SHANTINAGARINDUSTRIAL ESTATE,

VAKOLA,SANTACRUZ(EAST),
MUMBAI400055.
TEL
:26674425/26674426
26672762/26672901
FAX
:912226672144
EMail:bandco@bhatawadekar.com
Website:www.bhatawadekar.com

BHATAWADEKAR&COMPANY
RiskManagement&InsuranceAdvisory
RiskSurvey,InspectionandValuation
LossAdjustment&ProjectMonitoring

Lic.No.SLA/4284Upto01/12/2015

Ref.No.:Y2011/07/MRE/SPL/RI82

ReportNo.BM/0709/2011
Date:19.07.2011

RISKINSPECTIONREPORT

Regarding

Insured

Insurers

RiskLocation

DescriptionofProject

DateofInspection
Inspectedby

: RiskInspectionof2262MW(3x754MW)gasbased
combinedcyclepowerprojectunderconstruction

: SamalkotPowerLtd.
(100%subsidiaryofReliancePowerLtd.)

: RelianceGeneralInsuranceCompanyLtd.,
Mumbai.

: IDAPeddapuram,SamalkotHPO
PostBoxNo.22,Samalkot533440
EastGodavari(Dist),AndhraPradesh(India)

: 2262MW(3x754MW)gasbasedcombinedcycle
powerproject
: 12.07.2011

: B.SreeramaSreenivasu
AmolBhise

ReportApprovedby
: MilindBhatawadekar

**************************************************

PREAMBLE

Insurers,RelianceGeneralInsuranceCompanyLtd.informedtheriskengineerthatthe
Samalkot Combined Cycle Power plant intended to be reinsured by them with the
MunichReinsuranceCompany,whodesiredthatanindependentriskinspectionreport
bemadeavailabletoknowthestatusofprojectintermsofworkcompletion,qualityof
workthatwasalreadycompletedatsite.Instructionstocarryoutsuchinspectionwere
issuedtousonFridaythe8thJuly2011.

PursuanttosuchinstructionsandincoordinationwiththecorporateofficeofReliance
Power, we visited project site as planned on 12.07.2011 to collect data, inspect the
materialsarrived/storedatsiteandunderstandthestatusofprojectprogress.

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ReportNo.BM/0709/2011

PageNo.2

Duringoursitevisit,weinteractedwithfollowingkeyexecutives:

Mr.K.Chandrasekhar
ChiefProjectDirector
Mr.UjjwalMathur
Sr.ManagerBusinessDevelopment
Mr.Khan

Planning/PMGdept.

PROJECTDETAILS
SamalkotPowerLimited,a100%subsidiaryofReliancePowerLimited,isimplementing
a 2262 MW Gas Based Combined Cycle Power Project (CCPP) adjacent to the existing
220 MW naphtha/gas based combined cycle power plant and is located at notified
industrial area IDA Peddapuram near Samalkot, East Godavari district, Andhra
Pradesh,India.
ProjectConfiguration
The2262MWCCPPprojectenvisages3powerblockseachwithgross capacityof754
MWatsiteambientcondition.
Each block comprises of 2+2+1 multi shaft configuration, consisting of two GE9351FA
Gas turbines (243 MW capacity), two Triple Pressure Horizontal Heat Recovery Steam
Generators(HRSG)andoneGED11steamturbine(268MWcapacity).Thegenerators
are hydrogen cooled and supplied by GE, USA. (We were informed that the first 2
generatorsaresuppliedbyGEfromToshiba,Japanandtheremaininggeneratorswould
besuppliedbyGE,USAdirectly.)
Inaddition,eachblockshallbehavingadedicatedcoolingwatersystemcomprisingof
InducedDraftCoolingTowers(IDCT)andCWPumps.Thepowerfromtheprojectshall
beevacuatedat400KVlevelfromGasInsulatedSwitchyard(GIS).TheBalanceofPlant
(BOP) mainly comprises of compressed air system, PreTreatment Plant, cooling water
chlorinationsystem,fireprotectionsystem,etc.
Fuel

Although the site is well connected by GAILs regional gas supply pipeline to large /
mediumconsumersinthatarea,adedicatedgaspipeline(approx.45km)isenvisaged
tobebuiltbyInsuredfromGadimoga(KrishnaGodavarioffshoregasbasingaslandfall
point)tosite.

RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyet
tostartforthefuelpipeline.Uponenquiry,Insuredinformedusthatthepipelinewould
beanundergroundpipeline.Routingandlocationofgaspipelineandrelatedfacilitiesis
finalizedandissubjecttolandacquisitionandrightofwayapprovals.

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Water

Insured is planning to build a water pipeline (approx. 50 km long) along the Samalkot
canalfromupstreamofSirArthurCottonbarrage,Dowleswaramtotheprojectsite.

RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyet
to start for the water pipeline. Upon enquiry, Insured informed us that the pipeline
wouldbeanundergroundpipeline.Routingandlocationofwaterpipelineandrelated
facilitiesisfinalizedandissubjecttolandacquisitionandrightofwayapprovals.

PowerEvacuation&Sales

AspowerevacuationarrangementfortheproposedProject,aBulkPowerTransmission
AgreementhasbeenenteredintowithPowerGridCorporationofIndiaLtd.(PGCIL)to
evacuatepowerfromthenearestpoolingstationlocatedatVemagiri.Insuredisbuilding
a2X400KVD/Cpowertransmissionline(approx.25kmlength)fromprojectsitetothe
VemagiriPoolingStationIItoconnectintoPGCILnetwork.
Thecompanyproposestogeneraterevenuethroughmerchantpowersales.
RightofWayapprovals/Landacquisitionisunderprogressandconstructionworkisyet
tostartforthetransmissionnetwork.Routingandlocationoftransmissionnetworkand
relatedfacilitiesisfinalizedandissubjecttolandacquisitionandrightofwayapprovals.
Project EPC contract was awarded on International Competitive Bidding route to
M/s.RelianceInfrastructureLtd.,andNoticetoProceed(NTP)wasreportedlygivento
thecontractorforstartofworkonJuly31,2010.

