The input parameters and assumption given do not include loan repayment period, O&M cost, insurance premium. Hence, it is not possible to reproduce the parameters and assumptions and arrive at the same results. GSs have been deprived of the opportunity to check the results. 

For checking the correctness of the results, O&M cost of manufacturer given in other web hosted projects can be considered. Since the purchase order of 3 MW was placed on 8/1/10, the COD of the project should be before 31/3/10 and COD of other three projects should be before 30/09/10. Therefore 3 MW project will be eligible for 50% depreciation and others for 100% depreciation. If this is considered and the investment is deducted from the cash inflow of first year, the IRR of MP and Karnataka projects will be more than 13%. These projects are not additional. 

The projects are eligible for 100% depreciation – 80% regular depreciation and 20% additional depreciation. PPs set up the project only for the tax benefit.  Tax benefit should not be ignored. 

The PLF considered for MP and Karnataka projects are too low. MPERC has recommended 22.5% and KERC 26.5%. Several projects have been registered with this PLF or even higher. There is no reason (except to make the project additional) for considering PLF at 20% for MP and 23.32% for Karnataka. DOE should seek a letter directly from the bank to the effect that they have considered the given PLF while appraising the loan. Loan application submitted by PP should not be the sole basis. With this PLF, DSCR will be very low and project will not be investment grade. Which bank will assist such projects? 

The project cost is based on offer letters. How much did the company actually pay. Atleast 10% less. Basing conclusion on quotation is not correct in India, where the promoters negotiate and bring down the price. If the DOE wants to strictly follow guidelines 6 of Annex 13, EB 61, ensure the PP gives a worksheet with actual cost incurred.  

PP does not want to disclose how the WACC and ROE has been computed. There is no information on the benchmark except a footnote that the calculations are given to DOE. Does it mean that GSs do not have any knowledge to comment on this issue or the PP does not want to give it purposely? Whatever the reasons may be the benchmark is very high. EB has recommended a ROE of 11.75% for energy projects in India as against which 22.63% has been considered. 

ROE has been declared at 22.63%. PDD also gives DE ratio of 75:25, interest of 10% and tax rate of 33.99%. Assuming for a second that we accept all these, how can the WACC be 12.16%? If the ROE of 22.63% is correct, then the WACC should be 11.41% and if WACC of 12.16% is correct, ROE should be 25.10%!! What is this computation?  Are two ROEs assumed for the same project? 

A cursory reading at common practice analysis reveals that no project has been set up without CDM benefits? This is absolutely incorrect. Please check the data base and do not take only what suits. 

You have fixed the benchmark at 22.63% and 12.16%. Will CDM benefits enable the projects to earn the target return? If not, why are these projects set up? Either the input parameters given are unreliable or the benchmarks are incorrect given with sole aim of making the project additional.