs


Costs

Final


PwC 314

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Thalassery – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Thalassery project is 30 Crore INR, which amounts to 23% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 30.91 Crore INR, out of which items worth 15.93 Crore INR (around 51% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 37%. Extrapolating this, the cost is expected to increase by 37% from 30 Crore INR to 42 Crore INR. Further, the anticipated tax for the labour costs is 7.63 Crore INR.

Final


PwC 315

A.9.1.9. Summary of Cost Estimates of Manjeri 220kV AIS Upgradation Package


The Total project cost of Manjeri project is 44.51 Crore INR. This amounts to around 2% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Manjeri Project

S. No

Description Units 220kV SS 220kV LILO line

Total % of Total

1 Cost of land Crore INR 6.40 - 6.79 15%

2

Land Development Cost (Site Leveling and Construction of Compound wall)

Crore INR 3.60 - 3.60

8%

3 Site Portable office. Crore INR 0.05 - 0.05 0%

4 C TV Crore INR 0.01 - 0.01 0%

5 Telecommunication equipment

Crore INR 0.50 - 0.50 1%

6 Fire hydrant System Crore INR 0.21 - 0.21

7 Control Room Building/Bay Control Centre/CABLE Trench/Road

Crore INR 2.65 - 2.65

8

Electrification of Control Room (Manjeri, Kothamangalam, Chalakudy)

Crore INR 0.11 - 0.11

9 Foundation of equipment & structures/fencing/meta spreading/firewall

Crore INR 4.21 - 4.21

10

Erection of Structures, Equipment, Earthmat, Bus Stringing, Earthing, Automation

Crore INR 1.42 - 1.42

11 Sub Total for Labour Crore INR 8.60 0.14 8.74 20%

12 GST @ 18% on labour Crore INR 1.55 0.03 1.57 4%

13 Total for Labour Crore INR 10.14 - 10.14

14 Material + Spares Cost for new substation including GST

Crore INR 23.24 0.39 23.63 53%

15 Total for Material Crore INR 23.24 - 23.24

16 Total Labour& Material Crore INR 33.38 - 33.38 15%

Grand Total Crore INR 43.95 0.56 44.51 8%


Final


PwC 316

Component-wise distribution of KSEB estimated costs (as a % of project cost) – Manjeri



Component-wise cost distribution of costs (segregation by PwC) for Manjeri Project




3 Tax Crore INR 1.55 0.03 1.57 3.53%



6 Others Crore INR 0.56 0.00 0.56 1.27%

Total Crore INR 43.95 0.56 44.51


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Manjeri package is 49.64 Crore INR, which is a 12% increase compared to the KSEB estimated project cost of 44.51 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Manjeri Project


15%

8%

0%

0%

1%

19%

4%

53%

Cost of land

Land Development Cost (SiteLeveling and Construction ofCompound wall)Site Portable office.

C C TV

Telecommunication equipments

Sub Total for Labour

GST @ 18% on labour

23.63

8.74

44.51

24.98

11.94

49.64

0.00

10.00

20.00

30.00

40.00

50.00

60.00


Cro

re I

NR


Final


PwC 317

Note: The cost estimate breakup for Manjeri is not given in the investment proposal. So, the estimates were requested earlier. However, at the time of the review, the estimates for Manjeri were not available. Therefore, the estimates of Manjeri were not reviewed completely. The anticipated cost is calculated using the methodology mentioned in section 5.3.


The KSEB estimated material cost of the Manjeri project is 23.63 Crore INR, which amounts to 53% of the total project cost.

The details of items that reviewed the investment proposal can be referred in detail from the ‘Manjeri – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Manjeri project is 8.74 Crore INR, which amounts to 19% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 8.74 Crore INR to 11.94 Crore INR. Further, the anticipated tax for the labour costs is 2.15 Crore INR.

Final


PwC 318

A.9.1.10. Summary of Cost Estimates of Kolathanadu Line Strengthening Package


The Total project cost of Kolathanadu project is 239.77 Crore INR. This amounts to around 9% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Kolathanadu Project

S. No

Particulars Unit Amount % of Total

1 Materials and Spares Inclusive of F & I and all taxes

Crore INR 88.16 37%

2 Civil Crore INR 69.93 29%

3 GST 18% of Civil Charges Crore INR 12.59 5%

4 Abstract cost of Bay Extension Works Crore INR 19.40 8%

5 Abstract cost of new 4 x 110 kV Line from Ambalathara solar park SS to 110kV Cheruvathur-Kanhangad Feeder

Crore INR 34.00 14%

6 RoW& Tower Footing Compensation Crore INR 7.55 3%

7 Tree Cutting Compensation Crore INR 13.60 6%

8 Less Scrap value of dismantled items inc. 18% GST

Crore INR -5.45 -2%



Component-wise distribution of KSEB estimated costs (as a % of project cost) – Kolathanadu