PROJECTBATTERYLIMITS(ONSITE,OFFSITE&SHAREDFACILITIES)

BasedondiscussionswithInsuredregardingprojectbatterylimits,wereportasbelow:

A.) Onsite:Thefollowingpackagesarelocatedwithintheprojectsitepremisesand
protectedbyacompoundwall.

3BlocksofGasTurbines/Generators/HRSG/SteamTurbine&Generator

CoolingWatersystemcomprisingofInducedDraftCoolingTowersandCW
Pumps

400KVlevelGasInsulatedSwitchyard

andBalanceofPlantmainlycomprisingofcompressedairsystem,PreTreatment
Plant,coolingwaterchlorinationsystem&fireprotectionsystem.

Bhatawadekar&Co

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PageNo.4

B.) Offsite:Thefollowingpackagesarelocatedoutsidetheplantboundary:

FuelGaspipeline:
45km(approx.)betweenprojectsiteandGadimoga

Waterpipeline:
50km(approx.)betweenprojectsiteandDowleswaram
Intermediatewaterreservoir:tostore3monthsofpowerplantswaterrequirement
(locationnotyetfinalized)

PowerEvacuation/Transmissionsystem:25km(approx.)betweenprojectsiteto
VemagiripoolingstationII.

We were informed that project execution of the offsite works mentioned above
havenotyetcommenced.

C.) Sharedfacilities

It is envisaged that the following facilities will be shared between this proposed
powerprojectandexisting220MWgasbasedcombinedcyclepowerplant(onlyfor
OpenCycleModeOperationofGasTurbinebeforeCommissioningoftherespective
SteamTurbines):

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 fuel
conditioningskidoftheproposedproject.
CompressedAirSystem:Thetappingof25mmfromthereceiveroftheexisting
220MWGasBasedCombinedCyclePowerPlantisproposedtoberoutedtothe
proposedproject.
FireFightingSystem:TheBlanktapofftappingfromtheFireFightingSystemof
theexisting220MWGasBasedCombinedCyclePowerPlantisproposedtobe
routedtotheproposedproject.
Switchyardfacilities:Inordertoevacuatethepower&drawstartuppowerat
220KVswitchyardfacilities,itisproposedtoconnecttotheswitchyardfacilityof
existing220MWGasBasedCombinedCyclePowerPlant.

Insured is planning to construct and install the interlinking facilities as part of the
projectandthusincludedintheSumInsured.

Thefollowingfacilitieswillbesharedbetweentheproposedplantandexisting220
MWGasBasedCombinedCyclePowerPlantevenaftercommissioningoftheplant
incombinedcyclemode.

Demineralisation(DM)Plant
Plantreservoir

ThelayoutprovidedbyInsuredalongwithprojectlocationandoffsitesisenclosedas
ANNEXUREI.

Bhatawadekar&Co

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PageNo.5

KEYAGENCIESINVOLVEDINTHEPROJECT

EngineeringConsultant:

Black&Veatch,USA

CivilStructure/ArchitecturalConsultant: Toshiba(TPSC)

GasPipeline:

Tractebel

LendersEngineer:

Lahmeyer

Operation&Maintenance:

O&MdivisionofReliancePower

EPCContractor:RelianceInfrastructureLtd.andkeysubcontractorslistedbelow:

Description

1 CivilWorks
2

PowerPlantBuildingStructuralBolts
Supply

3 FireProtectionSystem
4

GasTurbine,SteamTurbine,Generators
andassociatedAuxiliaries

Contractor/Agency
ShapoorjiPallonji&Company
Limited
HangziaoSteelStructureCo.
Limited(HXSS),China
MXSystemInternational
Limited
GeneralElectricCompany(GE),
USA

5 HeatRecoverySteamGeneratorSupply

CMIEPTI,USA

6 DistributionControlSystem

HoneywellInternational
Limited,USA

7 LPPipingSupply&Erection

RaunaqInternationalLimited

8 Condenser&AssociatedAuxiliaries

InducedDraftCoolingTowersComplete
Supply&Erection

10 Transportation&Logistics
11 GeneratorTransformers
12

GasinsulatedSwitchyard(Supply+
Erection)

HangzhouBoilerGroupCo.
Limited,China
ConsortiunofHamonShriram
CotterallPrivateLimited,India
andHamonThermalEurope,
Belgium
ABCIndiaPrivateLimited
HyundaiHeavyIndustriesCo.
Limited,Korea
XianElectricEngineeringCo.
Limited,China

13 GeneratorCircuitBreaker

ABBLimited

14 UnitAuxillaryTransformers

ArevaIndiaLimited

Bhatawadekar&Co

ReportNo.BM/0709/2011

15 HTSwitchgear
16 StartUpTransformers

Larsen&ToubroLimited
ArevaT&DLimited

17 400kVCablesandAccessories

SheyangFurukawa,China

18 AuxTransformersDry
19 GeneratorBusducts

QRE,China
C&SElectricLimited
BusPostInsulatorsSaravanan
GlobalEnergyLimited
WaveTrapsArevaT&D
Limited

