SamalkotPowerLtd_Risk Inspection_Report_BM_0709_2011.pdf

BHATAWADEKAR&COMPANYRiskManagement&InsuranceAdvisoryRiskSurvey,InspectionandValuationLossAdjustment&ProjectMonitoring Lic.No.SLA/4284Upto01/12/2015

SHANTINAGARINDUSTRIAL ESTATE,VAKOLA,SANTACRUZ(EAST),MUMBAI400055.TEL :26674425/2667442626672762/26672901FAX :912226672144EMail:[email protected]:www.bhatawadekar.com

Ref.No.:Y2011/07/MRE/SPL/RI82 ReportNo.BM/0709/2011 Date:19.07.2011

RISKINSPECTIONREPORTRegarding : RiskInspectionof2262MW(3x754MW)gasbased

combinedcyclepowerprojectunderconstruction

Insured : SamalkotPowerLtd.(100%subsidiaryofReliancePowerLtd.)

Insurers : RelianceGeneralInsuranceCompanyLtd.,Mumbai.

RiskLocation : IDAPeddapuram,SamalkotHPOPostBoxNo.22,Samalkot533440EastGodavari(Dist),AndhraPradesh(India)

DescriptionofProject : 2262MW(3x754MW)gasbasedcombinedcyclepowerproject

DateofInspection : 12.07.2011

Inspectedby : B.SreeramaSreenivasuAmolBhise

ReportApprovedby : MilindBhatawadekar

**************************************************PREAMBLEInsurers,RelianceGeneral InsuranceCompanyLtd. informedtheriskengineerthattheSamalkot Combined Cycle Power plant intended to be reinsured by them with theMunichReinsuranceCompany,whodesiredthatan independentrisk inspectionreportbemadeavailabletoknowthestatusofprojectintermsofworkcompletion,qualityofworkthatwasalreadycompletedatsite.InstructionstocarryoutsuchinspectionwereissuedtousonFridaythe8thJuly2011.PursuanttosuchinstructionsandincoordinationwiththecorporateofficeofReliancePower,we visited project site as planned on 12.07.2011 to collect data, inspect thematerialsarrived/storedatsiteandunderstandthestatusofprojectprogress.

Bhatawadekar&Co ReportNo.BM/0709/2011 PageNo.2

Duringoursitevisit,weinteractedwithfollowingkeyexecutives:Mr.K.Chandrasekhar ChiefProjectDirectorMr.UjjwalMathur Sr.ManagerBusinessDevelopmentMr.Khan Planning/PMGdept.PROJECTDETAILS

SamalkotPowerLimited,a100%subsidiaryofReliancePowerLimited,isimplementinga2262MWGasBasedCombinedCyclePowerProject (CCPP)adjacent to theexisting220 MW naphtha/gas based combined cycle power plant and is located at notifiedindustrial area IDA Peddapuram near Samalkot, East Godavari district, AndhraPradesh,India.

ProjectConfiguration

The2262MWCCPPprojectenvisages3powerblockseachwithgrosscapacityof754MWatsiteambientcondition.

Eachblock comprisesof2+2+1multi shaft configuration, consistingof twoGE9351FAGas turbines (243MWcapacity), twoTriplePressureHorizontalHeatRecoverySteamGenerators(HRSG)andoneGED11steamturbine (268MWcapacity).Thegeneratorsare hydrogen cooled and supplied by GE, USA. (We were informed that the first 2generatorsaresuppliedbyGEfromToshiba,JapanandtheremaininggeneratorswouldbesuppliedbyGE,USAdirectly.)

Inaddition,eachblockshallbehavingadedicatedcoolingwatersystemcomprisingofInducedDraftCoolingTowers(IDCT)andCWPumps.Thepowerfromtheprojectshallbeevacuatedat400KVlevelfromGasInsulatedSwitchyard(GIS).TheBalanceofPlant(BOP)mainlycomprisesofcompressedairsystem,PreTreatmentPlant,coolingwaterchlorinationsystem,fireprotectionsystem,etc.

FuelAlthough the site iswell connected byGAILs regional gas supply pipeline to large /mediumconsumers inthatarea,adedicatedgaspipeline(approx.45km) isenvisagedtobebuiltbyInsuredfromGadimoga(KrishnaGodavarioffshoregasbasingaslandfallpoint)tosite.

RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyettostartforthefuelpipeline.Uponenquiry,Insuredinformedusthatthepipelinewouldbeanundergroundpipeline.Routingandlocationofgaspipelineandrelatedfacilitiesisfinalizedandissubjecttolandacquisitionandrightofwayapprovals.


WaterInsured isplanning tobuildawaterpipeline (approx.50km long)along theSamalkotcanalfromupstreamofSirArthurCottonbarrage,Dowleswaramtotheprojectsite.RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyetto start for thewater pipeline.Upon enquiry, Insured informed us that the pipelinewouldbeanundergroundpipeline.Routingand locationofwaterpipelineandrelatedfacilitiesisfinalizedandissubjecttolandacquisitionandrightofwayapprovals.PowerEvacuation&SalesAspowerevacuationarrangementfortheproposedProject,aBulkPowerTransmissionAgreementhasbeenenteredintowithPowerGridCorporationofIndiaLtd.(PGCIL)toevacuatepowerfromthenearestpoolingstationlocatedatVemagiri.Insuredisbuildinga2X400KVD/Cpowertransmissionline(approx.25kmlength)fromprojectsitetotheVemagiriPoolingStationIItoconnectintoPGCILnetwork.

Thecompanyproposestogeneraterevenuethroughmerchantpowersales.

RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyettostartforthetransmissionnetwork.Routingandlocationoftransmissionnetworkandrelatedfacilitiesisfinalizedandissubjecttolandacquisitionandrightofwayapprovals.

Project EPC contract was awarded on International Competitive Bidding route toM/s.Reliance InfrastructureLtd.,andNoticetoProceed(NTP)wasreportedlygiventothecontractorforstartofworkonJuly31,2010.

PROJECTBATTERYLIMITS(ONSITE,OFFSITE&SHAREDFACILITIES)BasedondiscussionswithInsuredregardingprojectbatterylimits,wereportasbelow:A.) Onsite:Thefollowingpackagesarelocatedwithintheprojectsitepremisesand

protectedbyacompoundwall.

3BlocksofGasTurbines/Generators/HRSG/SteamTurbine&Generator

CoolingWatersystemcomprisingofInducedDraftCoolingTowersandCWPumps

400KVlevelGasInsulatedSwitchyard

andBalanceofPlantmainlycomprisingofcompressedairsystem,PreTreatment

Plant,coolingwaterchlorinationsystem&fireprotectionsystem.


B.) Offsite:Thefollowingpackagesarelocatedoutsidetheplantboundary:

FuelGaspipeline: 45km(approx.)betweenprojectsiteandGadimogaWaterpipeline: 50km(approx.)betweenprojectsiteandDowleswaramIntermediatewaterreservoir:tostore3monthsofpowerplantswaterrequirement(locationnotyetfinalized)PowerEvacuation/Transmissionsystem:25km(approx.)betweenprojectsitetoVemagiripoolingstationII.Wewere informed that project execution of the offsiteworksmentioned abovehavenotyetcommenced.

C.) Sharedfacilities

It is envisaged that the following facilitieswill be shared between this proposedpowerprojectandexisting220MWgasbasedcombinedcyclepowerplant(onlyforOpenCycleModeOperationofGasTurbinebeforeCommissioningoftherespectiveSteamTurbines): Fuel Gas System: The fuel gas system of the existing 220 MW Gas Based

Combined Cycle Power Plant is proposed to be interconnected to the fuelconditioningskidoftheproposedproject.

CompressedAirSystem:Thetappingof25mmfromthereceiveroftheexisting220MWGasBasedCombinedCyclePowerPlantisproposedtoberoutedtotheproposedproject.

FireFightingSystem:TheBlanktapofftappingfromtheFireFightingSystemoftheexisting220MWGasBasedCombinedCyclePowerPlant isproposedtoberoutedtotheproposedproject.

Switchyardfacilities:Inordertoevacuatethepower&drawstartuppowerat220KVswitchyardfacilities,itisproposedtoconnecttotheswitchyardfacilityofexisting220MWGasBasedCombinedCyclePowerPlant.

Insured isplanning to constructand install the interlinking facilitiesaspartof theprojectandthusincludedintheSumInsured.Thefollowingfacilitieswillbesharedbetweentheproposedplantandexisting220MWGasBasedCombinedCyclePowerPlantevenaftercommissioningoftheplantincombinedcyclemode.

Demineralisation(DM)Plant Plantreservoir

The layoutprovidedbyInsuredalongwithproject locationandoffsites isenclosedasANNEXUREI.


KEYAGENCIESINVOLVEDINTHEPROJECTEngineeringConsultant: Black&Veatch,USACivilStructure/ArchitecturalConsultant: Toshiba(TPSC)GasPipeline: TractebelLendersEngineer: LahmeyerOperation&Maintenance: O&MdivisionofReliancePowerEPCContractor:RelianceInfrastructureLtd.andkeysubcontractorslistedbelow:

Description Contractor/Agency

1 CivilWorks ShapoorjiPallonji&CompanyLimited

2 PowerPlantBuildingStructuralBoltsSupply

HangziaoSteelStructureCo.Limited(HXSS),China

3 FireProtectionSystem MXSystemInternationalLimited

4 GasTurbine,SteamTurbine,GeneratorsandassociatedAuxiliaries

GeneralElectricCompany(GE),USA

5 HeatRecoverySteamGeneratorSupply CMIEPTI,USA

6 DistributionControlSystem HoneywellInternationalLimited,USA

7 LPPipingSupply&Erection RaunaqInternationalLimited

8 Condenser&AssociatedAuxiliaries HangzhouBoilerGroupCo.Limited,China

9 InducedDraftCoolingTowersCompleteSupply&Erection

ConsortiunofHamonShriramCotterallPrivateLimited,IndiaandHamonThermalEurope,Belgium

