m€w€reffi - mperc

m€w€reffilM P lndustrial DeveloPmenilCorBoration Limited

No. M PrDC RO/IND/SEZ / 2021 /11 L 2-

In this regard we would like to inform you that a totalbeen deposited through RTGS/NEFT vide UTR

/St/lLas MPERC application fee.

Submitted for information and further needful please.

To,The Secretary, '

I\I.P. Electricity Regulatory Commission (MPERC)

5th Floor, Metro Plaza,E-5 Arera Colony, Bittan Market,Bhopal-4620L6.

Sub: In the matter of filing of Petition for approval of Capital Expenditure to be donetowards the installation of additional 63 MVA Transformer in t32/33 kV sub-station switchyard in FY 2O20-2L, at SEZ, Pithampur, Dhar (MP).

Dear Sir,

This is regarding fiiing of Petition for approval of Capital Expenditure to be done towardsthe installation of additional 63 MVA Power Transformer in 132133 kV sub-stationswitchyard in FY 20ZO-21, at SEZ-ll, Pithampur, Dhar (MP).The Petitioner is a distributionhcensee for wheeling and retail supply of electricity in its licensed area as notified by the

flon'ble Commission.The Petitioner submits that the l-lon'ble Commission has issued

MPERC [1'he Conditions of distribution license for distribution licensee (including deemed

licensee)) Regulations, 2004); in exercise of powers conferred on it by Section L6 read withSection 181[2) of the Electricity Act 2003 [No. 36 of 2003J and to enable determination ofcapital /additional capital investment as per provision 10 of the said regulation. The

Hon'ble Commission has issued directives to MPIDC Ltd. for submitting a petition forapproval of capital expenditure done towards installation of additional 63 MVA

Transform er in L32/33 kV, sub-station at SEZ-ll area, Pithampur.

In-line with the above provisions of the Regulations, the Petitioner accordingly submits thePetition for Approval of Capital Expenditure to be donetowards installation of additional 63

MVA Transformer in 132/33 kV, sub-station switchyard at SEZ-ll area, Pithampur, Dhar

[MP).

&'TP INDT'STRIAt DEVELOPMENTCORPORATION LIIMITEE}REGIONAL OFFIEE, INDORE(Government of Madhya Pradesh Undertaking)

LTDr.I/01/202L

fees of Rs. has

No.,ffZ%fi-nndg on dated

Supe -dinfEngineer

MPIDC R0 Indore

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E"rtE[s(Pr MADF{Y,& PRA.I}ESFS 277E

H REGULATORY COMISSION, BHOPAL

Petition No. ...

EIN THE MATTER OF:-

$niting of Petition for approval of capital expenditure done towards the installafion

..of additional6S MVA transformer in 13{33 kV sub-station switchyard in FY 2A20-

$21 under the principles laid down in the MPERC {The Conditions of distributiony'icensee (including deemed licensee)) Regulations 2004 and Capex guidelines, byEthe Madhya Pradesh Audyogik Kendra Vikas Nigam (Indore) Ltd.,Indore, as the

gDistribution Licensee.

Madhya Pradesh Induetrial Development Corporation Ltd.,

I

TI{E PETITIONEB. ABOVE NAMED RESPECTFULLY SUMTTS

'{OTARY, DIST' lt\iDORI

Y P GOYT.

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PITITIONER

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AFFIDAVIT

i, {shutosh Kanungo,Sf o Shri chanclra Shekhar Kanungo, agecl 571196r-5 r.vorkirrg-,'' rth \lat1hva Praclesh Audvogik Kenrlra Vikas Nigam (lndore) i-td., lndore, r1o

herel-r-solerurly affirm ancl state on oath as uncler:-

1) I sav that I ant the Superintencling Engineer of Maclhya Praclesh lndustrialDe,"'elopment Corporation L,td., Inclore, ancl I am competent to sn ear theprresent afficlavit.

2) I say that facts stated in the saici petition are correct to the best of nlyknowledge on the basis of information tierivecl from recorcls maintaine'cl bythe compatry in the orclinary course of Lrusilress ancl are believecl by rne tobe true.

DEPOI\IENT*=+-(Ashutosh Karunryo)

I, the depohegrt gpove namecJr',',' ,.\,- , '2affidavit hrd tti,e, no part of it

VERIFICATION

do hereby verify that the contents of my aboveis faise and nothing material l-ras been concealed

{Ashutosh Kanwrgo)

there ftom- ,''" ,

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Verifiecl at Indore r1,Y .2079.e0et

t'vu/URN B[!"ORr i,,rr

\iOTARY, DIST. II{DOq*t'i P GCV.I

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MADHYA PRADESH ELECTRICITY REGUTATORY COMMISSION, BHOPAL

Filing No.:

Case No.:

IN THE MATTER OF

SUBMISSION OF PETITION FOR APPROVAL OF CAPITAL EXPENDITURETOWARDS THE INSTALLATION OF ADDITIONAL 63 MVA TRANSFORMERIN 132133 kV SUB-STATION SWITCH YARD AT SEZ-II AREA" PTTHAMPUR

AND

IN THE MATTER OF THE APPLICANT

MADHYA PRADESH INDUSTRIAL DEVELOPMENT CORPORATIONLIMITED, INDORE (HERE IN AFTER REFERRED TO AS 'MPIDC LTD' OR'THEPETITIONER');

THE'PETITIONEK RESPECTFULLY SUBMITS:

The Petitioner is a distribution licensee for wheeling and retail supply ofeleckicity in its licensed area as notified by the Hon ble Commission.

