PDD claims that the project is financed 100% by equity. DOE should go through the Annual Accounts the company and ensure that the project is indeed financed by 100% equity. It should not go by mere statement of PP. Besides verifying the annual accounts, DOE should also get a Chartered Accountant certificate to that effect.  

The PP has used much lower benchmark, less than 14.5% for the previous projects located in Tamil Nadu and Gujarat. How can the expected return on equity go up to 19.86% for this project? This is not conforming to the requirements of validation manual. 

Project cost is Rs.7.5 crore/MW. TNERC has recommended only Rs.5.3 crore. The project cost is very high. O&M cost is  given as Rs.28 lakhs and 7.5% escalation has been considered. These are very high. DOE should take into consideration only purchase order cost and not offer. Validation manual clearly states that the DOE should use its sectoral and local expertise and financial knowledge in accepting evidence. DOE should know that offer letters are always obtained at higher cost to make the project additional. This is sectoral and local expertise expected of DOE.   

The cash inflow should include tax saving due to depreciation (100%) and tax holiday. Consultant would have omitted this to make the project additional. The investment is made in 2011-12 and the generation also commences in the same year. Therefore, the cash outflow should be deducted from cash inflow of 2011-12 while calculating the indicator. 

Wind power projects are eligible for 100% depreciation (80% + 20%). If the tax savings arising out of the depreciation benefit is taken into account and the cash out flow is deducted from the cash inflow of first year generation, the project will become non-additional

Even with CDM benefits, the NPV of this project will not become positive. Why is the PP setting up this project then? Is it a charity? If so, why to seek CDM benefits? Either the input parameters used are inflated or the benchmark is inflated.  

PP should not be allowed to introduce any new expenditure which is not disclosed in PDD at a later point of time, or modify any input values including net exportable (considered at 60,500 MWh) during validation, which will bring down the IRR. NPV cannot be negative for this project at a return of 14.5%, benchmark selected by the PP for other projects.