(1) Interest and finance charges on loan capital shall be computed on the outstanding loans, duly taking into account the schedule of repayment in accordance with the terms and conditions of relevant agreements of loan, bond or non-convertible debentures. Exception can be made for the existing or past loans which may have different terms as per the agreements already executed if the Commission is satisfied that the loan has been contracted for and applied to identifiable and approved projects for the State Load Despatch Centre.
1 Subs. vide Not. no. HPERC/F(5)(3)(1)(SLDC) dated 1 st November,2013 (First Amendment) Reg., 2013 published in the R H.P. dated 5 th November, 2013 at p. no 4619- 4626. Before its substitution reg. 20 read as under:
“20. Return on Equity
(1) Return on equity shall be computed on the equity determined in accordance with regulation 17 and on pre tax basis at the base rate of 15.5% to be grossed up as per sub-regulation (3) of this regulation.
(2) The rate of return on equity shall be computed by grossing up the base rate with the normal tax rate for the year 2010-11 applicable to the Power System Operation Company :
Provided that return on equity with respect to the actual tax rate applicable in line to the Power System Operation Company with the provisions of the relevant Finance Acts of the respective year during the control period shall be trued up separately for each year of the control period at the end of the control period.
(3) Rate of return on equity shall be rounded off to three decimal points and be computed as per the formula given below:- Rate of pre-tax return on equity = Base rate / (1-t) Where t is the applicable tax rate in accordance with sub-regulation (2) of this regulation.
Illustration:-
1. In case of the Power System Operation Company paying Minimum Alternate Tax (MAT) @ 19.93% including surcharge and cess:
Rate of return on equity = 15.50/ (1-0.1993) = 19.358%.
2. In case of the Power System Operation Company paying normal corporate tax @ 33.99% including surcharge and cess:
Rate of return on equity = 15.50/ (1-0.3399) = 23.481%.” 18 Compendium of HPERC Regulations, March 2021 1[(2) The rate of interest shall be the weighted average rate of interest calculated on the basis of the actual loan portfolio at the beginning of each year applicable to the project for State Load Despatch Centre:
Provided that if there is no actual loan for a particular Year but normative loan is still outstanding, the last available weighted average rate of interest for the actual loan shall be considered:
Provided further that if the Power System Operation Company/State Load Despatch Centre does not have actual loan, then one (1) Year State Bank of India (SBI) MCLR /any replacement thereof as notified by RBI for the time being in effect applicable for one (1) Year period, as may be applicable as on 1st April of the relevant Year plus 200 basis points shall be considered as the rate of interest for the purpose of allowing the interest on the normative loan.]
(3) The interest rate on the amount of equity in excess of 30% treated as notional loan shall be the weighted average rate of the loans of the respective years and shall be further limited to the rate of return on equity specified in these regulations:
Provided that all loans considered for this purpose shall be identified with the assets created:
Provided further that the interest and finance charges of re-negotiated loan agreements shall not be considered, if they result in higher charges:
Provided further that the interest and finance charges on works in progress shall be excluded and shall be considered as part of the capital cost:
Provided further that neither penal interest nor overdue interest shall be allowed for determination of fee and charges.
(4) In case any moratorium period is availed of in any loan, depreciation provided for in the fee and charges leviable during the years of moratorium shall be treated, as notional repayment of loan during those years and interest on loan capital shall be calculated accordingly.
(5) The Power System Operation Company shall make every effort to refinance the loan as long as it results in net savings on interest benefit to the users and in the event the costs associated with such refinancing shall be borne by the users and any benefit on account of refinancing of loan and interest on loan shall be passed on to the users. Refinancing may also include restructuring of debt.