10 Transportation&Logistics ABCIndiaPrivateLimited

11 GeneratorTransformers HyundaiHeavyIndustriesCo.Limited,Korea

12 GasinsulatedSwitchyard(Supply+Erection)

XianElectricEngineeringCo.Limited,China

13 GeneratorCircuitBreaker ABBLimited

14 UnitAuxillaryTransformers ArevaIndiaLimited


15 HTSwitchgear Larsen&ToubroLimited16 StartUpTransformers ArevaT&DLimited

17 400kVCablesandAccessories SheyangFurukawa,China

18 AuxTransformersDry QRE,China19 GeneratorBusducts C&SElectricLimited

20SwitchyardEquipmentsBusPostInsulatorsWaveTraps

BusPostInsulatorsSaravananGlobalEnergyLimitedWaveTrapsArevaT&DLimited

21 Control&RelayPanelsForSwitchyard SiemensLimited,India

22 LTPower&controlCablesSwitchYard TeracomLimited

23 SwitchyardReactorsSupply ArevaT&DLimited

24 400KVSwitchYardErection,Testing&Commissioning(ETC) BlueStarLimited

25 ShiftingofExisting132KvTransmissionLineatSamalkotProject SrimanConstruction

26 EOTCranesAnupamIndustriesLimited/PanparEngineeringPrivateLimited

27 SupplyofLDPipes PSLLimited

28 FuelGasConditioningSystem MultitexFilterationsLimited

29 HorizontalPumps WPILLimited30 VerticalPumps FlowmoreLimited

31 CompressedAirSystem AtlasCopcoLimited

32 CoolingWaterpumps WPILLimited

33 ChlorinationPlant AiroxNigenEquipments(P)Limited

34 PlateHeatExchangers GEAEcoflexIndiaPvt.Limited35 FireTender UnitedManufacturingLimited

36 CoolingWaterTreatmentPlant ThermaxLimited

37 PreTreatmentPlant ThermaxLimited38 MechanicalErection PowerMech


Based on verification of documents, discussions with Insured and visual inspection(walkdown)ofthesite,wereportasunder:OFFSITESWehavenotvisitedtheoffsitesas Insuredhad informedusthat landacquisitionandrightofwayapprovalsareunderprogress.However, the river intake pump house being planned upstream of Dowleswarambarragefacessignificantriskofflooding/inundationespeciallyduringconstructionphaseas the pump house would be on the banks of River Godavari which experiencesconsiderableswellingandfloodingeveryyear.Intheeventofafloodingofconstructionworkareasofriver intakepumphouse,theworkcangetdelayed foratimeperiodof36monthsdependingonfloodintensityandthedamageitcauses.Suchdelaywouldnaturallyaffecttheprojectcommissioningforsuchcorrespondingperiod.ONSITESEXPOSURETONATURALHAZARDSThisprojectsiteislocatedatnotifiedindustrialareaIDAPeddapuramnearSamalkot,EastGodavaridistrict,AndhraPradesh,India.ThisprojectsiteislocatedinZone1oftheMunichReearthquakemap.Ingeneral,theeastcoastofIndiafacingBayofBengalhasbeenexposedtodevastatingcyclones/stormsonaregularbasisandtheprojectsitebeingapprox.15kmawayfromtheseacoastisthusexposedtomoderateriskofdamageduetocycloneandassociatedwind,stormsandrains.Arelevantextractregardingstorm/cycloneoccurrencestakenfromareportprovidedbyInsuredisenclosedasANNEXUREII.Wewere informedby Insured that thebasicwindvelocity is50m/sand thecycloniceffect is1.15timesthebasicwindspeedwhilemaximumrain intensity is501mmperday.ThemonsoonseasoninthisregionisnormallyduringJuneNovember.Storm drains are under construction (excavation in progress) at site. However,consideringthetopographyandlayout,theriskofinundation/floodingislow.


LAYOUT&SECURITYThepowerplantisbeingbuiltongradedlandandinawellspreadlayout.Housekeepingisverygood.Theexisting220MWplantisseparatedfromtheprojectsitebyafencemadeofmetalsheetsboltedontoasteelstructureanchoredtothegroundwhiletheotherareasofthewhole plant is surrounded by a compound wall and is protected by welltrained,efficientandalertsecurity.At one location, on the northern side of the project site, the compound wallconstruction(approx.lengthof100m)isincompleteandeasilyaccessiblefromadjacentroad.However,theareaismannedbysecuritypersonnel.Therehavebeennoreportedincidentsoftheftorunrestinthatareatilldate.FIRE&SAFETYCurrently,civilworksareunderprogressatprojectsiteandnofirefightingequipment(permanent/portable)isinstalledatsite.Wegatheredtheimpressionthatsafetyatworkisgivenpriorityatsite.MATERIALSRECEIVEDTILLDATE&STORAGEATSITEWeobserved thatwellplannedand laidoutstorageareashavebeenprovided forbyInsured.Storagefacilitiesandworkareasareonleveledgroundandtheirlayoutiswellspread.Storageareasarelocatedwithintheprojectsiteonly.Weobserved that the followingcriticalequipment /project itemsaredelivered/undererectionatsite. GasTurbine:1no. Generatorstator:1no. Gasturbinediffusers:2nos. Generatorrotors:2nos. Coolingwater(CW)pipes Stackcomponents CoolingTower(IDCT)structurals Gasturbine/GeneratoraccessoriesinwoodenpackagesandcontainersWealsoobservedthatoneGasTurbineandaGeneratorStatorwerebeingreceivedatsiteduringourvisit.


InsuredinformedusthatthetotalvalueofImportedCargodeliveredatSamalkotsiteason 12.07.2011 is US$ 83 Million (Rs 382 Crores). This value of imported cargo isexpected to touchUS$167Million (Rs768Crores) innext15days. Total indigenouscargodeliveredatthesiteason12.07.2011isRs19.26Crores.TheshippingschedulesprovidedbyInsuredareenclosedasANNEXUREIII.Thehumidity levelsatprojectsiteareveryhigh (average80%approx.)due towhichequipmentatsiteneedtobestoredandpreservedwithcareuntilcommissioning.Wewere informed that thegas turbineswouldbe received in sealedconditionwhilegenerators and transformers would come to site in preserved condition (nitrogenfilling). Insured informed us that nitrogen levels would be monitored and relevantrecords would be maintained. Insured also informed that the space heaters areprovidedforGeneratorsandwouldbetakeninserviceforgeneratorspreservation.Weobservedthatthe2generatorrotorswerecoveredwithrainprotectioncoversandplacedinsecuredareanearBlock3.SITEWORK/ERECTIONPROGRESSWe were informed that all necessary permits, clearances are available for projectexecution.Weobservedthatworkpracticesatsiteareverygoodandsafe.Wehavenotobservedanydeficienciesinthequalityofworkortheworkpracticesandgathered the impression that the quality ofworks being executed at site till date isgood.Insuredinformedusthattheprojectisbeingimplementedinthefollowingsequence:Block3(Module1)Block2(Module2)Block4(Module3)Block 1& 5 arenotpartof thisproject and are areasmeant forexpansionof thepowerplantinfuture.We were informed that excavation work at site commenced on 14.02.2011. Weobservedthatsitegradinginprojectareaiscompleted.Weobservedthatstrandjackarrangementmountedonagantrycraneisbeingusedforhandling/placinggasturbinesandgeneratorsonthe foundations. Insured informedusthat all gas/steam turbines and generators would be placed on their respective