SwitchyardEquipments
20 BusPostInsulators
WaveTraps
21 Control&RelayPanelsForSwitchyard

SiemensLimited,India

22 LTPower&controlCablesSwitchYard

TeracomLimited

23 SwitchyardReactorsSupply

ArevaT&DLimited

24

400KVSwitchYardErection,Testing&
Commissioning(ETC)

25

ShiftingofExisting132KvTransmissionLine
SrimanConstruction
atSamalkotProject

BlueStarLimited

27 SupplyofLDPipes

AnupamIndustriesLimited/
PanparEngineeringPrivate
Limited
PSLLimited

28 FuelGasConditioningSystem

MultitexFilterationsLimited

29 HorizontalPumps
30 VerticalPumps

WPILLimited
FlowmoreLimited

31 CompressedAirSystem

AtlasCopcoLimited

32 CoolingWaterpumps

WPILLimited

26 EOTCranes

34 PlateHeatExchangers
35 FireTender

AiroxNigenEquipments(P)
Limited
GEAEcoflexIndiaPvt.Limited
UnitedManufacturingLimited

36 CoolingWaterTreatmentPlant

ThermaxLimited

37 PreTreatmentPlant
38 MechanicalErection

ThermaxLimited
PowerMech

33 ChlorinationPlant

PageNo.6

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.7

Based on verification of documents, discussions with Insured and visual inspection

(walkdown)ofthesite,wereportasunder:

OFFSITES

WehavenotvisitedtheoffsitesasInsuredhadinformedusthatlandacquisitionand
rightofwayapprovalsareunderprogress.

However, the river intake pump house being planned upstream of Dowleswaram
barragefacessignificantriskofflooding/inundationespeciallyduringconstructionphase
as the pump house would be on the banks of River Godavari which experiences
considerableswellingandfloodingeveryyear.Intheeventofafloodingofconstruction
workareasofriverintakepumphouse,theworkcangetdelayedforatimeperiodof
36monthsdependingonfloodintensityandthedamageitcauses.Suchdelaywould
naturallyaffecttheprojectcommissioningforsuchcorrespondingperiod.

ONSITES

EXPOSURETONATURALHAZARDS

ThisprojectsiteislocatedatnotifiedindustrialareaIDAPeddapuramnearSamalkot,
EastGodavaridistrict,AndhraPradesh,India.

ThisprojectsiteislocatedinZone1oftheMunichReearthquakemap.

Ingeneral,theeastcoastofIndiafacingBayofBengalhasbeenexposedtodevastating
cyclones/stormsonaregularbasisandtheprojectsitebeingapprox.15kmawayfrom
theseacoastisthusexposedtomoderateriskofdamageduetocycloneandassociated
wind,stormsandrains.

Arelevantextractregardingstorm/cycloneoccurrencestakenfromareportprovidedby
InsuredisenclosedasANNEXUREII.

We were informed by Insured that the basic wind velocity is 50 m/s and the cyclonic
effectis1.15timesthebasicwindspeedwhilemaximumrainintensityis501mmper
day.ThemonsoonseasoninthisregionisnormallyduringJuneNovember.

Storm drains are under construction (excavation in progress) at site. However,

consideringthetopographyandlayout,theriskofinundation/floodingislow.

Bhatawadekar&Co

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PageNo.8

LAYOUT&SECURITY

Thepowerplantisbeingbuiltongradedlandandinawellspreadlayout.

Housekeepingisverygood.

Theexisting220MWplantisseparatedfromtheprojectsitebyafencemadeofmetal
sheetsboltedontoasteelstructureanchoredtothegroundwhiletheotherareasofthe
whole 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 wall
construction(approx.lengthof100m)isincompleteandeasilyaccessiblefromadjacent
road.However,theareaismannedbysecuritypersonnel.Therehavebeennoreported
incidentsoftheftorunrestinthatareatilldate.

FIRE&SAFETY

Currently,civilworksareunderprogressatprojectsiteandnofirefightingequipment
(permanent/portable)isinstalledatsite.

Wegatheredtheimpressionthatsafetyatworkisgivenpriorityatsite.

MATERIALSRECEIVEDTILLDATE&STORAGEATSITE

We observed that well planned and laid out storage areas have been provided for by
Insured.Storagefacilitiesandworkareasareonleveledgroundandtheirlayoutiswell
spread.Storageareasarelocatedwithintheprojectsiteonly.

We observed that the following critical equipment /project items are delivered/under
erectionatsite.

GasTurbine:1no.
Generatorstator:1no.
Gasturbinediffusers:2nos.
Generatorrotors:2nos.
Coolingwater(CW)pipes
Stackcomponents
CoolingTower(IDCT)structurals
Gasturbine/Generatoraccessoriesinwoodenpackagesandcontainers

WealsoobservedthatoneGasTurbineandaGeneratorStatorwerebeingreceivedat
siteduringourvisit.

Bhatawadekar&Co

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InsuredinformedusthatthetotalvalueofImportedCargodeliveredatSamalkotsiteas
on 12.07.2011 is US$ 83 Million (Rs 382 Crores). This value of imported cargo is
expected to touch US$ 167 Million (Rs 768 Crores) in next 15 days. Total indigenous
cargodeliveredatthesiteason12.07.2011isRs19.26Crores.

TheshippingschedulesprovidedbyInsuredareenclosedasANNEXUREIII.

The humidity levels at project site are very high (average 80 % approx.) due to which
equipmentatsiteneedtobestoredandpreservedwithcareuntilcommissioning.