The Petitioner subrr.its that the Horlble Commission has issued MPERC (TheConditions of distribution license for distribution licensee (including deemedlicensee)) Regulations, 20a$; in exercise of powers conferred on it by section16 read with Section 181(2) of the Electricity Act 2003 (No. 36 of 2003) and toenable determination of capital /additional capital investment as per provision10 of the said regulation. The Hon ble Commission has issued directives toMPIDC Ltd. for submitting a petition for approval of capital expenditure donetowards installation of additional 63 MVA transformer tn 132/33 kv, sub-station at SEZ-II area, Pittrampur.

In-line with the above provisions of the Regulations, the Petitioner accordioglysubmits the Petition for Approval of Capital Expenditure done towardsinstallation of additional 63 MVA transformer in 132133 kv, sub-stationswitchyard at SEZ-II area. Pithampur.

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PRAYER TO THE HON'BLE COMMISSION:

The Petitioner respectfully prays to the Commission:

a. To admit the petition seeking approval of capital expenditure done towardsinstallation of additional 63 MVA transformer in132/33 kV, sub-stationswitchyard at SEZ-II area, Pithampur.

b. To'pass any other order as the Honble Commission may cleem fit andappropriate under the circumstances of the case and in the interest of justice;

c. To condone any ewor f omission and to give opportunity to rectify the same;

d. The filing is being done based on the best available information and in caseof any change, the Petitioner may be permitted to make furthersubmissions, addition and alteration to this Petition as may be necessaryfrom time to time.

Date: -/ -/2027

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lM P lndustrial DevelopmentlCorporation Limited

\0.\IPIDCflND lSEZl2[t2ll€\ ?' Clut!

MF IN DUSTRIA.L DEVELOPMET{TCORPORATION LIMITEDREGIONAL OFFICE, INDORE(Government of Madhya Pradesh Undertaking)

rndore, u*.?)orrrox

To,

The Commission SecretaryNladhya Pradesh Electricity Regulatory Commission,5th Floor, "Metro Plaza"rE-5 Arera Colony, Bittan MarketBhopal- 462016

Authorisation letter

Shri Ashutosh Kanungo, Superintendent Engineer, MPIDC Indore is hereby authorized to

sign and do all necessary documentations regarding Filing of Petition for approval of Capital

Expenditure done iowards the installaiion of additional63 iWv'A transformer in732/33 kV sub-

station switchyard in FY 2O2O-2L, at SEZ-II, Pithampur, Dhar (MP). Earlier authorization

issued in the name of Shri D.L. Goyal, Joint Director (Planning) hereby cancelled.

Executive Directcrr*TID* RC,INDORE

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TECHNICAL REPORT ON

CAPITAL EXPENDITURE

FOR ADDITIONAL 63 MVA

TRANSFORMER BY

MPIDC (I) SEZ – II AREA

Prepared & submitted by:

Madhya Pradesh Industrial Development

Corporation

(Formerly known as Madhya Pradesh Audyogik

Kendra Vikas Nigam)

1st Floor, Atulya IT Park, Near Crystal IT Park,

Khandwa Road, Indore - 452 007

Madhya Pradesh (India)

List of Abbreviations

S.No Abbreviation Expansion

1 Act Electricity Act 2003

2 BPTA Bulk Power Transmission Agreement

3 Cr. Crore

4 DCDS Double-Circuit Double Stringing

5 GoMP Government of Madhya Pradesh

6 IRR Internal Rate of Return

7 kV Kilovolt

8 KVA Kilo-Volt Ampere

9 KWh Kilo-Watt Hour

10 LILO Line-In Line-Out

11 LOA Letter of Acceptance

12 MPAKVN Madhya Pradesh Audyogik Kendra Vikas Nigam Ltd.

13 MPERC Madhya Pradesh Electricity Regulatory Commission

14 MPIDC Madhya Pradesh Industrial Development Corporation

15 MPPTCL Madhya Pradesh Power Transmission Company Ltd.

16 MPSEB Madhya Pradesh State Electricity Board

17 NPV Net Present Value

18 R&M Repair & Maintenance

19 SEZ Special Economic Zone

Technical Report on CAPEX for 63 MVA transformer of MPIDC

Contents

1. Background 3

2. History of Supply Business 4

3. Requirement of 63 MVA Transformer 9

4. Proposal by MPIDC 12

5. Estimated Cost Break up of 63 MVA transformer 14

6. Cost benefit analysis 16

6.1 Base Assumptions 16

6.2 Benefits under setting up new transformer in 132/33 kV sub-station 18

6.3 Revenue generation 18

7. Evaluation method for financial Estimations 21

7.1 NPV Method 21

7.2 IRR Method 22

7.3 Payback Method Error! Bookmark not defined.

7.4 Conclusion 24

List of Figures

Figure 1: Number of Consumers and Total Energy Sales in SEZ Area. 4

Figure 2: Layout plan of 132/33 kV Substation in SEZ II 7

Figure 3: SLD of 132 kV sub-station MPPTCL SEZ 8

Figure 4: Historical Transformer Loading Pattern Error! Bookmark not defined.

Figure 5: Actual load and Number of Consumers 10

Figure 6: Transformer Distribution Losses 10

file:///D:/MAYANK/MPAKVNL/MPIDC%20Captex%20Report_v5.docx%23_Toc59286129


3 | P a g e

1. Background

Madhya Pradesh has fostered industrialization in the state, whereby the Government of Madhya

Pradesh (GoMP) has provided necessary support, be it in the form of developing infrastructure

or formulating industry-friendly policies. This was the sole reason for the birth of Madhya Pradesh

Audyogik Kendra Vikas Nigam Ltd (MPAKVN) - a synonym to growth in the state.