foundationsdirectlyusingthestrandjackarrangement.Priortousingthestrandjackforeachhandlinginstanceofgasturbine/generator,asastandardprecautionarymeasure,a load test of the strand jacks system is being conducted. Such measures as abovemitigatetheriskoflossesthatnormallyoccurduringintermediatestorage,shiftingandhandlingoftheturbines/generators.Block3:Foundationsfor2gasturbines,2generatorsand2diffusersarecompleted.Agasturbine,itsdiffuserandgeneratorwereobservedtobeplacedontheirfoundationpedestals.Strandjacksystem isreadyforreceivingthesecondgasturbine,generatorandplacingthemontheirfoundations.We observed that the second gas turbine was being received at site on 12.07 andgeneratorisexpectedtobereceivedatsiteinthenextfewdays.Civilworksare inprogressforHRSGs,stacks,generatortransformers,electricalcontrolroom,steamturbinesystem.Block2:CivilworksareinprogressforFoundationsfor2gasturbines,2generators,2diffusers,HRSGs,stacks,generatortransformers,electricalcontrolroom,steamturbinesystem.Block4:Civilworksare inprogressforfoundationsfor2gasturbines,2generators,2diffusers,HRSGs,stacks,generatortransformers,electricalcontrolroom,steamturbinesystem.IDCT2,3&4:Civilworks(RCC)arealmostcompletedandmechanicalerectionofstructuralshasbeenstartedforIDCT3.Civilworks(RCC)areinprogressforIDCT2and4.GISSwitchyardExcavationisinprogress.OthersBoundarywallworkisundercompletion.


Weobservedthatanexistingpowertransmissionlinecarryingpowerforaneighbouringindustry (RAKCeramics) ispassing through theproject site (partially crossingBlock2)andanalternateroutingofthelineawayfromprojectworkareasanditserectionworkisunderprogress.ProgressReportssubmittedbyInsuredareenclosedasANNEXUREIV.PicturestakenduringoursitevisitareenclosedasANNEXUREV.InsuredinformedusthatthetotalvalueofCivil/ErectionWorks(approx.)atthesiteason12.07.2011isRs.350Crores.We were informed that the EPC Contractor, Reliance Infrastructure Ltd. would beresponsible for the erection and commissioning of the entire plant and would besupervisedbytherespectiveOEMsforthesame.EspeciallyforGTG/STGpackagesandHRSGs,wewereinformedthaterectionandcommissioningwouldbesupervisedbyGEandCMIrespectively.We noted that commissioning spares are being made available adequately forcommissioning.WeunderstandthatoperationsandmaintenanceofthepowerplantwouldbedonebyO&MdivisionofReliancePowerLtd.WewerealsoinformedthatInsuredhassignedacomprehensive Long Term Supply/Service Agreement (LTSA)/ Long Term PartsManagement(LTPM)contractforaperiodof18yearswithGEforgas/steamturbines,generatorswherebymachineheatrate,availabilityareguaranteed.PROJECTIMPLEMENTATIONSCHEDULEALevel2project implementationscheduleasreceivedfrom InsuredalongwithcriticalpathisenclosedasANNEXUREVI.The schedule updated as on 01.05.2011 provided by Insured is enclosed asANNEXUREVII.Theplanned(contractualw.r.tLenders)combinedcyclecommercialoperationdatesareasfollows:

Block/Module PlannedCommercialOperationDate(COD)Block3/Module1 December2012Block2/Module2 February2013Block4/Module3 April2013

Itmaybenotedthatinopencyclemode,onlytheGasturbineswouldbecommissionedwithbypassstackand theHRSGwithmainstackand thesteam turbinewouldnotbe


commissioned. Only after completion of open cycle commissioning, combined cyclecommissioning(HRSGwithmainstackandsteamturbine)canbeachieved.Insured/ EPCContractor are putting all their efforts to try and achieve the followingtargets(earlierthancontractuallyplanned)forcommissioningcompletioninopencyclemode/combinedcyclemode.BasedonsiteconditionsandtheexecutionexperienceofEPCContractorRelianceInfrastructureLtd.,webelievethatsuchambitiouslytargetedschedulescanbeachievedasgiveninthetablebelow.