We were informed that the gas turbines would be received in sealed condition while
generators and transformers would come to site in preserved condition (nitrogen
filling). Insured informed us that nitrogen levels would be monitored and relevant
records would be maintained. Insured also informed that the space heaters are
providedforGeneratorsandwouldbetakeninserviceforgeneratorspreservation.

Weobservedthatthe2generatorrotorswerecoveredwithrainprotectioncoversand
placedinsecuredareanearBlock3.

SITEWORK/ERECTIONPROGRESS

We were informed that all necessary permits, clearances are available for project
execution.

Weobservedthatworkpracticesatsiteareverygoodandsafe.

Wehavenotobservedanydeficienciesinthequalityofworkortheworkpracticesand
gathered the impression that the quality of works being executed at site till date is
good.

Insuredinformedusthattheprojectisbeingimplementedinthefollowingsequence:

Block3(Module1)
Block2(Module2)
Block4(Module3)

Block 1 & 5 are not part of this project and are areas meant for expansion of the
powerplantinfuture.

We were informed that excavation work at site commenced on 14.02.2011. We

observedthatsitegradinginprojectareaiscompleted.

Weobservedthatstrandjackarrangementmountedonagantrycraneisbeingusedfor
handling/placinggasturbinesandgeneratorsonthefoundations.Insuredinformedus
that all gas/steam turbines and generators would be placed on their respective

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.10

foundationsdirectlyusingthestrandjackarrangement.Priortousingthestrandjackfor
eachhandlinginstanceofgasturbine/generator,asastandardprecautionarymeasure,
a load test of the strand jacks system is being conducted. Such measures as above
mitigatetheriskoflossesthatnormallyoccurduringintermediatestorage,shiftingand
handlingoftheturbines/generators.

Block3:

Foundationsfor2gasturbines,2generatorsand2diffusersarecompleted.
Agasturbine,itsdiffuserandgeneratorwereobservedtobeplacedontheirfoundation
pedestals.

Strandjacksystemisreadyforreceivingthesecondgasturbine,generatorandplacing
themontheirfoundations.

We observed that the second gas turbine was being received at site on 12.07 and
generatorisexpectedtobereceivedatsiteinthenextfewdays.

CivilworksareinprogressforHRSGs,stacks,generatortransformers,electricalcontrol
room,steamturbinesystem.

Block2:

CivilworksareinprogressforFoundationsfor2gasturbines,2generators,2diffusers,
HRSGs,stacks,generatortransformers,electricalcontrolroom,steamturbinesystem.

Block4:

Civilworksareinprogressforfoundationsfor2gasturbines,2generators,2diffusers,
HRSGs,stacks,generatortransformers,electricalcontrolroom,steamturbinesystem.

IDCT2,3&4:

Civilworks(RCC)arealmostcompletedandmechanicalerectionofstructuralshasbeen
startedforIDCT3.

Civilworks(RCC)areinprogressforIDCT2and4.

GISSwitchyard

Excavationisinprogress.

Others

Boundarywallworkisundercompletion.

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.11

Weobservedthatanexistingpowertransmissionlinecarryingpowerforaneighbouring
industry (RAK Ceramics) is passing through the project site (partially crossing Block2)
andanalternateroutingofthelineawayfromprojectworkareasanditserectionwork
isunderprogress.

ProgressReportssubmittedbyInsuredareenclosedasANNEXUREIV.

PicturestakenduringoursitevisitareenclosedasANNEXUREV.

InsuredinformedusthatthetotalvalueofCivil/ErectionWorks(approx.)atthesiteas
on12.07.2011isRs.350Crores.

We were informed that the EPC Contractor, Reliance Infrastructure Ltd. would be
responsible for the erection and commissioning of the entire plant and would be
supervisedbytherespectiveOEMsforthesame.EspeciallyforGTG/STGpackagesand
HRSGs,wewereinformedthaterectionandcommissioningwouldbesupervisedbyGE
andCMIrespectively.

We noted that commissioning spares are being made available adequately for
commissioning.

Weunderstandthatoperationsandmaintenanceofthepowerplantwouldbedoneby
O&MdivisionofReliancePowerLtd.WewerealsoinformedthatInsuredhassigneda
comprehensive Long Term Supply/Service Agreement (LTSA)/ Long Term Parts
Management(LTPM)contractforaperiodof18yearswithGEforgas/steamturbines,
generatorswherebymachineheatrate,availabilityareguaranteed.

PROJECTIMPLEMENTATIONSCHEDULE

ALevel2projectimplementationscheduleasreceivedfromInsuredalongwithcritical
pathisenclosedasANNEXUREVI.

The schedule updated as on 01.05.2011 provided by Insured is enclosed as

ANNEXUREVII.

Theplanned(contractualw.r.tLenders)combinedcyclecommercialoperationdatesare
asfollows:

Block/Module
PlannedCommercialOperationDate(COD)
Block3/Module1
December2012
Block2/Module2
February2013
Block4/Module3
April2013

Itmaybenotedthatinopencyclemode,onlytheGasturbineswouldbecommissioned
with bypass stack and the HRSG with main stack and the steam turbine would not be

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.12

commissioned. Only after completion of open cycle commissioning, combined cycle

commissioning(HRSGwithmainstackandsteamturbine)canbeachieved.

Insured/ EPC Contractor are putting all their efforts to try and achieve the following
targets(earlierthancontractuallyplanned)forcommissioningcompletioninopencycle
mode/combinedcyclemode.Basedonsiteconditionsandtheexecutionexperienceof
EPCContractorRelianceInfrastructureLtd.,webelievethatsuchambitiouslytargeted
schedulescanbeachievedasgiveninthetablebelow.