37%

29%

5%

8%

14%

3%6% -2%

Materials and Spares Inclusive of F& I and all taxes

Civil

GST 18% of Civil Charges

Abstract cost of Bay ExtensionWorks

Abstract cost of new 4 x 110 kVLine

RoW& Tower FootingCompensation

Tree Cutting Compensation

Final


PwC 319

Component-wise cost distribution of costs (segregation by PwC) for Kolathanadu Project


1 Materials Crore INR 0.00 82.71 82.71 34%


Crore INR 0.00 123.33 123.33 51%

3 Tax Crore INR 0.00 12.59 12.59 5%


Crore INR 0.00 21.14 21.14 9%

5 Land Purchase Crore INR 0.00 0.00 0.00 0%

6 Others Crore INR 0.00 0.00 0.00 0%

Total Crore INR 0.00 239.77 239.77


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kolathanadu package is 317.38 Crore INR, which is a 32% increase compared to the KSEB estimated project cost of 239 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kolathanadu Project



The KSEB estimated material costs are 82 Crore INR, which is around 34% of the total cost of the Kolathanadu project. Using the available Schedule of rates, around 80 Crore INR worth items were reviewed, which is around 97% of the total material costs of the project.

82.71

123.33

239.77

87.45

176.93

317.38

0.00

50.00

100.00

150.00

200.00

250.00

300.00

350.00


Cro

re I

NR


Final


PwC 320

Kolathanadu - Material Cost Estimates – Summary


After review, it was observed that items worth 30.3 Crore INR were overestimated, 50.42 Crore INR items were underestimated and no items were correctly estimated. The net effect results in overestimation of reviewed material costs. As 97% of the materials were reviewed, this net effect, on extrapolating to the total material costs would result in 81.95 Crore INR. However, the anticipated cost is calculated using the methodology mentioned in section 5.3 only.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kolathanadu – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the Kolathanadu project is 123 Crore INR, which amounts to 51% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 69.92 Crore INR, out of which items worth 48.56 Crore INR (around 40% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 43%. Extrapolating this, the cost is expected to increase by 43% from 239 Crore INR to 317 Crore INR. Further, the anticipated tax for the labour costs is 31.85 Crore INR.

82.71 Crore INR


80.8 Crore INR



Costs


Costs

Final


PwC 321

A.9.1.11. Summary of Cost Estimates of NRHTLS Project


The Total project cost of NRHTLS project is 89.13 Crore INR. This amounts to around 4% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for NRHTLS Project

Reconductoring of Kakkayam -

Nallalam (including

Kinalur tap) 110kV line with

HTLS conductor.

Conversion of 110 kV SC Line to DC

line from Nallalam 220kV s/s to 110 kV

substation, Meppayur.

S.No. Particulars Units Amount Amount

Total Project Costs

% of total

1 Materials Line Crore INR 34.69 35.06 69.76 78%

2 Spares 1% of (1) Crore INR 0.35 0.35 0.70 1%

3 Materials Substation Crore INR 1.25 0.85 2.10 2%

4 Spares 4% of (3) Crore INR 0.05 0.03 0.08 0%

5 Erection and commissioning @ 7.5% (5) Crore INR 2.73 2.72 5.45 6%

6

Additional 50% of labour for HTLS swinging works 50%*(7.5%*(1+2)) Crore INR 1.31 1.33 2.64 3%

7 Foundation for 1 No of feeder bay at Nallalam Crore INR 0.17 2.51 2.68 3%

8

Insurance(1%), transportation(4%) & contingencies(1%) - Total 6% of (5) Crore INR 2.18 2.18 4.36 5%

9 Services Tax @ 15% of (6+7+(40% of (8)) Crore INR 0.62 0.76 1.37 2%

10 Total Crore INR 43.35 45.79 89.13 Source: Investment Proposal / SBU- T DPR

Component-wise distribution of KSEB estimated costs (as a % of project cost) – NRHTLS


78%

1%2%

6%

3%3%

5% 2%Materials Line

Spares

Materials Substation

Erection and commissioning @ 7.5% (5)

Additional 50% of labour for HTLS

Foundation

Insurance(1%), transportation(4%) &contingencies(1%)

Services Tax @ 15%

Final


PwC 322


Component-wise cost distribution of costs (segregation by PwC) for NRHTLS Project



2 Labour, Civil Works and Erection Crore INR 0.00 10.77 10.77 12%

3 Tax Crore INR 0.00 1.37 1.37 2%

4 Compensation (Tree Cutting & Land) Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 0.00 4.36 4.36 5%



As per the methodology mentioned in Section 5.3, the anticipated project cost of the NRHTLS package is 99.03 Crore INR, which is an 11% increase compared to the KSEB estimated project cost of 89.13 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for NRHTLS Project


72.63

10.77

89.13

76.80

15.15

99.03

0.00

20.00

40.00

60.00

80.00

100.00

120.00


Cro

re I

NR


Final


PwC 323


The KSEB estimated material costs are 72 Crore INR, which is around 81% of the total cost of the NRHTLS project. Using the available Schedule of rates, around 34 Crore INR worth items were reviewed, which is around 47% of the total material costs of the project.