Block/Module OpenCycleCommissioningcompleted

CombinedCycleCommissioningcompleted

Block3/Module1 December2011 October2012Block2/Module2 January2012 November2012Block4/Module3 February/March2012 December2012

Inlinewiththeabove,thetargetedopencyclecommissioningmilestonesareasbelow:

Block/Module

GTFirstFiring/Ignition

GTGSynchronisation

CommissioningcompletedOpencycle

Block3/Module1

GT1:15.10.2011GT2:30.10.2011

GTG1:15.11.2011GTG2:30.11.2011

GTG1:15.12.2011GTG2:30.12.2011

Block2/Module2

GT1:15.11.2011GT2:30.11.2011

GTG1:15.12.2011GTG2:30.12.2011

GTG1:15.01.2012GTG2:30.01.2012

Block4/Module3

GT1:15.12.2011GT2:30.12.2011

GTG1:15.01.2012GTG2:30.01.2012

GTG1:15.02.2012GTG2:02.03.2012

GT: GasturbineGTG: Gasturbine&GeneratorSTG: Steamturbine&GeneratorTo ensure that the critical project inputs fuel, water, compressed air, powerevacuationsystemdonotbecomebottlenecks forachieving theabove targetedopencycleschedules, it isenvisagedthatthe following facilitieswillbesharedbetweentheproposedpowerprojectandexisting220MWgasbasedcombinedcyclepowerplant(only for Open Cycle Mode Operation of Gas Turbine before Commissioning of therespectiveSteamTurbines): FuelGasSystem:Thefuelgassystemoftheexisting220MWGasBasedCombined

CyclePowerPlantisproposedtobeinterconnectedtothefuelconditioningskidoftheproposedproject.

CompressedAirSystem:Thetappingof25mmfromthereceiveroftheexisting220MW Gas Based Combined Cycle Power Plant is proposed to be routed to theproposedproject.


FireFightingSystem:TheBlanktapofftappingfromtheFireFightingSystemoftheexisting220MWGasBasedCombinedCyclePowerPlantisproposedtoberoutedtotheproposedproject.

Switchyardfacilities:Inordertoevacuatethepower&drawstartuppowerat220KVswitchyardfacilities,itisproposedtoconnecttotheswitchyardfacilityofexisting220MWGasBasedCombinedCyclePowerPlant.

Thefollowingfacilitieswillbesharedbetweentheproposedpowerprojectandexisting220MWGasBasedCombinedCyclePowerPlantevenaftercommissioningoftheplantincombinedcyclemode.

Demineralisation(DM)Plant Plantreservoir

Insuredisplanningtoconstructandinstalltheinterlinkingfacilitiesaspartoftheprojectso that open cycle commissioning targeted schedules can be achieved as describedabove.Uponenquiry,Insured informedusthattheyhaveredundancyforthewaterpipelines,fuelgaspipelinesasalsofirefightingsystem,compressedairandswitchyardfacilitiesintheexisting220MWpowerplantalsoandthusdonotforeseeanybottlenecksarisingintheabovefacilitiesaffectingtheopencyclecommissioningofthepowerproject.NOTEONADVANCEDCLASSGASTURBINESTheadvancedclassofGasturbinestechnologyiscontinuouslyevolvingandlikesomeoftheothermanufacturers,catastrophicdamageswerereportedworldwideinFClassgasturbinesofGeneralElectricincludingIndia.However,fromthemarketintelligencegatheredbyusfromGEFClassgasturbines(9FAseries)installedintherecentpast,nomajordamageswerereported.SimilarFClassgasturbinesofGE,i.e.9FAserieshavebeeninstalledinIndiaasfollows:1.) PragatiPower,Delhi(Bhavana)

FirstGT: inoperationsinceNov2010SecondGT: inoperationsinceApril2011

2.) LancoKondapally,AndhraPradesh: inoperationsinceDec20093.) GMRVemagiri,AndhraPradesh: inoperationforlast3yearsAlltheaboveinstallationshavebeenoperatingsuccessfullyandreliably.


EAR/ALOPCOVERSSUMINSUREDUponrequest,InsuredhasprovidedusthefollowingvaluesforSumInsured:PropertyDamage:SumInsured: INR76,149Million(InsidePlantBoundaryLimits) ThedetailsareindicatedinTable1SumInsured: INR5,900Million(OutsidePlantBoundaryLimits) ThedetailsareindicatedinTable2TotalSumInsured: INR82,049Million(InsidePlant+OutsidePlantBoundaryLimits)Table1:SumInsuredValuesinsidePlantboundaryLimits

DescriptionModule1

INR(Million)

Module2INR

(Million)

Module3INR

(Million)

GasTurbines,Generators&Auxiliaries 4,882.09 4,814.64 4,804.53

SteamTurbines,Generators&Auxiliaries 1,578.05 1,565.87 1,565.87

SparesofGasTurbines,SteamTurbines,Generators&HeatRecoverySteamGenerator

881.41 881.41 881.41

Condenser&associatedAuxiliaries 133.11 133.11 133.11

HeatRecoverySteamGenerator(HRSG) 2,750.35 2,750.35 2,750.35

ErectionServicesforGasTurbines,Steamturbines,Generators&HRSG 759.80 759.80 759.80

CivilWorks,ErectionStructure 4,236.91 4,236.91 4,236.91

AllMechanicalItems 647.93 647.93 692.81

AllElectrical,C&IItemsincludingCables 455.66 455.66 455.66BalanceofPlantincludingEquipments,Erection&Civilworks 4,818.52 4,818.52 4,818.52

Total 21,143.84 21,064.21 21,098.98

CommonFacilitiesForTheEntirePlant 12,841.75

Total 76,148.77


Table2:SumInsuredValuesoutsidePlantboundaryLimits

Description Module1INR(Million)GasPipeline(Includingcivilworks,supplyofmaterialandequipments,erection,testing&commissioning) 2,000.0

WaterPipeline(Includingcivilworks,supplyofmaterialandequipments,erection,testing&commissioning) 2,000.0

TransmissionLine(Includingcivilworks,supplyofmaterialandequipments,erection,testing&commissioning)

1,900.0

Total 5,900.0

WewereinformedbyInsuredthattheabovevaluesincludecustomsduties,taxesalso.ALOP:Insured intends to insure only debt service (Interest + Principal Repayment) atINR6942.5Million(INR6,903.6MilliontowardsinterestandINR38.90MilliontowardsPrincipalrepaymentfor12monthsperiodfortheentireprojectdebtservicing).Insuredisseekinganindemnityperiodof12months.

