PP claims credit for the power to be supplied to the Government as royalty as economic benefit. This can also be stretched further to include import duty, excise duty, income tax, VAT/sales tax and professional tax paid as economic benefit!! It is not clear why the PP is not claiming those benefits conferred by the project!!

PDD states, “The installation of hydro power project in rural areas will result in generating local employment opportunities and capacity building of the local employees is too general”. If this is really correct, why the PP is shying away from stating the actual employment generated? In most of the hydropower projects, outsiders are employed under the pretext of non-availability of skill and the benefit of the project hardly percolates to local population. Setting up a project without having any percolation effect only tantamount to creating islands of prosperity in the midst of poverty and cannot be said to lead to sustainable development. DOE should make it a monitoring factor and state how many local people have been provided employment out of total employment. 

PDD states, “The project activity involves the successful installation and operation of state-of-art hydro turbine generators. The implementation such technologies will encourage the development of similar efficient technology and large capacity hydro power plants. What is the state-of-art generator used that is so different and involves technological benefit? Is the technology so sophisticated that the PP has chosen not to disclose in sec A.3. decided not to disclose the technological details. DOE should check the technology, how it differs from the technology employed by other projects – there are at least half-a-dozen of them in Sikkim - how it represents the state-of-art. If it is no way different, DOE should ensure that PP does not claim credit for what is not true.

PP claims that 2% of CER revenue will be donated for local development, while it is mandated by law and PP cannot escape from it. It is not on his own volition that the PP is proposing to donate 2% of CER income, but out of compulsion. How can PP claim credit for this? If he can claim credit for the community development contribution, then he can as well claim credit for the income tax the project is going to pay!! 

To sum up, the entire section on sustainable development makes falls claims, takes credit for what is mandated by law and generally misleads the public. PP should be asked to quantify every aspect of the sustainable development, made into a monitoring factors and any deviation from the commitment given should render the project ineligible for CER benefits.  

PP has selected project IRR (if it is post-tax) as the financial indicator, which seems to be correct. But, how can expected return on equity be used as benchmark? Has the PP read the CDM rules? Is this in line with the Guidance on investment analysis? Whom the PP is trying to mislead? PP should use either commercial lending rate or WACC as benchmark as per guidance. Now that the PP has given the expected return on equity at 17%, the WACC calculation has become simple. 

PP has used BSE 500 index for market return. Why BSE sensex, which has a much longer history and data cannot be used? Further, Aswath Damodaran does not recommend calculating beta for 2 or 3 years. Only selected sentence from the article has been taken out without reading the full article. DOE should not accept the beta presented and ensure the beta used is the lowest. If the PP expects a higher return than what the lowest beta yields, then it is his personal expectation. As per Guidelines on investment analysis, the project should straightaway be rejected.  DOE should check the calculation and the data thoroughly before accepting the beta.

Nowhere the PP has given decision making date. Without decision making date, how did the DOE accept the PDD for webhosting? In several placed PP has used Project Information Memorandum as the basis. How can internal document be used to evidence the input parameter? 

The PLF is very low. Another project located in Sikkim has considered PLF at more than 52%. While the PDD states “After meeting the royalty power sharing obligation to the Government of Sikkim, the balance power shall be exported to grid for selling on a merchant basis through a bilateral agreement or through a power exchange”, sec. B.5 adopts weighted average tariff for Case-I bids! How can the PP adopt case –I bid tariff unless the project is bid based? PDD does not give anywhere whether the project has been awarded through bid. This is only to mislead the Global stakeholders and DOE. If it is through bid, then the PP should give the document to DOE and also explain why it cannot bid for a higher tariff. If it is not through bid, then PP cannot use the bid tariff and DOE should insist on merchant power tariff, which is more than Rs.4/kWh.

Strangely, in working capital, receivable have been taken at 2% of project cost and CERC regulation has been given as evidence!! PP does not seem to understand the difference between fixed cost and project cost. PP’s explanation is not correct. 