Block/Module
OpenCycle
CombinedCycle
Commissioningcompleted Commissioningcompleted
Block3/Module1
December2011
October2012
Block2/Module2
January2012
November2012
Block4/Module3
February/March2012
December2012

Inlinewiththeabove,thetargetedopencyclecommissioningmilestonesareasbelow:

Block/
GTFirstFiring/
GTG
Commissioning
Module
Ignition
Synchronisation
completedOpencycle
Block3/
GT1:15.10.2011
GTG1:15.11.2011
GTG1:15.12.2011
Module1
GT2:30.10.2011
GTG2:30.11.2011
GTG2:30.12.2011
Block2/
GT1:15.11.2011
GTG1:15.12.2011
GTG1:15.01.2012
Module2
GT2:30.11.2011
GTG2:30.12.2011
GTG2:30.01.2012
Block4/
GT1:15.12.2011
GTG1:15.01.2012
GTG1:15.02.2012
Module3
GT2:30.12.2011
GTG2:30.01.2012
GTG2:02.03.2012

GT: Gasturbine
GTG: Gasturbine&Generator
STG: Steamturbine&Generator

To ensure that the critical project inputs fuel, water, compressed air, power
evacuation system do not become bottlenecks for achieving the above targeted open
cycleschedules,itisenvisagedthatthefollowingfacilitieswillbesharedbetweenthe
proposed power project and existing 220 MW gas based combined cycle power plant
(only for Open Cycle Mode Operation of Gas Turbine before Commissioning of the
respectiveSteamTurbines):

FuelGasSystem:Thefuelgassystemoftheexisting220MWGasBasedCombined
CyclePowerPlantisproposedtobeinterconnectedtothefuelconditioningskidof
theproposedproject.

CompressedAirSystem:Thetappingof25mmfromthereceiveroftheexisting220
MW Gas Based Combined Cycle Power Plant is proposed to be routed to the
proposedproject.

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FireFightingSystem:TheBlanktapofftappingfromtheFireFightingSystemofthe
existing220MWGasBasedCombinedCyclePowerPlantisproposedtoberoutedto
theproposedproject.

Switchyardfacilities:Inordertoevacuatethepower&drawstartuppowerat220
KVswitchyardfacilities,itisproposedtoconnecttotheswitchyardfacilityofexisting
220MWGasBasedCombinedCyclePowerPlant.

Thefollowingfacilitieswillbesharedbetweentheproposedpowerprojectandexisting
220MWGasBasedCombinedCyclePowerPlantevenaftercommissioningoftheplant
incombinedcyclemode.

Demineralisation(DM)Plant
Plantreservoir

Insuredisplanningtoconstructandinstalltheinterlinkingfacilitiesaspartoftheproject
so that open cycle commissioning targeted schedules can be achieved as described
above.

Uponenquiry,Insuredinformedusthattheyhaveredundancyforthewaterpipelines,
fuelgaspipelinesasalsofirefightingsystem,compressedairandswitchyardfacilitiesin
theexisting220MWpowerplantalsoandthusdonotforeseeanybottlenecksarisingin
theabovefacilitiesaffectingtheopencyclecommissioningofthepowerproject.

NOTEONADVANCEDCLASSGASTURBINES

TheadvancedclassofGasturbinestechnologyiscontinuouslyevolvingandlikesomeof
theothermanufacturers,catastrophicdamageswerereportedworldwideinFClassgas
turbinesofGeneralElectricincludingIndia.

However,fromthemarketintelligencegatheredbyusfromGEFClassgasturbines(9FA
series)installedintherecentpast,nomajordamageswerereported.

SimilarFClassgasturbinesofGE,i.e.9FAserieshavebeeninstalledinIndiaasfollows:

1.) PragatiPower,Delhi(Bhavana)
FirstGT:

inoperationsinceNov2010
SecondGT:
inoperationsinceApril2011

inoperationsinceDec2009
2.) LancoKondapally,AndhraPradesh:

3.) GMRVemagiri,AndhraPradesh:
inoperationforlast3years

Alltheaboveinstallationshavebeenoperatingsuccessfullyandreliably.

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PageNo.14

EAR/ALOPCOVERSSUMINSURED

Uponrequest,InsuredhasprovidedusthefollowingvaluesforSumInsured:

PropertyDamage:

SumInsured:
INR76,149Million(InsidePlantBoundaryLimits)

ThedetailsareindicatedinTable1

SumInsured:
INR5,900Million(OutsidePlantBoundaryLimits)

ThedetailsareindicatedinTable2

TotalSumInsured: INR82,049Million(InsidePlant+OutsidePlantBoundaryLimits)

Table1:SumInsuredValuesinsidePlantboundaryLimits

Module1 Module2 Module3

Description
INR
INR
INR
(Million) (Million) (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&HeatRecoverySteam
Generator

881.41

881.41

881.41

Condenser&associatedAuxiliaries

133.11

133.11

133.11

2,750.35

2,750.35

2,750.35

759.80

759.80

759.80

4,236.91

4,236.91

4,236.91

AllMechanicalItems

647.93

647.93

692.81

AllElectrical,C&IItemsincludingCables
BalanceofPlantincludingEquipments,
Erection&Civilworks
Total

455.66

455.66

455.66

4,818.52

4,818.52

4,818.52

21,143.84 21,064.21 21,098.98

CommonFacilitiesForTheEntirePlant

12,841.75

Total

76,148.77

HeatRecoverySteamGenerator(HRSG)
ErectionServicesforGasTurbines,
Steamturbines,Generators&HRSG
CivilWorks,ErectionStructure

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PageNo.15

Table2:SumInsuredValuesoutsidePlantboundaryLimits

Module1
INR(Million)

Description
GasPipeline(Includingcivilworks,supplyofmaterial
andequipments,erection,testing&commissioning)
WaterPipeline(Includingcivilworks,supplyofmaterial
andequipments,erection,testing&commissioning)
TransmissionLine(Includingcivilworks,supplyof
materialandequipments,erection,testing&
commissioning)
Total

2,000.0
2,000.0
1,900.0
5,900.0

WewereinformedbyInsuredthattheabovevaluesincludecustomsduties,taxesalso.