Established in the early 80s, MPIDC (erstwhile MPAKVN) is a wholly owned undertaking of

GoMP with a sole vision to establish Western Madhya Pradesh as an industrious economy.

MPIDC (Indore), since its inception has taken major initiatives for promoting industrialization in

the state, including identifying

growth centers, setting up,

promoting, and nurturing these

industrial hubs and above all

inviting investors.

It has been instrumental in

establishing Industrial Growth

Centers at Pithampur, Kheda,

Maksi, Dewas, Meghnagar, etc.

in addition to other commercial

zones like Food Parks,

Readymade Garment Complex,

etc. across Western MP. Its latest

project, Crystal IT Park, is a

promising initiative that may

open floodgates in M.P. to a

whole new world of opportunity

and enterprise.

MPIDC (I) as a distribution licensee

For supporting growth in industrialization, MPIDC Indore, was notified as the developer of

Special Economic Zone (hereinafter referred to as ’SEZ’) at Pithampur, near to Indore, prior to the

enactment of SEZ Act, 2005 which became operational w.e.f. 15.08.2003. This SEZ is a green field

multi-product SEZ of India and is spread over an area of more than 1100 hectares of land in Zones,

SEZ - I & II. Industries of various sectors such as Plastic, Engineering, Pharmaceutical, Metal,

Textile & Food processing etc. are in the Zone.

Central Government vide its notification dated 3rdMarch 2010, amended Section 14 of the

Electricity Act, 2003(hereinafter referred to as ‘Act’), wherein, the developer of SEZs have been

deemed to be a Distribution Licensee (hereinafter referred to as “Licensee”). MPIDC (I), being the


4 | P a g e

developer of SEZ, is responsible for provision of utility services which also includes supply of

electricity within the SEZ area to its consumers. As per the said amendment, MPIDC (I) being the

developer of SEZ, filed a petition at Hon’ble Madhya Pradesh Electricity Regulatory Commission

(MPERC) for taking on record its status as a Deemed Distribution Licensee and seeking specific

conditions of Distribution License, for providing benefits to its consumers w.r.t providing cost

effective and uninterrupted electricity. Hon’ble MPERC subsequently granted the same in 2005

to MPIDC (I).

2. History of Supply Business

MPIDC started its power supply business in SEZ area as a distribution licensee from 13.03.2005,

with only four (4) consumers in its area which increased substantially as the years passed by. The

initial contracted demand of the SEZ area (for SEZ – I & II both combining) was 10 MW which

gradually increased to 18 MW during the FY 2013-14 due to increase in number of consumers.

During the FY 2016-17, the total contracted demand of SEZ area was increased to 40 MW due to

rising number of consumers. The demand was further increased to 50 MW during the FY 2019-

20 (presently the contracted demand is 55 MW).

Due to increase in the number of new consumers, it is imperative for MPIDC (I) to augment its

existing facility at higher voltage level to meet the existing and future demand. Further to add, a

good amount of undeveloped area (~40%), available inside the SEZ – II area, was almost sold to

various industrial consumers after its development. A comparison of consumers’ vis-à-vis total

energy sales in SEZ area is shown as below:

Figure 1: Number of Consumers and Total Energy Sales in SEZ Area.

MPIDC (I) took an initiative of providing electricity supply to its SEZ consumers with an objective

of providing quality and reliable power with minimum number of tripping ensuring cost

optimization to its consumers, both in terms of reducing electricity procurement costs as well as

180 194 207

286315

354380

412

55 53 64 67 69 77 81 85

0

50

100

150

200

250

300

350

400

450

2012-13 2013-14 2014-15 2015-16 2016-17 2017-18 2018-19 2019-20

Total Sales (in MUs) Consumer No.


5 | P a g e

boosting manufacturing efficiency (being most of the industries are manufacturing units) by

providing quality supply.

For meeting the power requirement of the SEZ area, MPIDC (I) had signed a Bulk Power

Transmission Agreement (BPTA) with erstwhile Madhya Pradesh State Electricity Board

(MPSEB) (a body constituted under the Electricity (Supply) Act, 1948 – predecessor entity of MP

Power Transmission Company Ltd) on 29.01.2005.

With increase in number of consumers and subsequently their power requirement, as also

mentioned in previous section, the original BPTA got supplemented five times on 11.10.2010,

05.10.2013, 29.03.2016, 15.04.2018 and 29.08.2018 for enhancement of the existing Contracted

Capacity to 50MW.

As explicitly provided above, it was imperative on account on MPIDC (I), as a contractual

obligation, to construct a 132/33 kV sub-station for increasing its contracted demand to serve its

consumers.

The overall SEZ area is categorized into two (2) different zones i.e. SEZ – I &SEZ – II. The contract

demand of these zones, as on 01.04.2016, was15 MW and 25 MW respectively. The power to both

these areas of SEZ was being supplied from three bays (10 MW each capacity, i.e. 30 MW in total)

of 220 kV MPPTCL sub-station.

After the development of extra space available inside the SEZ – II area, more industrial consumers

were added in the same due to which requirement of power has been also increased. The

anticipated demand in the SEZ area (both SEZ-I and SEZ-II combining) is expected to reach 87

MW. For serving the increased/ future demand, it became imperative for MPIDC (I) to construct

a dedicated 132 kV sub-station inside the SEZ-II area.

The 220 kV transmission sub-station, as mentioned above, is near SEZ-I area, whereas it is far (>3

kms) from the SEZ-II area (where extra space is available and demand is being increased).

Considering higher transmission losses (~2%), in transmitting power at higher distances, and

quality of supply, a dedicated sub-station inside the SEZ area was constructed. Also, it was

observed that construction of 132 kV Sub-Station was cost effective with respect to 220 kV sub-

station.