NRHTLS - Material Cost Estimates – Summary


After review, it was observed that items worth 29 Crore INR were overestimated, 4.7 Crore INR items were underestimated and 0.25 Crore INR were correctly estimated. The net effect results in overestimation of reviewed material costs. As only 47% of the materials costs were able to be reviewed, the resultant effect is not extrapolated to the remaining 53% of the material cost. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘NRHTLS – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



The KSEB estimated cost of labour of the NRHTLS project is 10 Crore INR, which amounts to 12% of the total project cost. The breakup of labour cost estimates available in the investment proposal is 2.67 Crore INR, out of which items worth 1.99 Crore INR (around 20% of labour cost) were able to be reviewed. The reviewed items of the KSEB estimated labour cost is anticipated to increase by 40%. Extrapolating this, the cost is expected to increase by 40% from 89 Crore INR to 99 Crore INR. Further, the anticipated tax for the labour costs is 2.73 Crore INR.

72 Crore INR


34 Crore INR


29 Crore INR Overestimated

Costs


Costs

Final


PwC 324

A.9.1.12. Summary of Cost Estimates of Ernad Lines Package


The Total project cost of ERNAD project is 551.67 Crore INR. This amounts to around 22% of the total project cost of 12 TRANSGRID projects. The KSEB cost estimate breakup is presented below.

Cost Estimate (as given in the KSEB investment proposal) for Ernad Project

S.No. Description Units Project A Project B Total % of total

Line Construction works:

1 Materials and spares and Freight and insurance

Crore INR

254.41 254.41 46%

2 Labour cost for Project A & B Crore INR

98.10 98.10 18%

3 Total Tender cost Excluding Service Taxes (1) +(2)

Crore INR

352.51 352.51

Bay Extension Works at Madakkathara / Nallalam Substations

4 Materials for bay extension works Crore INR

6.66 0.99 7.65 1%

5 Spares for substation @ 4% of (4) Crore INR

0.27 0.04 0.31 0%

6 Bay Extension work Materials and Spares (4)+(5)

Crore INR

7.96

7 Erection & Commissioning @ 7.5% of (6) Crore INR

0.60 0%

8 Foundation for bay extension works Crore INR

2.25 0.34 2.59 0%

9 GST @ 18% of (8) Crore INR

0.47 0%

10 Total Cost of bay extension works (6)+(7)+(8)+(9)

Crore INR

11.62

Other costs

11 Tender Excess @29.28% of (3) Crore INR

103.21 19%

12 Additional Tax and GST revision for awarded amount

Crore INR

37.57 7%

13 Compensation for tower footing & RoW Crore INR

28.84 4.88 33.72 6%

14 Provision for various statutory approvals Crore INR

4.76 0.29 5.05 1%

15 Administration & General expenses Crore INR

2.88 0.96 3.85 1%

16 Design, Engineering & validation of MCMV towers

Crore INR

4.14 ---- 4.14 1%

17 Grand Total Crore INR

551.67

18 Less PSDF Grant Crore INR

(-) 333.93

19 Net Amount to be met by KSEB Crore INR

217.74


Final


PwC 325

Component-wise distribution of KSEB estimated costs (as a % of project cost) – Ernad



Component-wise cost distribution of costs (segregation by PwC) for Ernad Project




Crore INR 0.00 101.29 101.29 18%

3 Tax Crore INR 0.00 38.04 38.04 7%


Crore INR 0.00 33.72 33.72 6%


6 Others Crore INR 0.00 116.25 116.25 21%

Total Crore INR 0.00 551.67 551.67


As per the methodology mentioned in Section 5.3, the anticipated project cost of Ernad package is 595.47 Crore INR, which is an 8% increase compared to the KSEB estimated project cost of 551.67 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

46%

18%

1%

19%

7%

6% 1%1%

1%Materials and spares

Labour cost

Materials for bay extension

Spares for substation

Erection & Commissioning

Foundation for bay extension works

GST @ 18%

Tender Excess

Additional Tax and GST revision forawarded amountCompensation for tower footing &RoWProvision for various statutoryapprovalsAdministration & General expenses

Design, Engineering & validation ofMCMV towers

Final


PwC 326

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Ernad Project


Note: The cost estimate breakup for Ernad is not given in the investment proposal. So, the estimates were requested earlier. However, at the time of the review, the estimates for Ernad were not available. Therefore, the estimates of Ernad were not reviewed completely. The anticipated cost is calculated using the methodology mentioned in section 5.3.


The KSEB estimated material cost of the Ernad project is 262.63 Crore INR, which amounts to 48% of the total project cost.



The KSEB estimated cost of labour of the Ernad project is 101 Crore INR, which amounts to 18% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 101 Crore INR to 142 Crore INR. Further, the anticipated tax for the labour costs is 25.64 Crore INR.