ALOP:

Insured intends to insure only debt service (Interest + Principal Repayment) at

INR6942.5Million(INR6,903.6MilliontowardsinterestandINR38.90Milliontowards
Principalrepaymentfor12monthsperiodfortheentireprojectdebtservicing).Insured
isseekinganindemnityperiodof12months.

Description

ALOP

BI

Principal
Module1

35.00
Module2

42.78
Module3
3.89
63.39
Interest
Module1 237.11 221.28
Module2 228.88 220.50
Module3 224.38 219.21
Total
694.25 802.16
*AllFiguresInRsCrores

Insured is also seeking a seamless insurance coverage comprising of EAR/ALOP covers

andanAllRiskCoverincl.B.Iforoperationalphaseasbelow.

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.16

OperationalPropertyAllRisk

Interest:
All Risk cover for power generating units along with completed
ancillary systems & Balance of Plant (BOP) units & Power Transmission Lines, Water
Pipelines,GassupplyPipelinesOperationalizedduringthepolicyperiod.

TotalSumInsured:INR82,749Million(Plants+OutsideBoundaryLimits)

DetailsofSumInsuredValueInside&OutsidePlantBoundaryLimits
Module1 Module2 Module3
INR
INR
INR
(Million) (Million) (Million)

Description
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&HeatRecoverySteam
Generator

881.41

881.41

881.41

Condenser&associatedAuxiliaries

133.11

133.11

133.11

2,750.35

2,750.35

2,750.35

759.80

759.80

759.80

4,236.91

4,236.91

4,236.91

AllMechanicalItems

647.93

647.93

692.81

AllElectrical,C&IItemsincludingCables
BalanceofPlantincludingEquipments,
Erection&Civilworks
Total

455.66

455.66

455.66

4,818.52

4,818.52

4,818.52

21,143.84 21,064.21 21,098.98

CommonFacilitiesForTheEntirePlant

12,841.75

HeatRecoverySteamGenerator(HRSG)
ErectionServicesforGasTurbines,
Steamturbines,Generators&HRSG
CivilWorks,ErectionStructure

Total

76,148.77

OutsideBoundaryLimitStructures

5900

Total

82,048.77

ConsumablesLikeAirFilters,Chemicals,
SparesofAuxiliaries,DieselCharges

200.00

SurroundingPropertySumInsured

500.00

Total

82,748.77

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.17

OperationalPropertyAllRisk(BIincludingMLOP)

BasisofIndemnity :
Interest+PrincipalRepayment(DebtServiceOnly)
LimitofIndemnity

INR8,021.6Million

IndemnityPeriod:

12months

Description

ALOP

BI

Principal
Module1

35.00
Module2

42.78
Module3
3.89
63.39
Interest
Module1 237.11 221.28
Module2 228.88 220.50
Module3 224.38 219.21
Total
694.25 802.16
*AllFiguresInRsCrores

The detailed projections of ALOP/ B.I provided by Insured are enclosed as

ANNEXUREVIII.

CLAIMS

Insuredinformedusthattherewerenoclaimsreportedtilldateunderthemarinepolicy
orconstructionworksatsiteason12.07.2011.

RISKCONCENTRATIONANDRESPONSETOINSURABLEINCIDENTS

Insuredinformedusthattheprojectisbeingimplementedinthefollowingsequence:

Block3(Module1)
Block2(Module2)
Block4(Module3)

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.18

3Dviewofanindividualblock/moduleisenclosedbelow:

IDCT
STG

2 x HRSG

2 x GTG

Topviewofthemodules/blockslayoutisasdepictedbelow:

G
T

G
T

H
R

S
T
G

G
T

G
T

S
T
G

Block 2

Block 3

S
T
G

Block 4

Central Control Room

Themaximumriskconcentrationoftheprojectsiteisinthepowerblockareaswhere
3blocksofGTG/STGarebeinginstalled.

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.19

Intheeventofamajorbreakdowningas/steamturbinesandgenerators,thereareno
repair facilities available in India. The suitable repair facilities are available abroad at
Singapore/Dubai/U.K/Japan/USA.

Detailedroutesurveysfortransportationofprojectcargohavebeendoneandthefact
that2gasturbinesand2generators(thelargestandheaviestODC)havebeendelivered
safely to site confirms that there are no infrastructure bottlenecks for marine cargo
transportationfrom/tositeintheeventofacatastrophicmachinerybreakdownatsite.

PROBABLEMAXIMUMLOSS(PML)SCENARIO

Under PML scenario, we have considered 3 scenarios 1.) an explosion and fire in a
hydrogencooledgeneratorand2.)anexplosionandresultingfireinthefuelgassystem
ofthegasturbineand3.)fire/explosioninGISswitchyard.

In scenarios 1 and 2 as mentioned above, we are assuming that 1 Gas turbine and
1 generator along with auxiliaries get completely destroyed. Further, we assume that
there would be very minor damage to the neighbouring gas turbine, generator and
auxiliarieslocatedinthesameblock.Thereinstatementofthesameislikelytotake20
months.