At present, the total cumulative demand of SEZ area is 70 MW i.e., SEZ – I is having a total

demand of 15 MW and SEZ – II is having a total demand of 55 MW. The power supply is being

fed through 220 kV sub-station of MPPTCL to SEZ – I area and through dedicated 132 kV sub-

station to SEZ –II area. As also mentioned above, after the allocation of the hilly land, which is

presently undeveloped, available in SEZ-II area, new consumers are being getting added and


6 | P a g e

demand is being increased. Presently the demand of the SEZ-II area is ~55 MW, and the same is

expected to increase to 72 MW in near future. With the construction of 132/33 kV sub-station in

SEZ-II area, a total of ~50 MW was easily catered in the SEZ-II area (presently demand in SEZ-II

area is ~55 MW). Considering future projected cumulative load of 87 MW (both SEZ I and SEZ

II), further network upgradation will be required.

Construction of a dedicated 132/33 kV sub-station was taken up in June 2017 by MPIDC (I) in

SEZ-II area on post facto approval by Hon’ble State Commission. The construction of same was

accomplished in-line with the agreement as well as with the objective of meeting future demand

and attracting more consumers to the SEZ ensuring higher revenue to the state.

Additional benefits achieved with the construction of new 132/33 kV sub-station for MPIDC are

as follows:

System strengthening and creation of infrastructure in undeveloped area

Reduced Technical and Commercial losses

Improved reliability of supply

Improvement in quality of power supplied to the industries situated in the SEZ area.

MPIDC completed construction of 132/33 kV substation considering the incoming power at 132

kV and transfer of power to main bus through isolator-circuit breaker-isolator combination. The

power from main bus is fed into a 63 MVA transformer which stepped down to 33 kV. The power

is then fed into a 33 KV bus from which different loads are tapped. Starting from the generating

stations to the end users, voltage was needed to be stepped up and down several times in

substations which ensures efficient transmission of power and minimizing the power losses. The

entire load of SEZ-II area which is around 55MW is catered through 132/33 kV substation and by

single 63 MVA transformer.

Construction of 132/33 kV sub-station instead of constructing a 220 kV sub-station, was a major

decision taken by MPIDC to achieve cost optimization and not burdening the consumers with

additional costs.

____________________________________________________________________________________


7 | P a g e

The single line diagram of 132/33 kV substation at SEZ-II is given below:

Figure 2: Layout plan of 132/33 kV Substation in SEZ II


8 | P a g e

Figure 3: SLD of 132 kV sub-station MPPTCL SEZ


9 | P a g e

3. Requirement of an additional 63 MVA

Transformer in SEZ-II

Special Economic Zone (SEZ) is an area in which business and trade laws are different from the

rest of the country. SEZs main aim is to increase trade balance, investment, and effective

administration in the area. Following a similar objective, MPIDC has recently developed the hilly

(elevated) area available inside the SEZ-II premises which is attributable to more industrial

consumers being added in SEZ-II area, with which the power requirement is expected to increase

exponentially and reach ~70 MW.

As per the regulations “The Conditions of Distribution License for Distribution Licensee, 2004”

issued by Hon’ble Commission it is stated that,

“9.9 …….The Licensee shall submit a 5-year Business Plan within three months from the date of

effectiveness of the Transfer Scheme and updated annually which should contain year wise load growth,

…year wise distribution loss reduction proposal…….”

“21..2 ……The Licensee shall plan and operate its Distribution System to ensure that, subject to the

availability of adequate power of appropriate quality, the system is capable of providing consumers

with a safe, reliable and efficient supply of electricity…….

It is observed that the load of SEZ-II has been increased to 55 MW in Oct-20 along with an increase

in number of consumers to 50. Further, considering the expansion planned for undeveloped area,

i.e., hilly area, inside SEZ-II, the estimated load will reach ~70 MW, which will further impact the

loading levels of transformer and supply redundancy.

As the SEZ area is occupied by the industrial consumers for which continuous, reliable, and

efficient supply of electricity is the foremost requirement, therefore it becomes the prime objective

of MPIDC, being a distribution licensee, to fulfill the requirements of the industrial consumers

and provide low-priced, uninterrupted, and quality power.

Generally, the optimum loading levels of transformer are considered at 80% - 85% and loading of

transformer beyond such levels may harm the transformer winding, insulation level and their

efficiency in the long run. As per the present scenario the current transformer loading in SEZ-II

area has been observed at ~80-85% in recent months and is further expected to increase with

increase in the number of consumers in the newly developed area by MPIDC, which could impact

the transformer efficiency levels with increase in Iron loss, Hysteresis loss, Copper loss, Eddy

Current Loss etc., further impacting the life of transformer, and power quality for the consumers.


10 | P a g e

With the increase of consumers inside SEZ area, the connected load in SEZ-II has increased from

45 MVA to 54.66 MVA from Apr -18 to Oct-20.

Due to increase in load growth inside the SEZ area, and increase in loading on the transformer,

the distribution losses have also increased. This increase in losses for the past few months is

graphically presented below:

Figure 5: Transformer Distribution Losses

0.00%

0.20%

0.40%

0.60%

0.80%

1.00%

1.20%

1.40%

1.60%

1.80%

Jun-20 Jul-20 Aug-20 Sep-20 Oct-20

Distribution Loss

45 46 47 46 45 46 46 47 46 45 4648

5048 49 49 49 49 50 51 50

5250 50 50 50 50 50 50 49 50

20

25

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No

v-18

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Actual Load (MVA) No.of Consumers

Figure 4: Actual load and Number of Consumers


11 | P a g e

As per the regulations “The Conditions of distribution license for distribution licensee, 2004”

issued by Hon’ble Commission it is also stated that,

10.3…..The Licensee shall make an application to the Commission for obtaining prior approval of the

Commission for schemes involving investments………….

a. ……there is a need for the investment in the Distribution System b. …the Licensee has examined the economic, technical, system and environmental aspects of all

viable alternatives to the proposal…….

