The Central Electricity Regulatory Commission (CERC) issued its decision on Petition No. 432/MP/2024 filed by KPS1 Transmission Limited (KTL). The petition sought approval under Sections 17(3) and 17(4) of the Electricity Act, 2003, to create a security interest over the petitioner’s assets to secure financial assistance for its transmission project.
KTL holds a transmission license to develop the “Transmission Scheme for Injection Beyond 3 GW RE Power at Khavda PS1” project. To fund the project, KTL approached Power Finance Corporation Limited (PFC), which agreed to provide a loan of ₹597.36 crore. Catalyst Trusteeship Limited was appointed as the Security Trustee to oversee the creation of the security interest.
The project is estimated to cost ₹887.20 crore, with a financing structure comprising ₹597.36 crore in debt and ₹289.84 crore in equity. The petitioner had already incurred ₹289.17 crore in expenses by June 30, 2024. The financial arrangements required KTL to create security over its movable and immovable assets, including project accounts and related documents, to secure the loan.
Key provisions outlined in the Transmission Service Agreement (TSA) and the Electricity Act necessitated prior approval from the CERC before any encumbrance or transfer of project rights. Article 15 of the TSA allows KTL to create encumbrances on project receivables or assets as security for financing agreements, subject to the Commission’s approval.
The hearing for the petition was conducted on December 10, 2024, and no objections were filed by the respondents. After examining the petitioner’s submissions and related documents, the Commission granted in-principle approval for creating a security interest in favor of the Security Trustee. This approval is contingent on the condition that the transmission license cannot be assigned to the lender’s nominee without explicit prior consent from the Commission. Such a transfer would be subject to due diligence and an evaluation of the nominee’s expertise in transmission project operations.
The Commission emphasized the importance of adhering to regulatory provisions to ensure accountability and transparency. It also directed the petitioner to submit a signed copy of the indenture of mortgage and financial documents for review.
The decision underscores the regulatory framework governing the financing and operation of transmission projects in India. It reflects the Commission’s role in balancing the interests of licensees, lenders, and stakeholders while ensuring compliance with the Electricity Act and associated regulations.
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