Description ALOP BI

PrincipalModule1 35.00Module2 42.78Module3 3.89 63.39InterestModule1 237.11 221.28Module2 228.88 220.50Module3 224.38 219.21Total 694.25 802.16*AllFiguresInRsCrores

Insured isalsoseekingaseamless insurancecoveragecomprisingofEAR/ALOPcoversandanAllRiskCoverincl.B.Iforoperationalphaseasbelow.


OperationalPropertyAllRiskInterest: All Risk cover for power generating units along with completedancillary systems& Balance of Plant (BOP) units& Power Transmission Lines,WaterPipelines,GassupplyPipelinesOperationalizedduringthepolicyperiod.TotalSumInsured:INR82,749Million(Plants+OutsideBoundaryLimits)

DetailsofSumInsuredValueInside&OutsidePlantBoundaryLimits

DescriptionModule1

INR(Million)

Module2INR

(Million)

Module3INR

(Million)

GasTurbines,Generators&Auxiliaries 4,882.09 4,814.64 4,804.53

SteamTurbines,Generators&Auxiliaries 1,578.05 1,565.87 1,565.87

SparesofGasTurbines,SteamTurbines,Generators&HeatRecoverySteamGenerator

881.41 881.41 881.41

Condenser&associatedAuxiliaries 133.11 133.11 133.11

HeatRecoverySteamGenerator(HRSG) 2,750.35 2,750.35 2,750.35

ErectionServicesforGasTurbines,Steamturbines,Generators&HRSG 759.80 759.80 759.80

CivilWorks,ErectionStructure 4,236.91 4,236.91 4,236.91

AllMechanicalItems 647.93 647.93 692.81

AllElectrical,C&IItemsincludingCables 455.66 455.66 455.66BalanceofPlantincludingEquipments,Erection&Civilworks 4,818.52 4,818.52 4,818.52

Total 21,143.84 21,064.21 21,098.98

CommonFacilitiesForTheEntirePlant 12,841.75

Total 76,148.77

OutsideBoundaryLimitStructures 5900

Total 82,048.77ConsumablesLikeAirFilters,Chemicals,SparesofAuxiliaries,DieselCharges 200.00

SurroundingPropertySumInsured 500.00

Total 82,748.77


OperationalPropertyAllRisk(BIincludingMLOP)

BasisofIndemnity : Interest+PrincipalRepayment(DebtServiceOnly)

LimitofIndemnity : INR8,021.6Million

IndemnityPeriod: 12months

Description ALOP BI


The detailed projections of ALOP/ B.I provided by Insured are enclosed asANNEXUREVIII.CLAIMSInsuredinformedusthattherewerenoclaimsreportedtilldateunderthemarinepolicyorconstructionworksatsiteason12.07.2011.RISKCONCENTRATIONANDRESPONSETOINSURABLEINCIDENTSInsuredinformedusthattheprojectisbeingimplementedinthefollowingsequence:Block3(Module1)Block2(Module2)Block4(Module3)


3Dviewofanindividualblock/moduleisenclosedbelow:

Topviewofthemodules/blockslayoutisasdepictedbelow:

G

T

G

H

R

S

G

G

T

G

H

R

S

G

S

T

G

G

T

G

H

R

S

G

G

T

G

H

R

S

G

S

T

G

G

T

G

H

R

S

G

G

T

G

H

R

S

G

S

T

G

Block 2 Block 3 Block 4

Central Control Room

Themaximumriskconcentrationoftheprojectsite is inthepowerblockareaswhere3blocksofGTG/STGarebeinginstalled.

STG

2 x GTG

2 x HRSG

IDCT


Intheeventofamajorbreakdowningas/steamturbinesandgenerators,therearenorepair facilities available in India. The suitable repair facilities are available abroad atSingapore/Dubai/U.K/Japan/USA.Detailedroutesurveysfortransportationofprojectcargohavebeendoneandthefactthat2gasturbinesand2generators(thelargestandheaviestODC)havebeendeliveredsafely to site confirms that there are no infrastructure bottlenecks formarine cargotransportationfrom/tositeintheeventofacatastrophicmachinerybreakdownatsite.PROBABLEMAXIMUMLOSS(PML)SCENARIOUnder PML scenario, we have considered 3 scenarios 1.) an explosion and fire in ahydrogencooledgeneratorand2.)anexplosionandresultingfireinthefuelgassystemofthegasturbineand3.)fire/explosioninGISswitchyard.In scenarios 1 and 2 asmentioned above,we are assuming that 1Gas turbine and1generatoralongwithauxiliariesget completelydestroyed.Further,weassume thatthere would be very minor damage to the neighbouring gas turbine, generator andauxiliarieslocatedinthesameblock.Thereinstatementofthesameislikelytotake20months.Based on Sum Insured data made available to us, 1 GT and generator would costINR2441Million.ItserectioncostwouldbeINR110Millionandtherelatedcivilworkswould cost INR 610 Million. Repair of other miscellaneous items (building, cables,auxiliarieswouldcost339Million.Thecumulativereinstatementcostwouldworkoutto(GTG/4882/2:2441Million+Erection/760/7:110Million+Civil/4237/7:610Million+Misc.items:339Million)INR3500Millionundermaterialdamageclaim.Thecorrespondingreinstatementperiod is likelytotake20months incl.supplyofnewgasturbineandgeneratorwhichisassumedat12monthsandtransportation,erectionandcommissioningof8months.Asthereare2gasturbinesand1steamturbineineachblock,damagetooneGasturbineandgeneratorwouldaffectonly50%generationofeachblockasoneGTat full capacityand the steam turbineat50% capacity canbeoperatedwhiletheotherGTisunderrepair.AsInsuredhasassumedhighestdebtservicechargeofINR2371.1Millionannuallyfor1blocktobecoveredunderALOPpolicy,theALOPlosscausedbythedamagetogasturbine/generatorwouldworkoutto(2371.1/(2x12))*20=INR1975.92Million.The combined PML would work out to INR 3500 Million (M.D) + 1975.92 Million(ALOP)=INR5475.92Million.