Considering the aforesaid regulation and examining the technical requirement with respect to

load growth inside the SEZ-II area, it is imperative on account of MPIDC to install a new

additional transformer of 63 MVA inside the 132/33kV substation to maintain the load balance

inside SEZ and to supply reliable, efficient, and quality power to its consumers.

A small study for impact of overloading of transformers is provided below for reference:

The power transformer is one of the most

expensive components in an electrical

transmission and distribution network. The

temperature inside a power transformer

varies with the load. When load is increased

the windings heat up and then cool down

again when it is decreased. In our case, due

to presence of Industrial consumers, the

load may not come down for some days. So,

it may burst when either the load is

extremely high for a short period or high

loading over a long period of time. In short,

overloading reduces the life of a transformer. Higher current in transformer windings, increases

copper loss in transformer which dissipate energy in the form of heat. This may cause transformer

to exceed its safe temperature limits if transformer is overloaded beyond its design limits.

Overloading is still the most common reason for transformer failure in India. In some utilities,

the annual failure rate for transformers is as high as 20 percent and above.


12 | P a g e

4. Proposal by MPIDC

MPIDC started its power supply business in SEZ area as a distribution licensee from 13.03.2005,

with only four (4) consumers in its area which increased substantially as the years passed with 50

consumers as if now. For supporting growth in industrialization, MPIDC has always ensured to

provide good quality of supply to industrial consumers, with minimum losses, with minimum

tripping as well as MPIDC always operates as per the regulations issued by Hon’ble Commission.

As mentioned in previous sections, due to increase in number of consumers in the newly built-

up area, sales and connected load in the SEZ-II area has increased along with that the loading

levels on transformer has increased and reached to a level of 80-85%, which is expected to increase

further with anticipated increase in load. Considering the same and with an objective to maintain

supply redundancy as per the MPERC regulation (The Conditions of distribution license for

distribution licensee (including deemed licensee), 2004, it is proposed to install an additional 63

MVA transformer in 132/33 kV sub-station switchyard. The bays for the proposed installation

are already available in sub-station.

Benefits of an additional transformer

Stabilize the loading levels on power transformer.

During maintenance work, load may be transferred to one of the transformers and another

can be repaired/serviced hassle free, which will ultimately benefit in supplying

uninterrupted power to Industries.

It will enable MPIDC to bifurcate loads among two transformers which will lower the risk

of transformer failure.

Reduction of electricity losses in electrical transformers.

Improving the power quality due to stable level of short circuit current in the network.

One Transformer in

System

Adding new Transformer in

Sub-Station


13 | P a g e

Load of SEZ-II area is expected to reach more than 70 MW and considering the aforesaid scenario

additional 63 MVA transformer can cater an additional load of 45.36 MW, considering power

factor of 0.9 and load factor of 0.8. This will assist MPIDC to cater load of more than 70 MW, by

balancing total load on both the transformer resulting in higher efficiency and lesser losses.

During any technical fault or preventive maintenance period, the additional transformer of 63

MVA will act as backup/stand-by transformer help in balancing the entire load of SEZ-II area,

which will further assist MPIDC in uninterrupted power flow to the industries.

Considering this scenario additional 63 MVA transformer will be an appropriate option to cater

the continuous increasing load and maintain consumer satisfaction.


14 | P a g e

5. Estimated Cost Break up of 63 MVA transformer

At present, load on single Transformer having capacity of 63 MVA has increased around 50 MVA

(in Oct 2020), due to growth in the connected number of industries. In view to meet the load

growth and maintain network redundancy, it becomes necessity to install additional 63 MVA

transformer in 132/33 kV switchyard. The present infrastructure inside the substation also

supports addition of another transformer as it has sufficient land space and bays.

For the installation of new 63 MVA transformer in 132/33 kV sub-station switchyard at SEZ-II,

the estimated cost break-up amounting to Rs. 886.74 lacs is as mentioned below:

Table 1: Cost break-up of 63 MVA transformer

S.No. Particulars Amount (Rs in

Lakhs)

1 132 kV Equipment 10.22

2 33 kV Equipment 17.16

3 Transformer and Associated equipment’s 314.23

4 Sub Station Structures 6.32

5 Bus Bar Earthing Material 29.96

6 AC / DC Supply related items 7.82

7 Sub Total (1 To 6) 385.71

8 Civil Work 8.45

9 Erection Charges 16.52

10 Sundries 41.07

11 Transportation Charges 20.00

12 GST 18% 69.43

13 Sub Total ( 8 to 12 ) 155.47

14 Compensation 0.00

15 Sub Total ( 7+13+14 ) 541.17

16 Contingency @ 5% on ( 15-12) 23.59

17 Sub Total ( 15+16) 564.76

18 Add Overhead @ 5 % on ( 7+13) 27.06

19 Interest Capitalisation @ 8% per annum on average period of duration completion of work

47.35

20 Sub Total ( 17+18+19) 639.17

21 Cost of Spares @ 6% on ( 20 ) 38.35

22 Supervision Charges @10% 63.92

23 Inventory for Maintenance 9.09


15 | P a g e

24 Grand Total ( 20+21+22+23) 750.52

25 Price Variation 136.22

26 Sub Total ( 24+25) 886.74

Funding Mechanism

The estimated cost break-up of additional 63 MVA transformer mentioned above amounting Rs.

886.74 lacs will be based on the 100% equity infused by MPIDC.