262.37

101.29

551.67

277.40

142.45

595.47

0.00

100.00

200.00

300.00

400.00

500.00

600.00

700.00


Cro

re I

NR


Final


PwC 327

A.9.2. Project-wise Summary of KSEB Cost Estimate Appraisal for New Capital Works Projects

A.9.2.1. Summary of Cost Estimates of Chemperi 110kV Substation


The Total project cost of Chemperi project is 25 Crore INR. This amounts to around 9% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Chemperi Project

Part A. Construction of 110kV Substation

Sl No Description Units Amount % of Total

1 Part-1: Land Crore INR 1.06 9%

2 Part-2: Cost of materials Crore INR 4.41 39%

3 Erection and commissioning @7.5% of Part-2 Crore INR 0.33 3%

4 Insurance, transporting and contingencies @6% of Part-2

Crore INR 0.26

2%

5 Part-3: Civil works and special works Crore INR 3.15 28%

6 Overhead charges @10% Crore INR 0.92 8%

7 Unforeseen items Crore INR 1.21 11%


Cost Estimates (as given in the KSEB investment proposal) for Chemperi Project

Part B. Construction of 110kV DC line

Sl No Description Units Amount % of Total

1 Part-(a) : Cost of materials Crore INR 2.73 34%

2 Erection and commissioning @7.5% of Part-(a) Crore INR 0.19 2%

3 Insurance, transporting and contingencies @6% of Part-(a)

Crore INR 0.16 2%

4 Part-(b): Civil works Crore INR 2.75 34%

5 Tree cutting compensation Crore INR 1.47 18%

6 Overhead charges @10% Crore INR 0.73 9%



Component-wise cost distribution of costs (segregation by PwC) for Chemperi Project

S.No Particulars Units Substation Transmission




Crore INR 3.48 2.94 6.42 26%

3 Tax Crore INR 2.04 1.45 3.49 14%

Final


PwC 328




Crore INR 0.00 1.47 1.47 6%


6 Others Crore INR 3.46 1.95 5.41 22%

Total Crore INR 14.45 10.55 25.00


Component-wise distribution of segregated cost (as a % of project cost) – Chemperi


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Chemperi upgradation package is 26.1 Crore INR, which is a 4.4% increase compared to the KSEB estimated project cost of 25 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Chemperi Project


28%

26%14%

6%

4%

22% Materials


Tax

Compensation (Tree Cutting &RoW)

Land Purchase

Others

7.14 6.50

25.00

7.559.10

26.10

0.00

5.00

10.00

15.00

20.00

25.00

30.00


Cro

re I

NR


Final


PwC 329


The KSEB estimated material costs is 7.14 Crore INR, which is around 29% of the total project cost of Chemperi project. Using the available Schedule of rates, only 2.90 Crore INR worth items were reviewed, which is around 40% of the total material costs of the project.

Chemperi - Material Cost Estimates – Summary


After review, it was observed that items worth 2.5 Crore INR were overestimated, 0.4 Crore INR items were underestimated and no items were correctly estimated. The net effect results in overestimation of reviewed material costs. As only 40% of the materials costs were able to be reviewed, the resultant effect is not extrapolated to the remaining 60% of the material cost. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.1.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Chemperi – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.



Note: The estimates breakup of labour, civil and erection cost are not available in the investment proposal. Hence, the labour, civil and erection cost items are not reviewed. The anticipated cost is calculated using the methodology mentioned in section 5.3.2.

The KSEB estimated cost of labour of the Chemperi project is 6.5 Crore INR, which amounts to 26% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 6.5 Crore INR to 9.1 Crore INR. Further, the anticipated tax for the labour costs is 1.62 Crore INR.

7.14 Crore INR


2.90 Crore INR



Costs


Costs

Final


PwC 330

A.9.2.2. Summary of Cost Estimates of Seethangoli 110kV Substation


The Total project cost of Seethangoli project is 10.04 Crore INR. This amounts to around 3% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Seethangoli Project

Part A. Construction of 110kV Substation

S. No Description Units Amount % of Total

1 Land Crore INR 0.50 5%

2 Civil Works Crore INR 2.81 29%

3 Materials including T&P Crore INR 4.23 40%

4 Erection & Commissioning (7.5% of III) Crore INR 0.32 3%

5 Transport, Insurance, contingencies (6% of III) Crore INR 0.25 2%

6 Overheads (10% of Total) Crore INR 0.81 8%

7 Provision for taxes Crore INR 0.69 12%

Total Substation Works Crore INR 9.61 Source: Investment Proposal / SBU- T DPR

Cost Estimates (as given in the KSEB investment proposal) for Seethangoli Project

Part B. Construction of 110kV DC line


1 Materials Crore INR 0.20 51%


3 Overheads & Supervision charges (10% of Total) Crore INR

0.03 8%

4 Provision for taxes Crore INR 0.05 14%

Total Line Works Crore INR 0.39


Component-wise cost distribution of costs (segregation by PwC) for Seethangoli Project





Crore INR 3.13 0.11 3.23 32%

3 Tax Crore INR 0.69 0.05 0.75 7%


Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 1.07 0.03 1.10 11%

Total Crore INR

9.62 0.39 10.01


Final


PwC 331

Component-wise distribution of segregated cost (as a % of project cost) – Seethangoli


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Seethangoli upgradation package is 11.62 Crore INR, which is a 16% increase compared to the KSEB estimated project cost of 10.01 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Seethangoli Project



The KSEB estimated material costs is 4.43 Crore INR, which is around 44% of the total project cost of Seethangoli project. Using the available Schedule of rates, only 3.07 Crore INR worth items were reviewed, which is around 69% of the total material costs of the project.