AsInsuredhasassumedhighestdebtservicechargeofINR2826.0Millionannuallyfor1 block to be covered under B.I policy, the B.I loss caused by the damage to gasturbine/generatorwouldworkoutto(2826.0/(2x12))*20=INR2355.0Million.ThecombinedPMLwouldworkout to INR3500Million (M.D)+ INR2355.0Million(B.I)=INR5855Million.Inscenario3,weareassumingthatafire/explosionintheGasinsulatedswitchyard(GIS)canlead todamageofentireGIShardware.The reinstatementof the same is likely to take10months (6.5monthsdelivery and 3.5months erection/commissioning)whereby the entireplantgenerationwouldgetaffectedasGISisacommonfacilityforpowerevacuationfromall3blocks to thegrid.Basedonmarine insurancevaluesprovidedby Insured, thehardwarecostsworkouttocostinUS$14.55*forexconversion@INR46*handlingcosts1.1*[email protected]% = INR933.91 Million.Addinganother20%forerection&commissioning,thedulyerectedvalueofGIShardwareworksouttoINR1120.69Million.ConsideringanotherINR80Millionformiscellaneousitems(building,fireprotectionsystem,etc.),thecumulativereinstatementcostsundermaterialdamageworkouttoINR1200Million.As Insuredhasassumedadebtservicechargeof INR6942.5MillionannuallyfortheentireprojecttobecoveredunderALOPpolicy,theALOPlosscausedbythedamagetoGISswitchyardwouldworkoutto((6942.5/12)*10)=INR5785.42Million.ThecombinedPMLwouldworkouttoINR1200Million(M.D)+INR5785.42 Million(ALOP)=INR6985.42Million.As Insuredhasassumedadebtservicechargeof INR8021.6MillionannuallyfortheentireprojecttobecoveredunderB.Ipolicy,theB.IlosscausedbythedamagetoGISswitchyardwouldworkoutto((8021.6/12)*10)=INR6684.67Million.ThecombinedPMLwouldworkouttoINR1200Million(M.D)+INR6684.67 Million(B.I)=INR7884.67Million.ISSUES&RECOMMENDATIONS1. ItshouldbeensuredthatthefirefightingsystemsforGTGs(commonandmachine

specific) are installed, tested andmade fully functionalbefore commencementoffirstfiringofthe1stgasturbine.

2. We observed that Gas Turbine was placed on its foundation in Block 3. The

protection seal cover (compressor end) of the Gas Turbine was observed to bedislodged from itspositionand thusexposed toprevalenthumidatmosphere.Wehaveshown thesame to Insuredand requested them toseal thecompressorendfromatmosphere inconsultationwithOEM.Astheacousticenclosuresarenotyetinstalled fortheGasturbine/generatorandthusexposedtoopenatmosphere,wealsorequestedInsuredtoarrangeforplacingtherainprotectioncoversontheGas


Turbines and Generators. Insured may check with OEM regarding preservationmeasurestobetakenforgasturbines.

3. Insured wished to have seamless erection all risks and operational insurance

coverageincl.ALOP/B.Irespectively.AsInsuredspowerplantisamerchantpowerplant and considering the possible operation of the power plant even beforecombinedcycleCODsareachieved,thereisapossibilitytooperatetheplantoninfirmbasisduring theperiodofOpenCyclecommissioningcompletion/CombinedCycle commissioning completion todeclarationofCOD for eachmodule/block. Inviewofthesame,Insurersmayreviewwhentheerection/testingphaseterminatesandwhentheoperationperiodstartsandhowtheshifthappensfromALOPtoB.Iineachblock.

4. Insuredwishedto includedebtrepayment(Interest+PrincipalRepayment)aspart

oftheBISum Insured.PresentwordingsoftheBIpolicydonotallowthis. Insurersmaycheckifthewordingscanbealteredspecificallyforthis.

OTHERCONSIDERATIONSFORTHEINSURERSAsexplained inearliersectionsof this report, the targetedcommissioningcompletiondatesinopencycle/combinedcyclemodeareasbelow:

Block/Module OpenCycleCommissioningcompleted

CombinedCycleCommissioningcompleted

Block3/Module1 December2011 October2012Block2/Module2 January2012 November2012Block4/Module3 February/March2012 December2012

Theplannedcombinedcyclecommercialoperationdatesareasfollows:

Block/Module PlannedCommercialOperationDate(COD)Block3/Module1 December2012Block2/Module2 February2013Block4/Module3 April2013

During project implementation phase and the initial period of operation,we foreseethat Insured would be able to complete open cycle commissioning as described inearliersectionsofthisreportandbeinapositiontogeneratepowerfromgasturbinesinopencyclemodeusingbypassstack/diverterdamper.However, the entire flue gases from gas turbine exhaust are required as input forcarryingoutcombinedcyclecommissioning, i.e.steam turbinesystemsandauxiliariesduetowhichtheopencycleoperationswouldneedtobeadjustedtomeetcombinedcyclecommissioningrequirements.