Table 2: Funding Mechanism

Sr. No Particulars Amount (in lacs)

Total expenditure 886.74

1. Equity 886.74


16 | P a g e

6. Cost benefit analysis

As inferred from the previous sections of this report, another 63 MVA transformer is proposed to

be installed in the SEZ – II premises, along with its estimated cost break up.

Further in this section, payback period for additional 63 MVA transformer has also been

computed on certain assumptions. As could be inferred from above, equity to be infused by

MPIDC is ~Rs. 8.87 Crs. for installing the above said transformer.

In this section, a comprehensive cost benefit analysis is presented for the expenditure to be

incurred for the installation of 63 MVA transformer in the existing 132/33 kV sub-station switch

yard. Also, for the purpose of capital budgeting techniques, financial estimations consisting of

NPV, IRR and payback period has been computed for the entire project cost in the next section.

For computations, certain assumptions have been considered which are as below:

6.1 Base Assumptions

a. Power purchase cost for FY 20-21 to FY 44-45 is assumed to increase at a rate of 2% p.a.

b. Transmission charges for FY 20-21 to FY 44-45 is assumed to increase at a rate of 2% p.a.

c. The Annual R&M expenses are assumed to be constant as Rs. 0.4224 Cr p.a. (@5% of

opening GFA, i.e., Rs. 8.45 Cr).

d. Annual Depreciation amount for first 17 years of project' life is considered as Rs. 0.22308 Cr. p.a. (@5.28% of Rs. 4.225 Cr.) and Rs. 0.05408 Cr. p.a. for the remaining years of project life (considering Straight Line Method).

e. Transmission losses are assumed as constant at a rate of 2.71% for FY 20-21 to FY 44-45. f. Energy purchase & sales are assumed to increase by 6 MW every year till total Energy

Sales reaches corresponding to a load of 72MW. g. During FY 19-20 distribution losses were 1.8% and it will further reduce gradually

depending upon increase in load. As per assumptions total Energy Sales will increase by

6 MW every year till it reaches 72 MW. Thus, it is assumed with the increase in Energy

Sales, the distribution losses gradually decrease by 0.05% every year till the total loss level

decreases by 0.25% with the increase in total load.

h. Average billing rate has been assumed to increase at a rate of 2.00% p.a. from FY 20-21 to FY 44-45.

i. The cost component of the power purchase cost per unit is an aggregate of energy purchase cost, transmission charges, O&M cost, and depreciation component.

j. Power purchase cost, transmission cost, R&M expenses, deprecation, and transmission losses are mentioned below:

17 | P a g e

Particulars FY18-19 (Actual) FY 19-20 (Actual) FY 20-21 (Proposed)FY 21-22 (Proposed) FY 22-23 (Assumed) FY 23-24 (Assumed) FY 24-25 (Assumed)

Power Purchase Cost (Crs.) (PPC) 126.57 138.78 169.36 194.24 220.03 246.74 274.42

Transmission Cost (Crs.) (TC) 11.48 9.31 9.50 9.69 9.88 10.08 10.28

R&M (Crs.) 0.423 0.423 0.423 0.423 0.423

Depreciation (Crs.) 0.223 0.223 0.223 0.223 0.223

Transmission Loss 2.75% 2.71% 2.71% 2.71% 2.71% 2.71% 2.71%

Distribution Loss 1.80% 1.80% 1.75% 1.70% 1.65% 1.60% 1.55%

Per Unit Cost 3.18 3.31 3.85 3.93 4.01 4.09 4.17

Particulars FY 25-26 (Assumed) FY 26-27 (Assumed) FY 27-28 (Assumed) FY 28-29 (Assumed) FY 29-30 (Assumed) FY 30-31 (Assumed) FY 31-32 (Assumed)



R&M (Crs.) 0.423 0.423 0.423 0.423 0.423 0.423 0.423

Depreciation (Crs.) 0.223 0.223 0.223 0.223 0.223 0.223 0.223



Per Unit Cost 4.25 4.34 4.42 4.51 4.60 4.69 4.79




R&M (Crs.) 0.423 0.423 0.423 0.423 0.423 0.423 0.423

Depreciation (Crs.) 0.223 0.223 0.223 0.223 0.223 0.054 0.054



Per Unit Cost 4.88 4.98 5.08 5.18 5.29 5.39 5.50

Particulars FY 39-40 (Assumed) FY 40-41 (Assumed) FY 41-42 (Assumed) FY 42-43 (Assumed) FY 43-44 (Assumed) FY 44-45 (Assumed)

Power Purchase Cost (Crs.) (PPC) 369.33 376.72 384.25 391.94 399.78 407.77

Transmission Cost (Crs.) (TC) 13.83 14.11 14.39 14.68 14.97 15.27

R&M (Crs.) 0.423 0.423 0.423 0.423 0.423 0.423

Depreciation (Crs.) 0.054 0.054 0.054 0.054 0.054 0.054

Transmission Loss 2.71% 2.71% 2.71% 2.71% 2.71% 2.71%

Distribution Loss 1.55% 1.55% 1.55% 1.55% 1.55% 1.55%

Per Unit Cost 5.61 5.72 5.84 5.95 6.07 6.19

18 | P a g e

6.2 Benefits under setting up new transformer in 132/33 kV sub-station

Increase in Energy Sales: Due to installation of 63 MVA transformer, MPIDC will be able

to draw and sell more power resulting in increased energy sales and additional revenue

generation.

Loss Reduction: As mentioned above, losses are expected to be reduced after the

installation of an additional transformer. For computation, the distribution losses

gradually are assumed to decrease by 0.05% every year till the total loss level reduces by

0.25% with proportional increase in load.