44%

32%

8%

0%

5%

11%

Materials


Tax


Land Purchase

Others

4.43

3.21

10.04

4.68 4.49

11.62

0.00

2.00

4.00

6.00

8.00

10.00

12.00

14.00


Cro

re I

NR


Final


PwC 332

Seethangoli - Material Cost Estimates – Summary


After review, it was observed that items worth 2.57 Crore INR were overestimated, 0.41 Crore INR items were underestimated and 0.09 Crore INR were correctly estimated. The net effect results in overestimation of reviewed material costs. As 69% of the materials were reviewed, this net effect, on extrapolating to the total material costs would result in 4.34 Crore INR. However, the anticipated cost is calculated using the methodology mentioned in section 5.3 only.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Seethangoli – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Seethangoli project is 3.21 Crore INR, which amounts to 32% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 3.21 Crore INR to 4.49 Crore INR. Further, the anticipated tax for the labour costs is 0.81 Crore INR.

4.10 Crore INR


3.07 Crore INR



Costs


Costs

Final


PwC 333

A.9.2.3. Summary of Cost Estimates of Thambalamanna 110kV Substation


The Total project cost of Thambalamanna project is 33.25 Crore INR. This amounts to around 11% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Thambalamanna Project


1 Material Cost Crore INR 20.16 61%

2 Erection and commissioning @7.5% of (1) Crore INR 1.51 5%

3 Transportation , Insurance & Contingencies @ 6 % of (1) Crore INR 1.21 4%

4 Civil Works and special works Crore INR 5.20 16%

5 PTCC approval, etc. Crore INR 0.55 2%

6 Overhead/supervision charges Crore INR 2.86 9%

7 Taxes and duties Crore INR 1.43 4%

8 Unforeseen Crore INR 0.34 1%



Component-wise distribution of KSEB estimated (as a % of project cost) – Thambalamanna


61%

4%

4%

16%

2%

8%

4% 1%Material Cost

Erection and [email protected]% of (1)

Transportation , Insurance &Contingencies @ 6 % of (1)

Civil Works and specialworks

PTCC approval, etc.

Overhead/supervisioncharges

Taxes and duties

Unforeseen

Final


PwC 334

Component-wise cost distribution of costs (segregation by PwC) for Thambalamanna Project





Crore INR 2.55 4.16 6.71 20%

3 Tax Crore INR 0.54 0.88 1.43 4%


Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 1.88 3.07 4.96 15%

Total Crore INR 12.63 20.61 33.25


As per the methodology mentioned in Section 5.3, the anticipated project cost of the Thambalamanna upgradation package is 37.76 Crore INR, which is a 12% increase compared to the KSEB estimated project cost of 33.25 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Thambalamanna Project



The KSEB estimated material costs is 20.16 Crore INR, which is around 61% of the total project cost of Thambalamanna project. Using the available Schedule of rates, only 12.89 Crore INR worth items were reviewed, which is around 67% of the total material costs of the project.

20.16

6.71

33.25

21.31

9.40

37.36

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00


Cro

re I

NR


Final


PwC 335

Thambalamanna - Material Cost Estimates – Summary


After review, it was observed that items worth 0.44 Crore INR were overestimated, 12.25 Crore INR items were underestimated and 0.20 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Thambalamanna – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Thambalamanna project is 6.71 Crore INR, which amounts to 20% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 6.71 Crore INR to 9.40 Crore INR. Further, the anticipated tax for the labour costs is 1.69 Crore INR.

19.31 Crore INR


12.89 Crore INR



Costs


Costs

Final


PwC 336

A.9.2.4. Summary of Cost Estimates of Pallom-Ettumanoor 110kV Substation


The Total project cost of Pallom-Ettumanoor project is 62 Crore INR. This amounts to around 21% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Pallom-Ettumanoor Project

