The Maharashtra Electricity Regulatory Commission (MERC) has approved the provisional tariff and Aggregate Revenue Requirement (ARR) for Adani Electricity Mumbai Infra Limited’s (AEMIL) 1,000 MW High Voltage Direct Current (HVDC) Kudus-Aarey transmission link, clearing the way for commercial operation of Maharashtra’s first Voltage Source Converter (VSC)-based HVDC system.
The project is intended to bypass existing transmission constraints and deliver bulk power directly into the Mumbai Metropolitan Region, strengthening the city’s power supply network.
AEMIL, a subsidiary of Adani Electricity Mumbai Limited, received a 25-year transmission licence for the project in March 2021. The original Detailed Project Report (DPR), approved by MERC in October 2021, estimated the project cost at Rs 6,691.83 crore. To obtain tariff approval before commercial operations, AEMIL filed a petition under the MERC Multi-Year Tariff (MYT) Regulations, 2024.
After technical scrutiny, an e-public hearing held on March 24, 2026, and review of the commissioning certificate issued by the Maharashtra State Load Despatch Centre (MSLDC), the Commission confirmed March 12, 2026, as the project’s official Commercial Operation Date (COD).
In its revised filing, AEMIL sought approval for a total capital cost of Rs 7,344.70 crore. However, following a provisional prudence check, MERC admitted a lower provisional capital cost of Rs 6,888.28 crore as of the COD.
One of the major cost revisions involved the DC cable system. Acting on earlier MERC directions to optimize expenditure, AEMIL modified the original 80-km underground cable plan into a hybrid configuration comprising 30 km of overhead line and 50 km of underground cable, connected through a transition station at Mandvi. Although the redesign was expected to save about Rs 450 crore compared with a fully underground system, competitive market pricing resulted in a DC cable system cost of Rs 2,316.95 crore.
MERC also excluded Rs 101.50 crore claimed for additional items such as an Emergency Restoration System, a dedicated power supply arrangement, a store facility at Aarey, and cyber security consultancy services, stating that these expenditures were outside the scope of the approved DPR.
In addition, the Commission disallowed AEMIL’s proposal to include Rs 150 crore for a new corporate office at Aarey, noting that such non-DPR capital investments require separate regulatory approval under the MERC Capex Investment Regulations.
For Interest During Construction (IDC), MERC provisionally allowed Rs 676.77 crore based on Inter-Corporate Deposit financing at an interest rate of 13.25 percent per annum. However, the Commission observed that the rate was significantly higher than prevailing market levels and directed AEMIL to pursue refinancing after COD to reduce financing costs.
Using a normative debt-to-equity ratio of 70:30 and treating non-interest-bearing Compulsorily Convertible Debentures as equity, MERC approved a provisional ARR of Rs 63.68 crore for the 20 operational days of FY 2025-26 and Rs 1,468.66 crore for FY 2026-27. The Total Transmission System Cost shared among distribution licensees was revised to Rs 11,018.80 crore for FY 2025-26 and Rs 11,816.79 crore for FY 2026-27.
The Commission clarified that all approvals are provisional and that AEMIL must submit a final petition supported by audited financial statements and detailed cost reconciliations, after which a third-party asset verification will be conducted before final tariff and capital cost determinations are issued.
Discover more from SolarQuarter
Subscribe to get the latest posts sent to your email.