Load management: By installing the additional transformer in 132/33 kV Substation switchyard load can be balanced on the power transformers which will help transformers in preventing internal damages occurred due to overloading which will further reduce the irregular tripping in the SEZ area.

6.3 Revenue generation

The calculation of the payback period has been segregated in two components.

a. Additional revenue generation due to increase in energy sales after the installation of the

63 MVA transformer.

b. Reduction in distribution losses after the installation 63 MVA transformer in the 132/33

kV sub-station.

For computing additional revenue generation and reduction in distribution losses, the following

analysis has been done:

19 | P a g e

Particulars FY18-19 (Actual) FY 19-20 (Actual) FY 20-21 (Proposed)FY 21-22 (Proposed) FY 22-23 (Assumed) FY 23-24 (Assumed) FY 24-25 (Assumed)

Energy Purchase(MU) 398.01 418.85 439.89 494.63 549.30 603.93 658.50

Energy Sales(MUs) 380.10 400.16 420.48 473.04 525.60 578.16 630.72

Average Billing Rate(Rs/kWh) 4.04 4.00 4.47 4.56 4.65 4.74 4.84

Additional Energy Sales (MUs) as compared to 2019-20 20.32 72.88 125.44 178.00 230.56

Additional Energy Sales (Cr.) (A) 9.08 33.23 58.33 84.43 111.55

Aggregate Power Purchase Cost per unit (Rs./kWh) (incl of PPC,

TC, R&M and Depreciation)

4.27 4.32 4.39 4.45 4.52

Power purchase cost of surplus energy (Cr.) (B) 8.67 31.52 55.02 79.26 104.31

Additional Revenue Generation (Cr.) (A-B) = C 0.41 1.71 3.31 5.17 7.25

Distribution loss reduction due to installation of new transformer 0.05% 0.10% 0.15% 0.20% 0.25%

Net Input in Distribution system (MUs) 387.07 407.50 427.97 481.22 534.42 587.56 640.65

Energy Saving (MUs) 0.21 0.48 0.80 1.18 1.60

Revenue Saving (Cr.) (D) 0.09 0.21 0.35 0.52 0.72

Total Revenue (Cr.) (C+D) 0.50 1.92 3.66 5.69 7.97



Energy Sales(MUs) 630.72 630.72 630.72 630.72 630.72 630.72 630.72


Additional Energy Sales (MUs) as compared to 2019-20 230.56 230.56 230.56 230.56 230.56 230.56 230.56

Additional Energy Sales (Cr.) (A) 113.78 116.06 118.38 120.75 123.16 125.63 128.14


TC, R&M and Depreciation)4.61 4.71 4.80 4.90 4.99 5.09 5.20

Power purchase cost of surplus energy (Cr.) (B) 106.39 108.51 110.68 112.88 115.14 117.43 119.78

Additional Revenue Generation (Cr.) (A-B) = C 7.40 7.55 7.71 7.87 8.03 8.19 8.36

Distribution loss reduction due to installation of new transformer 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%


Energy Saving (MUs) 1.60 1.60 1.60 1.60 1.60 1.60 1.60

Revenue Saving (Cr.) (D) 0.74 0.75 0.77 0.78 0.80 0.82 0.83

Total Revenue (Cr.) (C+D) 8.14 8.30 8.48 8.65 8.83 9.01 9.19


20 | P a g e



Energy Sales(MUs) 630.72 630.72 630.72 630.72 630.72 630.72 630.72


Additional Energy Sales (MUs) as compared to 2019-20 230.56 230.56 230.56 230.56 230.56 230.56 230.56

Additional Energy Sales (Cr.) (A) 130.70 133.32 135.98 138.70 141.48 144.31 147.19


TC, R&M and Depreciation)5.30 5.40 5.51 5.62 5.73 5.85 5.96

Power purchase cost of surplus energy (Cr.) (B) 122.17 124.61 127.10 129.63 132.22 134.80 137.49

Additional Revenue Generation (Cr.) (A-B) = C 8.53 8.71 8.89 9.07 9.26 9.51 9.70

Distribution loss reduction due to installation of new transformer 0.25% 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%


Energy Saving (MUs) 1.60 1.60 1.60 1.60 1.60 1.60 1.60

Revenue Saving (Cr.) (D) 0.85 0.87 0.88 0.90 0.92 0.94 0.96

Total Revenue (Cr.) (C+D) 9.38 9.57 9.77 9.97 10.17 10.44 10.66

Particulars FY 39-40 (Assumed) FY 40-41 (Assumed) FY 41-42 (Assumed) FY 42-43 (Assumed) FY 43-44 (Assumed) FY 44-45 (Assumed)

Energy Purchase(MU) 658.50 658.50 658.50 658.50 658.50 658.50

Energy Sales(MUs) 630.72 630.72 630.72 630.72 630.72 630.72

Average Billing Rate(Rs/kWh) 6.51 6.64 6.78 6.91 7.05 7.19

Additional Energy Sales (MUs) as compared to 2019-20 230.56 230.56 230.56 230.56 230.56 230.56

Additional Energy Sales (Cr.) (A) 150.14 153.14 156.20 159.33 162.51 165.76


TC, R&M and Depreciation)6.08 6.20 6.33 6.45 6.58 6.71

Power purchase cost of surplus energy (Cr.) (B) 140.24 143.04 145.90 148.81 151.78 154.82

Additional Revenue Generation (Cr.) (A-B) = C 9.90 10.10 10.31 10.52 10.73 10.95

Distribution loss reduction due to installation of new transformer 0.25% 0.25% 0.25% 0.25% 0.25% 0.25%

Net Input in Distribution system (MUs) 640.65 640.65 640.65 640.65 640.65 640.65

Energy Saving (MUs) 1.60 1.60 1.60 1.60 1.60 1.60

Revenue Saving (Cr.) (D) 0.97 0.99 1.01 1.03 1.05 1.08

Total Revenue (Cr.) (C+D) 10.87 11.09 11.32 11.55 11.78 12.02


21 | P a g e

7. Evaluation method for financial Estimations

To evaluate the capital expenditure done towards the installation of 63 MVA additional

transformer, the following capital budgeting techniques are computed in this section:

The above-mentioned budgeting techniques are used on the total investment made, i.e. Grant +

Equity, for the installation of 63 MVA additional transformer.