Part -I Upgradation of 66kV Substation Gandhinagar to 110kV

S.No

Description Units Amou

nt % of

Total

1 Cost of materials, A

Crore INR 5.70

52%

2 Erection & Commissioning, B=7.5% of A Crore INR 0.43

4%

3 Transportation, Insurance and contingencies, C=6% of A Crore INR 0.34

3%

4 Civil works and special works like SCADA etc. if any, D

Crore INR 3.57

32%

5 Overhead/ Supervision charges, F=10% of E Crore INR 1.00

9%

6 Taxes & Duties if any extra @15% for (40%of Civil work + Erection & Commissioning charge)

Crore INR 0.28

3%

7 Unforeseen Crore INR 0.22

2%

8 Deductions Crore INR -0.54

-5%




Part -II Upgradation of 66kV Substation Kottayam to 110kV



2 Equipment including T&P Crore INR 4.40 55%

3 Erection & Commissioning (7.5% of II) Crore INR 0.33 4%

4 Transport, Insurance, contingencies (6% of II) Crore INR 0.26 3%


6 GST @18% Crore INR 1.10 14%

7 Unforeseen Items & spares Crore INR 0.17 2%

Total Crore INR 8.00 Source: Investment Proposal / SBU- T DPR


Part -III Upgradation of existing 66kV Pallom - Ettumanoor feeder


A Cost of materials Crore INR 6.83 20%

B Erection, Testing & Commissioning = 7.5% of part –II Crore INR 0.51 2%

C Insurance, Transportation & contingencies 6% of part -II Crore INR 0.41 1%

D Civil works and Special works if any Crore INR 17.69 52%

E1 Tree Cutting compensation & crop damage Crore INR 0.15 0%

E2 Compensation towards Diminution of land value Crore INR 0.40 1%

E3 Provision for road cutting Crore INR 0.10 0%

E4 Provision for PTCC, Electrical Inspectorate Crore INR 0.05 0%

G Overhead/Supervision charges Crore INR 2.54 7%

Final


PwC 337


H Provision for GST Crore INR 4.58 13%

I Unforeseen Crore INR 0.74 2%



Part -IV Upgradation of 66kv Pallom-Ettumanoor & 66kv Pallom-Gandhinagar Feeders to 110kv



2 Equipment including T&P Crore INR 5.70 63%

3 Erection & Commissioning (7.5% of II) Crore INR 0.43 5%

4 Transport, Insurance, contingencies (6% of II) Crore INR 0.34 4%


6 GST @18% Crore INR 1.23 14%

7 Unforeseen Items & spares Crore INR 0.25 3%



Component-wise cost distribution of costs (segregation by PwC) for Pallom-Ettumanoor Project





Crore INR 5.45 19.00 24.45 39%

3 Tax Crore INR 1.38 5.81 7.19 12%


Crore INR 0.00 0.65 0.65 1%


6 Others Crore INR 2.07 5.01 7.09 11%

Total Crore INR 19.00 43.00 62.00


Component-wise distribution of segregated costs (as a % of project cost) – Pallom-Ettumanoor


37%

39%

12%

1%

11% Materials


Tax


Land Purchase

Others

Final


PwC 338

As per the methodology mentioned in Section 5.3, the anticipated project cost of the Pallom-Ettumanoor project is 72.05 Crore INR, which is a 16% increase compared to the KSEB estimated project cost of 62 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Pallom-Ettumanoor Project



The KSEB estimated material costs is 22.62 Crore INR, which is around 36% of the total project cost of Pallom-Ettumanoor project. Using the available Schedule of rates, only 17.9 Crore INR worth items were reviewed, which is around 79% of the total material costs of the project.

Pallom-Ettumanoor - Material Cost Estimates – Summary


22.62 24.45

62.00

23.92

34.23

72.05

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00

80.00


Cro

re I

NR


22.62 Crore INR


17.9 Crore INR



Costs


Costs

Final


PwC 339

After review, it was observed that items worth 11.7 Crore INR were overestimated, NR 6.15 Crore INR items were underestimated and 0.04 Crore INR were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Pallom-Ettumanoor – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Pallom-Ettumanoor project is 24.45 Crore INR, which amounts to 39% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 24.45 Crore INR to 34.23 Crore INR. Further, the anticipated tax for the labour costs is 6.16 Crore INR.

Final


PwC 340

A.9.2.5. Summary of Cost Estimates of Kollam-Kottiyam Interlinking Project


The Total project cost of Kollam-Kottiyam project is 54.37 Crore INR. This amounts to around 19% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Kollam-Kottiyam Project


1 Cost of materials Crore INR 27.02 50%

2 Civil works Crore INR 8.84 16%

3 Erection & Commissioning @7.5% of A

Crore INR 2.03 4%

4 Transportation, Insurance & contingencies @ 6% of A

Crore INR 1.62 3%

5 OH charges / Supervision Charges @ 10% of (E)

Crore INR 3.95 7%

6 PTCC Approval Crore INR 0.15 0%

7 Approval from PWD, Road reformation charges

Crore INR 8.50 16%

8 GST @ 18% of item (B)+(C)+(D) Crore INR 2.25 4%

9 Unforeseen ITEMS Crore INR 0.01 0%


Component-wise distribution of KSEB Estimated costs (as a % of project cost) –

Kollam-Kottiyam


50%

16%

4%

3%

7%

16%

4%Cost of materials

Civil works


Transportation, Insurance &contingencies

OH charges / SupervisionCharges

PTCC Approval

Approval from PWD ,Roadreformation charges

Final


PwC 341


Component-wise cost distribution of costs (segregation by PwC) for Kollam-Kottiyam Project





Crore INR 0.00 10.87 10.87 20%

3 Tax Crore INR 0.00 2.25 2.25 4%


Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 0.00 14.24 14.24 26%



As per the methodology mentioned in Section 5.3, the anticipated project cost of the Kollam-Kottiyam upgradation package is 60.76 Crore INR, which is a 16% increase compared to the KSEB estimated project cost of 54.37 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Kollam-Kottiyam Project



The KSEB estimated material costs is 27.02 Crore INR, which is around 50% of the total project cost of Kollam-Kottiyam project. Using the available Schedule of rates, only 22.84 Crore INR worth items were reviewed, which is around 85% of the total material costs of the project.