Based on Sum Insured data made available to us, 1 GT and generator would cost
INR2441Million.ItserectioncostwouldbeINR110Millionandtherelatedcivilworks
would 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.

Thecorrespondingreinstatementperiodislikelytotake20monthsincl.supplyofnew
gasturbineandgeneratorwhichisassumedat12monthsandtransportation,erection
andcommissioningof8months.Asthereare2gasturbinesand1steamturbineineach
block,damagetooneGasturbineandgeneratorwouldaffectonly50%generationof
each block as one GT at full capacity and the steam turbine at 50 % capacity can be
operatedwhiletheotherGTisunderrepair.

AsInsuredhasassumedhighestdebtservicechargeofINR2371.1Millionannuallyfor
1blocktobecoveredunderALOPpolicy,theALOPlosscausedbythedamagetogas
turbine/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.

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.20

AsInsuredhasassumedhighestdebtservicechargeofINR2826.0Millionannuallyfor
1 block to be covered under B.I policy, the B.I loss caused by the damage to gas
turbine/generatorwouldworkoutto(2826.0/(2x12))*20=INR2355.0Million.

The combined PML would work out to INR 3500 Million (M.D) + INR 2355.0 Million
(B.I)=INR5855Million.

Inscenario3,weareassumingthatafire/explosionintheGasinsulatedswitchyard(GIS)can
lead to damage of entire GIS hardware. The reinstatement of the same is likely to take 10
months (6.5 months delivery and 3.5 months erection/commissioning) whereby the entire
plantgenerationwouldgetaffectedasGISisacommonfacilityforpowerevacuationfromall
3 blocks to the grid. Based on marine insurance values provided by Insured, the hardware
costsworkouttocostinUS$14.55*forexconversion@INR46*handlingcosts1.1*custom
duties@26.85%=INR933.91Million.Addinganother20%forerection&commissioning,
thedulyerectedvalueofGIShardwareworksouttoINR1120.69Million.Consideringanother
INR80Millionformiscellaneousitems(building,fireprotectionsystem,etc.),thecumulative
reinstatementcostsundermaterialdamageworkouttoINR1200Million.

AsInsuredhasassumedadebtservicechargeofINR6942.5Millionannuallyforthe
entireprojecttobecoveredunderALOPpolicy,theALOPlosscausedbythedamage
toGISswitchyardwouldworkoutto((6942.5/12)*10)=INR5785.42Million.

ThecombinedPMLwouldworkouttoINR1200Million(M.D)+INR5785.42Million
(ALOP)=INR6985.42Million.

AsInsuredhasassumedadebtservicechargeofINR8021.6Millionannuallyforthe
entireprojecttobecoveredunderB.Ipolicy,theB.IlosscausedbythedamagetoGIS
switchyardwouldworkoutto((8021.6/12)*10)=INR6684.67Million.

ThecombinedPMLwouldworkouttoINR1200Million(M.D)+INR6684.67Million
(B.I)=INR7884.67Million.

ISSUES&RECOMMENDATIONS

1. ItshouldbeensuredthatthefirefightingsystemsforGTGs(commonandmachine
specific) are installed, tested and made fully functional before commencement of
firstfiringofthe1stgasturbine.

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 be
dislodged from its position and thus exposed to prevalent humid atmosphere. We
have shown the same to Insured and requested them to seal the compressor end
fromatmosphereinconsultationwithOEM.Astheacousticenclosuresarenotyet
installedfortheGasturbine/generatorandthusexposedtoopenatmosphere,we
alsorequestedInsuredtoarrangeforplacingtherainprotectioncoversontheGas

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.21

Turbines and Generators. Insured may check with OEM regarding preservation
measurestobetakenforgasturbines.

3. Insured wished to have seamless erection all risks and operational insurance
coverageincl.ALOP/B.Irespectively.AsInsuredspowerplantisamerchantpower
plant and considering the possible operation of the power plant even before
combinedcycleCODsareachieved,thereisapossibilitytooperatetheplantonin
firm basis during the period of Open Cycle commissioning completion/ Combined
Cycle commissioning completion to declaration of COD for each module/block. In
viewofthesame,Insurersmayreviewwhentheerection/testingphaseterminates
andwhentheoperationperiodstartsandhowtheshifthappensfromALOPtoB.Iin
eachblock.

4. Insuredwishedtoincludedebtrepayment(Interest+PrincipalRepayment)aspart
oftheBISumInsured.PresentwordingsoftheBIpolicydonotallowthis.Insurers
maycheckifthewordingscanbealteredspecificallyforthis.

OTHERCONSIDERATIONSFORTHEINSURERS

As explained in earlier sections of this report, the targeted commissioning completion

datesinopencycle/combinedcyclemodeareasbelow:

Block/Module
OpenCycle
CombinedCycle
Commissioningcompleted Commissioningcompleted
Block3/Module1
December2011
October2012
Block2/Module2
January2012
November2012
Block4/Module3
February/March2012
December2012

Theplannedcombinedcyclecommercialoperationdatesareasfollows:

Block/Module
PlannedCommercialOperationDate(COD)
Block3/Module1
December2012
Block2/Module2
February2013
Block4/Module3
April2013

During project implementation phase and the initial period of operation, we foresee
that Insured would be able to complete open cycle commissioning as described in
earliersectionsofthisreportandbeinapositiontogeneratepowerfromgasturbines
inopencyclemodeusingbypassstack/diverterdamper.

