Section 31 in The Maharashtra Electricity Regulatory Commission (Terms and Conditions of Tariff) Regulations, 2005
31. Debt-equity ratio.
- 31.1 Existing generating stations31.1.1For the purpose of these Regulations, the amount of loan capital and equity capital shall be calculated as follows:(a)The amount of loan capital shall be equal to the sum of the outstanding balance of all long-term loans taken to finance the purchase or construction of the generating station, at the commencement of the financial year for which tariff is being determined, as reflected in the books of account of the Generating Company;(b)The amount of equity capital shall be equal to-(i)equity capital as at April 1, 2004 as determined by the Commission in accordance with the Explanation below; plus(ii)equity component of approved capital expenditure for the financial year ending March 31, 2005:Provided that in case of a Generating Company formed as a result of a transfer scheme under Section 131 of the Act, the date of the said transfer scheme shall be the effective date instead of April 1, 2004 for determination of equity capital under clause (b) above.Explanation - for the purpose of this Regulation, equity capital shall be the sum total of paid-up equity capital, preference share capital, fully/compulsorily convertible debentures (or other financial instruments with equivalent characteristics), foreign currency convertible bonds, share premium account and any reserves, available for distribution as dividend or for capitalization by way of issue of bonus shares, which have been invested in the Generation Business. The amount of any grant, revaluation reserve, development reserve, contingency reserve and contributions from customers shall not be included in the equity capital. The amount reflected in the books of account as deferred tax liability or deferred tax asset of the Generation Business shall be added or deducted, as the case may be, from the amount of equity capital.31.2New generating stations31.2.1Any generating station commissioned on or after the date of notification of these Regulations shall be assumed to be financed at a normative debt:equity ratio of 70:30.31.2.2A Generating Company that has achieved financial closure in respect of a new generating station prior to the date of notification of these Regulations with a debt:equity ratio less than 70:30 may apply to the Commission for exemption from Regulation 31.2.1 along with reasons therefor:Provided that the Commission may exempt such generating station from the normative debt:equity ratio if it believes that the application of Regulation 31.2.1 is likely to adversely affect the commissioning schedule of such generating station and thereby, the cost and/or quantity of electricity supplied to consumers.31.3Renovation, modernization and replacement31.3.1Any approved capital expenditure incurred on renovation, modernization, replacement or extension of life of existing generating assets on or after April 1, 2005 shall be assumed to be financed at a normative debt:equity ratio of 70:30:31.4Other fixed assets31.4.1Any approved capital expenditure incurred on purchase of other fixed assets (not being generating assets) on or after April 1, 2005 shall be assumed to be financed at a normative debt:equity ratio of 70:30.31.5The Commission may, if it deems appropriate, allow a relaxation in the debt:equity ratio norm specified in this Regulation 31 where the applicant reasonably demonstrates inability to raise loan capital, up to the specified norm, due to market constraints, corporate/group exposure norms of lenders or similar factors:Provided that the Commission shall give any interested or affected party the opportunity to make representations before approving a relaxation in the debt:equity ratio norm under this Regulation 31.5.