27.02

10.87

54.37

28.57

15.22

60.76

0.00

10.00

20.00

30.00

40.00

50.00

60.00

70.00


Cro

re I

NR


Final


PwC 342

Kollam-Kottiyam - Material Cost Estimates – Summary


After review, it was observed that items worth 0.18 Crore INR were overestimated, 22.66 Crore INR items were underestimated and no items were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in section 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Kollam-Kottiyam – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Kollam-Kottiyam project is 10.87 Crore INR, which amounts to 20% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 10.87 Crore INR to 15.22 Crore INR. Further, the anticipated tax for the labour costs is 2.74 Crore INR.

27 Crore INR


22.8 Crore INR



Costs


Costs

Final


PwC 343

A.9.2.6. Summary of Cost Estimates of Mylatty-Vidhyanagar 220kV/110kV MCMV line Project


The Total project cost of Mylatty-Vidhyanagar project is 47 Crore INR. This amounts to around 16% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Mylatty-Vidhyanagar Project


1 Cost of Material Crore INR 12.18 40%

2 Erection & Commissioning (7.5% of A) Crore INR 0.91 3%

3 Transportation, Insurance and contingencies (6% of A) Crore INR 0.73 2%

4 Civil work and special works Crore INR 6.69 22%

5 Tree cutting and tower footing compensation Crore INR 2.96 10%

6 Overhead /supervisions charge (10% of F) Crore INR 2.35 8%

7 GST @ 18% Crore INR 4.65 15%


Total Project Cost Crore INR 47.00 Source: Investment Proposal / SBU- T DPR


Mylatty-Vidhyanagar



40%

3%2%22%

10%

8%

15% Cost of Material

Erection & Commissioning(7.5% of A)

Transportation, Insurance andcontingencies (6% of A)

Civil work and special works

Tree cutting and tower footingcompensation

Overhead /supervisions charge(10% of F)

GST @ 18%

Final


PwC 344

Component-wise cost distribution of costs (segregation by PwC) for Mylatty-Vidhyanagar Project

S.No. Particulars Units Substation Transmission




Crore INR 0.00 7.60 7.60 16%

3 Tax Crore INR 0.00 4.65 4.65 10%


Crore INR 0.00 2.96 2.96 6%


6 Others Crore INR 0.00 3.08 3.08 7%



As per the methodology mentioned in Section 5.3, the anticipated project cost of Mylatty-Vidhyanagar upgradation package is 48.01 Crore INR, which is a 2% increase compared to the KSEB estimated project cost of 54.37 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Mylatty-Vidhyanagar Project



The KSEB estimated material costs is 12.18 Crore INR, which is around 26% of the total project cost of Mylatty-Vidhyanagar project. Using the available Schedule of rates, only 9.55 Crore INR worth items were reviewed, which is around 78% of the total material costs of the project.

12.18

7.60

47.00

12.8810.64

48.01

0.00

10.00

20.00

30.00

40.00

50.00

60.00


Cro

re I

NR


Final


PwC 345

Mylatty-Vidhyanagar - Material Cost Estimates – Summary


After review, it was observed that items worth 3.49 Crore INR were overestimated, 6.07 Crore INR items were underestimated and no items were correctly estimated. The net effect results in underestimation of reviewed material costs. Therefore, the material cost is taken as such without any changes. However, the anticipated cost is calculated using the methodology mentioned in 5.3.

The details of items that are overestimated and underestimated in the investment proposal can be referred to in detail from the ‘Mylatty-Vidhyanagar – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Mylatty-Vidhyanagar project is 7.60 Crore INR, which amounts to 16% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 7.60 Crore INR to 10.64 Crore INR. Further, the anticipated tax for the labour costs is 1.92 Crore INR.

12.18 Crore


9.55 Crore


3.49 Crore Overestimated

Costs

6.07 Crore Underestimated

Costs

Final


PwC 346

A.9.2.7. Summary of Cost Estimates of Panthalacode 110kV Substation Project


The Total project cost of Panthalacode project is 22.18 Crore INR. This amounts to around 8% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Panthalacode Project


1 Land Crore INR 10.50 47%

2 Civil Works Crore INR

2.66 12%

3 Materials Crore INR

5.35 24%

4 Erection & Commissioning @ 7.5% Crore INR 0.40 2%

5 Insurance, Sale tax and transporting, Charges @ 6% Crore INR

0.32 1%

6 Overhead Charges 10% Crore INR

0.87 4%

7 [email protected]%

Crore INR 2.07

9%

Total Crore INR

22.18 Source: Investment Proposal / SBU- T DPR


Panthalacode



47%

12%

24%

2%2%

4%

9% Land

Civil Works

Materials

Erection & Commissioning @ 7.5%

Insurance, Sale tax and transporting, Charges@ 6%

Overhead Charges 10%

[email protected]%

Final


PwC 347

Component-wise cost distribution of costs (segregation by PwC) for Panthalacode Project