To make the project additional, PP has provided 40% of plant & machinery cost as refurbishment cost in 21st and 31st year and given PIM as the basis. While PIM is an internal document which cannot be used as evidence, 40% is very high. DOE should check other registered projects before accepting the refurbishment costs and that too at 40% of the plant and machinery cost.
   
Why the generation, project cost, tariff and O&M cost are subjected to only 10% variation? What is the basis for 10%?

Using 19th January 2009 as cut-off date for common practice analysis is incorrect and has been done only as a matter of convenience. Changing input parameters cannot be called change in legal regulation. If that is the case, every time the SERC introduces a new order for renewable energy projects, should that date be taken a cut-off date?  Is this what additionality tool states? DOE should not accept this unrealistic argument and should consider all project since the electricity generation was privatized in the country.

On the whole, this project does not appear additional. DOE should do a full scale study of the project, each and every document before giving its opinion.

1.	The project is claimed to be run of river hydro project. So the calculation of reservoir is wrong. The criterion 3 is applicable only to pumped storage or accumulation hydro projects. What does reservoir refer to as per PP? 

2.	The justification of opting out alternative 3 and alternative 4 is not justified adequately. It should be based on latest published data and figures. Refer B.4. Pls. clarify.
3.	The bilateral agreements, PPA with India are the documents, DOE to check thoroughly

4.	Date of investment decision should be at the time of DPR preparation. So, the basis of the cost escalation factors at a later date for CDM consideration is not valid. Pls. clarify. Refer B5. Step 3a. (Investment barrier).

5.	How the CDM benefit will alleviate the technical barriers. As per additionality tool, if the barriers are not alleviated by CDM, then the project is not additional. 

6.	Emission factor for state is not calculated.it should be made available to DOE to clearly validate this value.  Emission factor for India is not as per “Tool for emission factor for the system”. 

7.	Electricity generated by the project, auxiliary consumption, transmission losses, transformer losses, net electricity exported to India, net electricity exported to the  grid. These parameters to be monitored continuously and to be cross checked with sale receipts. 

8.	The Meth mentions that if investment analysis option is used, apply the following: 

a.	Apply an investment comparison analysis, as per Step 3 of the .Combined tool to identify the baseline scenario and demonstrate additionality., if more than one alternative is remaining after Step 2 and if the remaining alternatives include scenarios P1 and P3;

b.	Apply a benchmark analysis, as per Step 2b of the .Tool for the demonstration and assessment of additionality. If more than one alternative is remaining after Step 2 and if the remaining alternatives include scenarios P1 and P2.

But PP failed to apply like this. Pls. clarify.

PLF should be based on EB48 Annex 11guideline which says The plant load factor provided to banks and/or equity financiers while applying the project activity for project financing, or to the government while applying the project activity for implementation approval; (b) The plant load factor determined by a third party contracted by the project participants (e.g. an engineering company); But PDD doesn’t demonstrate how PLF has been arrived at. 

9.	Whether PLF includes machine shutdown, machine availability. Whether grid availability is accounted for in the calculation of gross generation. To my surprise, critical parameter like PLF is missing from the PDD. How DOE has allowed this. 

10.	Common practice analysis should be based on EB 39 Annex 10 (Additionality tool). Each step of common practice analysis should be fulfilled as per tool.

11.	Emission reduction calculation should be based on EB 50 Annex 14 “Tool for emission factor for the electricity system.
12.	Whether only one set of main meter, check meter set is enough for three projects. The monitoring parameters need to be checked by DOE.
13.	The main meter and check meter technical parameters like accuracy level, make, etc. needs to be mentioned in the PDD. 
14.	Layout of power transmission lines from the generation to the consumer with the metering system is not shown. It should include the distance of transmission lines. DOE has to check the meters are installed to monitor electricity generated, net electricity used in Bhutan, net electricity exported to India. Pls. clarify.

15.	The status of the construction & commission of the project is not stated in the PDD.
16.	What is the basis of calculation for transmission loss, auxiliary consumption and transformer losses? What is the length of transmission line?