However, the entire flue gases from gas turbine exhaust are required as input for
carrying out combined cycle commissioning, i.e. steam turbine systems and auxiliaries
duetowhichtheopencycleoperationswouldneedtobeadjustedtomeetcombined
cyclecommissioningrequirements.

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.22

Assuming that Insured achieves the targeted dates of open cycle/ combined cycle
commissioning (blockwise) and depending on the power demand and power market
pricingdynamics,weforeseeascenariounderwhichInsuredcanandwouldoperatethe
powerplant(blockwise)onopencyclemodeandcombinedcyclemodeduringthetime
periodsasgivenbelow:

Block/
OpenCycleOperation
CombinedCycleOperation
Module
Block3/
December2011
October2012December2012
Module1 October2012/December2012
Block2/
January2012
November2012February2013
Module2 November2012/February2013
Block4/
February/March2012
December2012April2013
Module3
December2012/April2013

As this project is planned to be selling power on merchant sale basis, there exists a
possibilitythattheblockwiseprojectedCommercialOperationDates(COD)getpushed
backfurtherthanthecurrentlydeclaredCODsandInsuredcanoperatethepowerplant
andgeneraterevenueoninfirmpowerbasis.

IfCODsgetpushedbackfurtherforreasonswhatsoever,thecombinedcycleoperation
periodmentionedabovewouldincreasecorrespondingly.

Thesescenarioswouldlargelydependonthefuelprice,availabilityandpowerdemand
andpowersalepriceapartfromthespeedatwhichInsuredcanexecutetheproject.

Weunderstandthatfinancialclosurehasnotbeenachievedfortheprojectandthedebt
servicecostsbeingprojectedbyInsuredareonlyforecastedfigures.Wegatheredthat
the equipment have been bought on suppliers credit and the civil/construction works
arebeingfundedbyinternalcashreserves.

If there is a moratorium from lenders on interest and principal repayment (this is the
case when such large power projects are negotiated by large corporates) and such
moratorium would count only from COD of the entire plant, there exists a possibility
thatInsuredneednotdeclareCOD.Instead,hecanachievecommissioningandoperate
the plant on infirm basis with respect to lenders contract but in reality derive
revenue/profit through such infirm power sales. The period of this infirm power
generation could depend on the comparison of Interest during construction (IDC)
payableanddebtservicingcostsavedduringsuchperiod.

During such moratorium from lenders, Insured has no debt servicing and repayment
liabilitytowardslendersuntilCODisdeclaredbuthastoincurIDC.

InviewofhugepowerdemandinIndiaandtheneedtoaddnewcapacityannuallyata
fast pace using the available fuel at a viable price, the regulatory/federal agencies
managing Indian power sector have declared a policy guideline whereby the project

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.23

whichisinadvancedstageofimplementationwouldgetpriorityforfuelgasallocation
sothatsuchprojectscanprovidepowerandrespondtotheincreasingdemandinthe
country.

The regulators policy however could and has led to a situation in India, where many
power projects under planning/execution would try and achieve readiness for power
generationandtryandgetpriorityforfuelallocationbythefederalagenciesregulating
fuelandpowerinIndia.So,weanticipatethattherewouldbescrambletogetthegas
allocatedbythepowerplantowners.

Insured is confident of arranging necessary fuel gas for commissioning. However for
subsequentsustainedoperationofthepowerplant,availabilityoffuelgasinsufficient
quantityforamerchantpowerplantwithoutlongtermpowersaleagreement,inour
opinionisthemostcriticalbottleneckforsuccessfulcompletionofcommissioningand
subsequentcommercialoperations.

Beingamerchantsalebasedpowerproject,therevenuemodellingisdifficulttopredict
as power generation and sale prices can fluctuate depending on fuel cost and also
power demand. As this would be a merchant power plant, there would be no price
supportforfluctuationsinfuelgasprices.Thekeydrivingfactoristhepowersaleprice.

Insured is also seeking a seamless insurance coverage comprising of EAR/ALOP covers

andanAllRiskCoverincl.B.Iforoperationalphaseasbelow.

BasisofIndemnityforALOPandB.I:Interest+PrincipalRepayment(DebtServiceOnly)

IndemnityPeriod:
12months

LimitofIndemnity:

aspertablebelow

Description

ALOP

BI

Principal
Module1

35.00
Module2

42.78
Module3
3.89
63.39
Interest
Module1 237.11 221.28
Module2 228.88 220.50
Module3 224.38 219.21
Total
694.25 802.16
*AllFiguresInRsCrores

Bhatawadekar&Co

ReportNo.BM/0709/2011

PageNo.24

When testing gets completed and the specific GTG and then the block come into
operation as per policy wordings/lenders contract wordings and how this has an
influenceonEAR/OperationalAllRiskandcorrespondingALOP/B.Iliabilityhastobe
closelylookedinto.Merchantplantlackinglongtermpowersalesagreementsmakes
itevenmorecomplicatedtoassessInsurersliabilityintheeventofaclaim.

AlsothediscussionsrevealingthatthesuminsuredfortheALOPincludestherepayment
oftheprincipalamounthowthiswouldbecoveredundertheexistingALOPwording
willneedtobelookedinto.

Thisreportisbasedonactualinspectioncarriedoutatsitetothebestofourknowledge
andabilityandisissuedwithoutprejudice.

ForBHATAWADEKARANDCOMPANY

MilindBhatawadekar
PrincipalOfficer

BoddapatySreeramaSreenivasu

RiskEngineerPowerPlants&Mechanical

AmolBhise
RiskEngineerCivil&Construction