Crore INR 3.06 0.00 3.06 14%

3 Tax Crore INR 2.07 0.00 2.07 9%


Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 1.20 0.00 1.20 5%



As per the methodology mentioned in Section 5.3, the anticipated project cost of the Panthalacode upgradation package is 22.42 Crore INR, which is a 1% increase compared to the KSEB estimated project cost of 22.42 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Panthalacode Project



The KSEB estimated material costs is 5.35 Crore INR, which is around 24% of the total project cost of Panthalacode project. Using the available Schedule of rates, only 2.82 Crore INR worth items were reviewed, which is around 53% of the total material costs of the project.

5.35

3.06

22.18

5.66

4.29

22.42

0.00

5.00

10.00

15.00

20.00

25.00


Cro

re I

NR


Final


PwC 348

Panthalacode - Material Cost Estimates – Summary



The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Panthalacode – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Panthalacode project is 3.06 Crore INR, which amounts to 14% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 3.06 Crore INR to 4.29 Crore INR. Further, the anticipated tax for the labour costs is 0.77 Crore INR.

5.35 Crore INR


2.82 Crore INR



Costs


Costs

Final


PwC 349

A.9.2.8. Summary of Cost Estimates of Vennakkara 110kV GIS Project


The Total project cost of Vennakkara project is 39.5 Crore INR. This amounts to around 13% of the total project cost of 8 New Capital Works projects under review. The KSEB cost estimate breakup is presented below.

Cost Estimates (as given in the KSEB investment proposal) for Vennakkara Project


1 Cost of materials Crore INR 26.58 67%

2 Civil works Crore INR 3.89 10%

3 Erection & Commissioning @ 7.5% of item (1) Crore INR 1.99 5%

4 Insurance, transportation, Contingencies @ 6% of item (1) Crore INR 1.59 4%

5 PTCC, Electrical Inspectorate fees Crore INR 0.03 0%

6 OH charges / Supervision Charges @ 10% of (6) Crore INR 3.41 9%

7 GST @ 18% of item Crore INR 4.29 11%

8 Unforeseen Crore INR 0.48 1%

9 Less Scrap Crore INR -2.77 -7%




Vennakkara



67%

10%

5%

4%0%

9%

11%

1%-7%

Cost of materials

Civil works


Insurance, transportation,Contingencies

PTCC, ElectricalInspectorate fees

OH charges / SupervisionCharges

GST @ 18% of item

Final


PwC 350

Component-wise cost distribution of costs (segregation by PwC) for Vennakkara Project





Crore INR 5.88 0.00 5.88 15%

3 Tax Crore INR 4.29 0.00 4.29 11%


Crore INR 0.00 0.00 0.00 0%


6 Others Crore INR 2.75 0.00 2.75 7%



As per the methodology mentioned in Section 5.3, the anticipated project cost of the Vennakkara upgradation package is 40.57 Crore INR, which is a 3% increase compared to the KSEB estimated project cost of 39.50 Crore INR. The comparison of the KSEB estimated cost and the anticipated cost is shown in the graph below.

Comparison of KSEB Estimated cost vs. Anticipated cost (Component-wise) for Vennakkara Project



The KSEB estimated material costs is 26.58 Crore INR, which is around 67% of the total project cost of Vennakkara project. Using the available Schedule of rates, only 5.98 Crore INR worth items were reviewed, which is around 22% of the total material costs of the project.

26.58

5.88

39.50

28.11

8.24

40.57

0.00

5.00

10.00

15.00

20.00

25.00

30.00

35.00

40.00

45.00


Cro

re I

NR


Final


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Vennakkara - Material Cost Estimates – Summary



The details of items that are overestimated and underestimated in the investment proposal can be referred in detail from the ‘Vennakkara – Review of Cost Estimates.xls’ which is appended as Appendix-10 in this report.




The KSEB estimated cost of labour of the Vennakkara project is 5.88 Crore INR, which amounts to 15% of the total project cost. Extrapolating this by the average labour cost escalation rate of 40%, the cost is expected to increase from 5.88 Crore INR to 8.24 Crore INR. Further, the anticipated tax for the labour costs is 1.48 Crore INR.

26.58 Crore INR


5.98 Crore INR



Costs


Costs

Final


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A.10. Appendix – Calculation of Impact of TRANSGRID 2.0 and New Capital Works on-grid and transmission charges

Calculation of the impact of the proposed projects (TRANSGRID 2.0 and New Capital Works) on the grid and transmission charges are attached with this report as Appendix-11 in Microsoft Excel format.

© 2020 PricewaterhouseCoopers Private Limited. All rights reserved. In this document, “PwC” refers to PricewaterhouseCoopers Private Limited (a limited liability company in India), which is a member firm of PricewaterhouseCoopers International Limited, each member firm of which is a separate legal entity.

Adding Value…

appraisal of capital expenditure proposal in transmission

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