7.1 NPV Method

Net present value method (also known as discounted cash flow method) is a popular capital

budgeting technique that considers the time value of money. It uses net present value of the

investment project as the base to accept or reject a proposed investment in projects like purchase

of new equipment, purchase of inventory, expansion or addition of existing plant assets and the

installation of new plants etc.Net present value is the difference between the present value of cash

inflows and the present value of cash outflows that occur as a result of undertaking an investment

project. It may be positive, zero or negative. These three possibilities of net present value are

briefly explained below:

NPV for the total project investment for installing up of the additional transformer of 63 MVA

in 132/33 kV sub-station is represented below

Net present value (NPV)

Internal rate of return (IRR)

Payback period (PP)

Positive NPV

•If present value of cash inflows is greater than the present value of the cash outflows, the net present value is said to be positive and the investment proposal is considered to be acceptable

Zero NPV•If present value of cash inflow is equal to present value of cash outflow, the net present value is said to be zero and the investment proposal is considered to be acceptable

Negative NPV•If present value of cash inflow is less than present value of cash outflow, the net present value is said to be negative and the investment proposal is rejected


22 | P a g e

As we can see from above computation, NPV comes out to be 49.29 Cr. Thus, as per NPV Method

installation of another transformer is preferred.

7.2 IRR Method

Internal rate of return (IRR) is a metric used in capital budgeting to estimate the profitability of

potential investments. Internal rate of return is a discount rate that makes the net present value

(NPV) of all cash flows from a particular project equal to zero.

The higher a project's internal rate of return, the more desirable it is to undertake. IRR is uniform

for investments of varying types and, as such, IRR can be used to rank multiple prospective

projects on a relatively even basis. Assuming the costs of investment are equal among the various

projects, the project with the highest IRR would probably be considered the best and be

undertaken first.

IRR for the total project investment for setting up of the 63 MVA transformer in 132/33 kV sub-

station is represented below:

NPV for the total project cost (Equity) Investment FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26

Revenue realisation due to installation

of new transformer (Rs. in Cr.)-8.86 0.50 1.92 3.66 5.69 7.97 8.14

NPV 49.29

NPV for the total project cost (Equity) FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33


of new transformer (Rs. in Cr.)8.30 8.48 8.65 8.83 9.01 9.19 9.38

NPV for the total project cost (Equity) FY 33-34 FY 34-35 FY 35-36 FY 36-37 FY 37-38 FY 38-39 FY 39-40



NPV for the total project cost (Equity) FY 40-41 FY 41-42 FY 42-43 FY 43-44 FY 44-45


of new transformer (Rs. in Cr.)11.09 11.32 11.55 11.78 12.02

IRR for the total project cost (Equity) Investment FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26



IRR 42.08%

IRR for the total project cost (Equity) FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33




23 | P a g e

As we can see from above computation, IRR comes out to be 42.08%. Thus, as per IRR Method

installation of another transformer is preferred.

7.3 Payback Method

Payback period, or “payback method,” refers to the amount of time it takes to recover the cost of

an investment. Simply put, the payback period is the length of time an investment reaches a

break-even point. The desirability of an investment is related to its payback period. Shorter

paybacks mean more attractive investments. The shorter the payback, the more desirable the

investment. Conversely, the longer the payback, the less desirable it is. Investors and managers

can use the payback period to make quick judgments on their investments. The concept of the

payback period is generally used in financial and capital budgeting.

Payback period for the total project investment for setting up of the 63 MVA transformer in

132/33 kV sub-station is represented below:

IRR for the total project cost (Equity) FY 33-34 FY 34-35 FY 35-36 FY 36-37 FY 37-38 FY 38-39 FY 39-40



IRR for the total project cost (Equity) FY 40-41 FY 41-42 FY 42-43 FY 43-44 FY 44-45



Payback period for the total project

cost (Equity)Investment FY 20-21 FY 21-22 FY 22-23 FY 23-24 FY 24-25 FY 25-26



Total Payback Period (Yrs.) Less than 9 years


cost (Equity)FY 26-27 FY 27-28 FY 28-29 FY 29-30 FY 30-31 FY 31-32 FY 32-33




cost (Equity)FY 33-34 FY 34-35 FY 35-36 FY 36-37 FY 37-38 FY 38-39 FY 39-40




cost (Equity)FY 40-41 FY 41-42 FY 42-43 FY 43-44 FY 44-45




24 | P a g e

Considering the investment and benefits involved on addition of another transformer, the

payback period for the investment done will be less than 9 years. Thus, as per payback method

also, installation of new transformer is preferred.

7.4 Conclusion

Considering above mentioned capital budgeting techniques, addition of new transformer is a

viable investment decision w.r.t project economics and technical feasibility. Through NPV, IRR

and Payback method, adding a 63 MVA transformer will result in increased in Energy Sales,

reduced losses, and flexibility for load management during repair or maintenance of the network.

NPV -49.29 Cr.

IRR -42.08%

Payback -Less than

9 yrs

m€w€reffi - mperc

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