Assuming that Insured achieves the targeted dates of open cycle/ combined cyclecommissioning (blockwise) anddependingon thepowerdemand andpowermarketpricingdynamics,weforeseeascenariounderwhichInsuredcanandwouldoperatethepowerplant(blockwise)onopencyclemodeandcombinedcyclemodeduringthetimeperiodsasgivenbelow:

Block/Module OpenCycleOperation CombinedCycleOperation

Block3/Module1

December2011October2012/December2012 October2012December2012

Block2/Module2

January2012November2012/February2013 November2012February2013

Block4/Module3

February/March2012December2012/April2013 December2012April2013

As this project is planned to be selling power onmerchant sale basis, there exists apossibilitythattheblockwiseprojectedCommercialOperationDates(COD)getpushedbackfurtherthanthecurrentlydeclaredCODsandInsuredcanoperatethepowerplantandgeneraterevenueoninfirmpowerbasis.IfCODsgetpushedbackfurtherforreasonswhatsoever,thecombinedcycleoperationperiodmentionedabovewouldincreasecorrespondingly.Thesescenarioswouldlargelydependonthefuelprice,availabilityandpowerdemandandpowersalepriceapartfromthespeedatwhichInsuredcanexecutetheproject.Weunderstandthatfinancialclosurehasnotbeenachievedfortheprojectandthedebtservicecostsbeingprojectedby Insuredareonlyforecastedfigures.Wegatheredthattheequipmenthavebeenboughton supplierscreditand thecivil/constructionworksarebeingfundedbyinternalcashreserves.If there isamoratorium from lenderson interestandprincipal repayment (this is thecase when such large power projects are negotiated by large corporates) and suchmoratoriumwould countonly fromCODof theentireplant, thereexistsapossibilitythatInsuredneednotdeclareCOD.Instead,hecanachievecommissioningandoperatethe plant on infirm basis with respect to lenders contract but in reality deriverevenue/profit through such infirm power sales. The period of this infirm powergeneration could depend on the comparison of Interest during construction (IDC)payableanddebtservicingcostsavedduringsuchperiod.During suchmoratorium from lenders, Insured has no debt servicing and repaymentliabilitytowardslendersuntilCODisdeclaredbuthastoincurIDC.InviewofhugepowerdemandinIndiaandtheneedtoaddnewcapacityannuallyatafast pace using the available fuel at a viable price, the regulatory/federal agenciesmanaging Indian power sector have declared a policy guidelinewhereby the project


which is inadvancedstageof implementationwouldgetpriorityforfuelgasallocationsothatsuchprojectscanprovidepowerandrespondtothe increasingdemand inthecountry.The regulatorspolicyhowever couldandhas led toa situation in India,wheremanypowerprojectsunderplanning/executionwould try and achieve readiness forpowergenerationandtryandgetpriorityforfuelallocationbythefederalagenciesregulatingfuelandpower inIndia.So,weanticipatethattherewouldbescrambletogetthegasallocatedbythepowerplantowners.Insured is confident of arranging necessary fuel gas for commissioning.However forsubsequentsustainedoperationofthepowerplant,availabilityoffuelgas insufficientquantity foramerchantpowerplantwithout longtermpowersaleagreement, inouropinion isthemostcriticalbottleneck forsuccessfulcompletionofcommissioningandsubsequentcommercialoperations.Beingamerchantsalebasedpowerproject,therevenuemodellingisdifficulttopredictas power generation and sale prices can fluctuate depending on fuel cost and alsopower demand. As thiswould be amerchant power plant, therewould be no pricesupportforfluctuationsinfuelgasprices.Thekeydrivingfactoristhepowersaleprice.Insured isalsoseekingaseamless insurancecoveragecomprisingofEAR/ALOPcoversandanAllRiskCoverincl.B.Iforoperationalphaseasbelow.BasisofIndemnityforALOPandB.I:Interest+PrincipalRepayment(DebtServiceOnly)IndemnityPeriod: 12monthsLimitofIndemnity: aspertablebelow

Description ALOP BI



When testing gets completed and the specific GTG and then the block come intooperation as per policy wordings/lenders contract wordings and how this has aninfluenceonEAR/OperationalAllRiskandcorrespondingALOP/B.Iliabilityhastobecloselylookedinto.MerchantplantlackinglongtermpowersalesagreementsmakesitevenmorecomplicatedtoassessInsurersliabilityintheeventofaclaim.AlsothediscussionsrevealingthatthesuminsuredfortheALOPincludestherepaymentoftheprincipalamounthowthiswouldbecoveredundertheexistingALOPwordingwillneedtobelookedinto.Thisreportisbasedonactualinspectioncarriedoutatsitetothebestofourknowledgeandabilityandisissuedwithoutprejudice.ForBHATAWADEKARANDCOMPANY

MilindBhatawadekarPrincipalOfficer

BoddapatySreeramaSreenivasu RiskEngineerPowerPlants&Mechanical

AmolBhiseRiskEngineerCivil&Construction

Documents

SamalkotPowerLtd_Risk Inspection_Report_BM_0709_2011.pdf